What is the proper way to dispose of a kitchen knife?
I agree on the Goodwill thing, but it pains me to think of putting tape on a knife blade -- someone's going to have to clean it off, and that risks someone getting injured.

Instead, find a piece of cardboard that's longer than the blade of the knife, and more than twice the depth of the blade with an inch (~3 cm) or more to spare.

Fold the cardboard in half, so it's now roughly larger than the size of the blade, and then place the blade so the back of the knife is against the fold (you can do it the other way, but you'll risk dulling the knife ... cutting paper isn't good for knives), then tape it down.  

You want to make sure it's well compressed, so the knife is being held in by friction.  You could always sandwich something rubbery in there with it to help with the friction.

(this is how I used to transport my knives when moving between apartments)

...

Another alternative, if you're really disposing of it, and don't mind dulling the blade, is to poke it into a piece of corrougated cardboard.  Just find a piece that's longer and wider than the blade, set it on the edge of your counter, put a hand on top to hold it steady, and then slowly push the blade in.