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Mysterious Donation Bins Raise Questions

The Childhood Disease Research Foundation sends about 10 percent of its proceeds to research, possibly to a for-profit Canadian company the charity's directors also run.

The collection bin for the Childhood Disease Research Foundation in San Juan Capistrano. Patch photo credit: Penny Arévalo
The collection bin for the Childhood Disease Research Foundation in San Juan Capistrano. Patch photo credit: Penny Arévalo
They’re popping up all over Orange County: collection bins promising to recycle your old clothing and shoes.

Some are run by for-profit companies, such as 7th Generation Recycling, which has bins in San Clemente and Rancho Santa Margarita. Others, like the donation boxes that showed up in San Juan Capistrano a week ago and another in Dana Point, are said to be operated by a Fremont-based nonprofit called the Childhood Disease Research Foundation.

Where does the foundation’s money go? 

At best, maybe 11 percent of the millions collected make it to the nonprofit’s stated purpose, records show. The charity’s board of directors and medical advisers include a retired professor who said he’s never done any advising for the foundation. And contact information for the foundation and its parent organization weaves a web across the United States and even into Canada.

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The bright blue bins are hard to miss. “CLOTHES & SHOES DONATION CENTER” appears in large print on three sides. The fourth side says: “This bin is owned and operated by a non-for profit organization. Fremont, CA 94539.”

Smaller print lists the name of the foundation and adds:

“The donated items deposited will be sold and after expenses, Charity receives a guaranteed fixed monthly revenue without risk of financial loss. This revenue helps to further Charity’s charitable purpose.”

According to state records, the foundation's parent organization, Optimal Medical Foundation, uses four different fund-raising companies across the U.S.

It’s unclear who placed the Orange County blue bins.

Dana Point gas station owner Mike Farr said he was approached by representatives he thought were directly from Childhood Disease Research Foundation. They asked for free space on the lot. Farr said they had the appropriate insurance. 

“I don’t know what they do, but I don’t care either,” Farr said.

He quickly changed his tune when told that maybe 10-11 percent of the proceeds get to the actual charity.

“I’m not happy with that. I want 100 percent.”

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According to an online flier, the Childhood Disease Research Foundation is in Fremont. Google street maps show it based out of a pretty residential neighborhood. The nonprofit’s website is under construction but shows the name of Optimal Medical Foundation, with an address in an apartment at the very tippy top of Michigan. A leasing manager said the unit – called a “suite” at Optimal’s website – is in the name of an individual, not a business or charity.  The listed phone number has a Canadian area code seven hours away.

According to several online sources, Optimal Medical runs the Childhood Disease Research Foundation, the Association for Breast Cancer Research and the National Charity for Cancer Research. The latter raised $5.3 million for research in 2009, but none of it was directed for that purpose, according to Time Magazine.

Patch tracked down reports about Optimal Foundation from several state sources and found:

went toward actual charitable causes. The rest was plowed back mostly into fundraising efforts. That same online flier, posted on a Chicago magnet school website, lists a board of directors and advisers that includes a retired professor from UC San Francisco, Dr. Robert Goldsmith, who said his name appears on at least four different Optimal Medical Foundation charities.

And he has no idea why.

“She stuck my name on without telling me,” Goldsmith said, referring to Janet Eland-Greenhaigh, the founding director of the Childhood Disease Research Foundation. “My lawyer is working on this.”

Patch was unable to reach Eland-Greenhaigh and one other California doctor on the board of directors, Jacob Eapen, a former public health commissioner in Alameda County, for comment.

Goldsmith said he’s contacted the California Attorney General’s office, which oversees charities, to complain about the unauthorized use of his name. A spokeswoman there said she could not comment.

“Please put me on record as not being on or ever have I been a director or consultant to those charities,” Goldsmith said.

He also wrote to Eland-Greenhaigh, whom he does know. She wrote back a month ago, wanting to know why he was doing this to her, Goldsmith reported, adding that his name has since been removed from Childhood Disease Research Foundation literature, but he believes it is still inappropriately attached to other Optimal charities.

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Just what kind of research does Childhood Disease Research Foundation support?

The online flier says it helps the development of “a rapid-response diagnostic test kit which allows the use of modern molecular technology to test for evidence of multiple diseases — including cancer — in both human and animal samples, producing accurate results in 90 seconds.”

Curiously, a research company in Mississauga, Ontario, Canada is doing that very same research. Not only is Eland-Greenhaigh listed as the executive vice president, but every member of the Childhood Disease Research Foundation’s board of directors and advisers – except Goldsmith – is part of this Canadian firm, Hygea Life Sciences Inc. According to Business Canada, an arm of the Canadian government, Hygea is a for-profit company.

Back in San Juan Capistrano, Debbie Brown, owner of a for-profit, secondhand store called Children’s Orchard, is fighting back against the upstart blue bins. She put her own fliers all over the Childhood Disease Research receptacle behind the nearby Citibank branch, letting donors know they can get cash for their goods at her place.

Clothes she can’t sell (about 2 million pieces a year, she told Patch), are sent to bonafide local charities, such as Father Serra’s Pantry, she said.

Brown acknowledged the foundation’s donation bins, which are often placed rent-free, eat into her own business model. But it’s the misleading nature of receptacles she said upsets her.

“It makes me so mad that people are giving clothes and thinking they’re doing good,” Brown said.

Most likely, according to published reports from universities and the media, the clothes make their way to the Third World, where they can threaten local textile industries. Clothes not suitable to wear – maybe up to half of the donations – end up as rags or furniture padding and upholstery.

Nonprofit giant Goodwill Industries has also been battling the phenomenon of donation bins. And local nonprofits say there are plenty of other avenues for people who want to help the needy.

For example, at San Juan’s Mission Thrift and Gift, after paying for the lease and five employee salaries, all proceeds go to local efforts:  70 percent to Family Resources, 20 percent to Camino Health Center and 10 percent to Mission Hospital’s hospice program, said Cathy Ogilvie, director of central development for Mission Hospital Foundation.

Nevertheless, as long as the Childhood Disease Research Foundation bins are collecting for charity, they can stay, said city of San Juan Capistrano spokeswoman Cathy Salcedo.

“Code enforcement will let them know to get a business license. We do allow the drop-offs, but they need a permit/business license,” she said.

Emily Smith May 21, 2013 at 06:56 PM
Great investigative journalism Penny! I know where I won't take my kids' old clothes.
childsorchsjc May 21, 2013 at 09:54 PM
Penny- Thank you so much for bringing this to everyone's attention. I hand pick every charity I give to and make sure that the items I donate are not going to end up in a Tijuana swap meet or being sold for profit like the items that go into these bins. It just upsets me so much that the public is being fooled. I am a busy mom and I know that I have been tempted in the the past because I just want to clean out the garage or the kids closets and get rid of stuff. When people read the front of the bin at a glance and see The Childhood Disease Foundation they automatically think that they are contributing to curing children's diseases. There have been some investigative articles on this but I think you did a great job getting to the source which happens to be a for profit company in Canada! The sad thing is that every person along the way makes money on these donations. Makes me sick! I pass through millions of pieces every year to people who actually need them. And, for the skeptics no, I do not claim them as donations. The IRS guidelines say that you must own the items if you want to write them off as donations. I don't own them, I am just a helper who is a pass through. I hope that your article will bring more investigation into this scam and maybe the cities will actually have them removed. Thank you! Debbie
Shirley May 21, 2013 at 10:24 PM
Best days work you ever did Penny. Everyone can rest easy if they will donate to the Salvation Army, their admimstrative fees are very little compared to all the others.
Mr Salty May 22, 2013 at 11:10 AM
Here's to a hefty Karmic retribution.
Mike Proctor May 22, 2013 at 11:31 AM
Nice article. I bet if you looked into other charitable organization, you would find similar percentages of where the money goes. Boat Angle, Cars for Causes......and many others.
Tray May 22, 2013 at 12:14 PM
That's not the way to go about this collecting used goods, already to many legit ones, It's an eyesore and distraction, they used to have SAmy bells and one way doors, a kid thought they threw money in it and crawled into it, he was found over a week later covered in trash.
Ronc4109 May 22, 2013 at 01:08 PM
As others have noted, really good work to trace the trail...as they always say, 'follow the money'.
Sharon Thompson May 22, 2013 at 01:48 PM
Upscale Resale is South County Outreach's thrift store in Laguna Hills. All proceeds support SCO's programs to fight hunger and homelessness. Donations for Upscale can be dropped off at Ritz Cleaners in Dove Plaza where they are picked up regularly. Ritz is a great business with terrific employees who believe in helping others! Upscale has a paid manager - all the rest of the staff are volunteers, of which I am one. SCO is on a scale with Salvation Army, Assistance League, Cancer Society, and hospital thrift stores. SCO/Upscale benefits folks right here in south Orange County! Every item donated is utilized in some manner. We at Upscale are diligent about maximizing what is given. Thank you, Penny, for this outstanding piece of investigative journalism. Major media outlets could use you and others of your calibre. WOW!
Penny Arévalo (Editor) June 05, 2013 at 10:00 AM
The Salvation Army in Orange County wrote a blog in response to this article. See it here: http://ocsalvationarmy.wordpress.com/2013/05/29/donation-drop-boxes-the-salvation-army-commits-85-cents-to-ever-dollar-raised-avoid-for-profit-drop-boxes/

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