Giveacar: building a sustainable business from vehicle scrapping for charity
This article was produced on behalf of Giveacar, a non-profit scrap car organisation that donates proceeds to charitable causes throughout the world.
Metal recycling is a £5 billion a year industry, and approximately half the metal recycled every year originates from the automotive business.
Last year, social enterprise Giveacar was created by recent Geography graduate Tom Chance, with the aim of creating a new revenue stream for charities in the UK by scrapping donated vehicles.
Of the 2 million vehicles that are decommissioned every year in the UK, up to half are not disposed of in accordance with the EU's 2005 End-of-Life Vehicle (ELV) Directive, which stipulates that all vehicle disposal must take place at an Authorised Treatment Facility (ATF).
ATFs de-pollute vehicles before dispatching them for recycling. Furthermore, the ELV Directive has set a mandatory ATF recycling target of 85% of a vehicle's weight - this figure is set to rise to 95% by 2015.
The idea for Giveacar began while Mr Chance was still studying, and occasionally dealing in the odd scrap car or two.
He noticed the proliferation of unregulated scrappers still operating despite the ELV Directive, and recognised the need to minimize the environmental impact associated with car disposal.
After researching car scrapping in the UK and abroad, he also found that the revenue generated by environmentally responsible scrappage could help provide extra income for charities at a time when many are struggling to secure donations.
Car donation is popular in the US, with several organisations specialising in end-of-life vehicle scrapping for charity.
By adopting a similar business model, Mr Chance was able to bring the idea to the UK. He reasons that - when compared to the initial investment of buying a new car - "the proceeds generated from scrapping an end-of-life machine are nominal, yet it is a sizeable lump sum to donate to charity".
While also providing an environmentally responsible and helpful service to dispose of vehicles, he could encourage people to donate their cars by appealing to the fact that they would not need to raise funds themselves, but would simply be giving back by getting rid of something they needed to.
Giveacar operates without external funding. For the business model to function successfully, a 25% portion of the revenue generated from scrapping (or auction in cases where the vehicle is not yet end-of-life) is deducted before the donation to a charity of the vehicle owner's choice.
In the 90% of cases where a vehicle is scrapped, this deducted sum is minor, and Giveacar guarantee a return for charity of at least £40 per vehicle, with most achieving £85-120. The vehicle collection costs meanwhile are borne by their salvage partner.
Since its inception in January 2010, the Giveacar scheme has raised over £200,000 for over 250 charitable organisations.
They have also expanded at a steady rate, growing from a one-man operation to a five-person team within one year. Keen to diversify, as of February 2011 they additionally accept motorcycle donations.
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