When flags are discolored, torn, frayed, or are general disrepair... the U.S. Flag Code does not authorize any particular organization with the duty of retiring unfit flags. Any one person or group can do it. However, flags should be retired in private at a non-public location and the ceremony should be a solemn and dignified event.
Now, certain organizations do provide a retirement ceremony (free of charge). Any veteran service organization or patriotic organization such as a Scouting America unit can conduct a proper flag retirement ceremony.
The National Flag Foundation provides the following guide for conducting a patriotic flag burning ceremony.
Only one flag should be used in the ceremony, which is representative of all the flags to be burned in the service. The remainder of the flags collected should be incinerated. A corporate, government, or military incinerator or furnace can usually be found for this purpose.
The ceremony should be conducted out-of-doors, preferably in conjunction with a campfire program, and it should be very special.
The ceremony involves two color guards, one for the flag currently in use and a special color guard for the flag to be retired from service. Of course, this may be adapted if conditions necessitate.
Just before sunset the dedicated flag for the ceremony should fly one final time before retirement in the normal ceremonial procedure for that location or group. Any additional flags to be retired should be folded.
The color guard responsible for the flag receiving the final tribute moves to front and center. The leader should present this color guard with the flag which has been selected for its final tribute and subsequent destruction. The leader should instruct the color guard to "hoist the colors."
Leader comments: (when the flag has been secured at the top of the pole)
"This flag has served its nation well and long. It has worn to a condition in which it should no longer be used to represent the nation."
"This flag represents all of the flags collected and being retired from service today. The honor we show here this evening for this one flag, we are showing for all of the flags, even those not physically here."
The leader should:
Call the group to attention;
Order a salute;
Lead the entire group in the Pledge of Allegiance to the Flag; and
Order the flag retired by the color guard.
Slowly and ceremoniously lower and then respectfully fold the flag in the customary triangle. Deliver the flag to the leader and then dismiss the group.
This concludes the Ceremony of Final Tribute
Fire Preparation:
It is important that the fire be sizable -- preferably having burnt down to a bed of red hot coals to avoid bits of the flag being carried off by a roaring fire -- yet be of sufficient intensity to ensure complete burning of the flag. There should be no accelerants poured over the fire unless needed to start the fire.
Flag Preparation:
Method 1: Multiple Flags to be ceremonially burned should be folded in its triangular shape and place in the pyre.
Method 2: The "Union" (the blue field) should be cut and separated from the stripes and placed in the pyre together.
When all is ready:
Assemble around the fire. The leader calls the group to attention.
The color guard comes forward and places the flag on the fire.
Note: Flags should not be doused with any type of accelerant or fluids to burn. The Flag should be lit once it is laid on to the pyre.
All briskly salute.
After the salute, but while still at attention, the leader should conduct a respectful memorial service as the flag burns. National Flag Foundation recommends singing "God Bless America" followed by an inspiring message of the flag's meaning followed by the "Pledge of Allegiance" and then silence.
When the flag is basically consumed, those assembled, with the exception of the leader and the color guard, should be dismissed single file and depart in silence.
The leader and the color guard remain until the flag is completely consumed.
The fire should then be safely extinguished and the ashes buried.
When retiring flags in a burn, special care should be made to separate flags based on the material it is made from. There are two types of flag materials -
Flags made of natural fabrics - Cotton, Linen, Wool, and Silk are easier to burn and do not create toxic fumes.
Flags made of synthetic fabrics - Polyester, Nylon, Raylon. These textiles will melt rather than burn and will give off toxic fumes.
As mentioned previously, it is best to separate the flags by material and burn them separately and away from others.