There are many nonprofit organizations that compete with one another for clothing donations. 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. CharityWatch disagrees with Planet Aid's reporting and reallocates these expenses to Fundraising.
In 2020 Planet Aid spent approximately $19.6 million to collect and process these non-cash donations, and reported these costs as Program expenses. In short, Planet Aid considers the costs associated with collecting and processing donated clothing and other goods to be a recycling program expense in support of its "significant contribution in the fight against global warming and climate change." It argues that if it did not collect these items they would end up in a landfill. CharityWatch's analysis of Planet Aid's 2020 tax form and audited financial statements shows the charity spending only 15% of its expenses on programs. Planet Aid reports spending 83% of its expenses on programs in 2020, according to its tax filing.
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. CharityWatch has been keeping an eye on Planet Aid, a charity known for its ubiquitous clothing collection boxes, for many years.
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