Aid's "Recycling" Program, Debunked!
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 84% of its
expenses on programs in 2012. CharityWatch's analysis of Planet
Aid's 2012 tax form and audited financial statements shows the charity
spending only 27% of its expenses on programs.
Why the difference?
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 climate change." It argues that
if it did not collect these items they would end up in a landfill.
In 2012 Planet Aid spent nearly $23 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:
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.
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 it would surely be collected by another charity, or by a
for-profit company that could sell it 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.
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 it. In 2012 Planet Aid brought in over $38.4 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 millions and millions of dollars would end up in a landfill
if Planet Aid did not collect them.
Watch analyst, Laurie Styron, discuss CharityWatch's rating of Planet
Aid's 2010 finances with CBS Los Angeles.
Unlike many other sources of charity
information online today, CharityWatch does not simply repeat information
that charities report about themselves. Our in-depth
analysis of charities is what has set us apart for more than
twenty years as the smart source for independent charity ratings
and other information. For more articles on this or other charities
analyzed by CharityWatch, please see our
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