In the UK, bags are auctioned off to the public and the proceeds go to charity. There's an article here on how it works in the UK.

What suprises me is that unidentifiable luggage still exists in the day and age. Are there any luggage manufacturers who provide luggage with unique identifiers built into the case? It can't be that hard to etch a number in 4 different places around the inside/outside so that it was pretty much always identifiable?