CharityWatch has been keeping an eye on Planet Aid, a charity known for its ubiquitous clothing collection boxes, for many years. This charity consistently reports low overhead and high program spending in its annual financial documents, but a closer analysis by CharityWatch reveals a different picture of how efficiently Planet Aid is operating.
Planet Aid reports spending 78% of its expenses on programs in 2024, according to its tax filing. CharityWatch’s analysis of Planet Aid’s 2024 tax form and audited financial statements shows the charity spending only 7% of its expenses on programs.
In short, Planet Aid considers the costs associated with collecting and processing donated clothing and other goods to be a recycling program expense. It argues that if it did not collect these items they would end up in a landfill. In 2024 Planet Aid spent approximately $27.2 million to collect and process these non-cash donations, and reported these costs as Program expenses. CharityWatch disagrees with Planet Aid’s reporting and reallocates these expenses to Fundraising. Here’s why:
(1) The expenses a charity incurs to raise donations, whether the donations are in the form of cash or non-cash items like donated clothing, are fundraising expenses, not program expenses.
(2) There are many nonprofit organizations that compete with one another for clothing donations. If Planet Aid did not collect the used clothing and other goods, most of the items would surely be collected by another charity, or by a for-profit company that could sell the items for a profit. So it is not the case that all of these items would likely end up in a landfill if Planet Aid did not collect them.
(3) The most damning evidence against Planet Aid’s financial reporting logic is provided by the charity itself. This charity does not distribute the vast majority of the clothing and other goods it collects to needy people—it sells the items. In 2024 Planet Aid brought in over $37 million from selling these items. This proves that there is a ready market of buyers willing and able to pay large sums of money to purchase used clothing, shoes, and textiles like the ones Planet Aid collects. It is ridiculous for this charity to assert that items worth tens of millions of dollars would end up in a landfill if Planet Aid did not collect them.
Will you help CharityWatch continue our important work?
As the only independent charity watchdog organization in the United States, CharityWatch relies on your support to fund our in-depth research and analysis in order to bring you the unbiased charity ratings and other information you rely on to help you make more informed giving decisions. We are not directly or indirectly funded by nonprofit industry interests.
We hope you will consider making a donation today so that we can continue to speak openly and critically and call out wrongdoing when we see it without concern for special interests cutting our funding. CharityWatch is a small organization and your donations are noticed, needed, and greatly appreciated. Thank you for giving wisely!
| Charity | |
|---|---|
| Planet Aid |
