Planet Aid

CharityWatch has been keeping an eye on Planet Aid, a charity known for its ubiquitous clothing collection boxes, for many years. Planet Aid 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 IRS Form 990 tax filing. However, CharityWatch's analysis of Planet Aid's 2024 tax filing and audited financial statements shows it spending only 7% 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 program expense, arguing that if it did not collect these items they would end up in a landfill. In 2024, Planet Aid spent approximately $27.7 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 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.

• The most damning evidence against Planet Aid's financial reporting logic is provided by the charity itself. Planet Aid does not distribute to needy people the vast majority of the clothing and other goods it collects--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 items Planet Aid collects. It is ridiculous for Planet Aid to assert that items worth tens of millions of dollars would end up in a landfill if it did not collect them.

According to the Planet Aid (PA) audit of December 31, 2024 (Note 5, Contributed Nonfinancial Assets):

PA received contributions of nonfinancial assets during the fiscal year-ended December 31, 2024, on which it placed a total value of $37,974,504. Of this amount, $32,481,301, $4,031,442, and $588,138, was attributed to "Clothes," "Shoes," and "Other goods," respectively. Additionally, the remaining balance of $873,623 was attributed to "Unsold inventories."

[Note: CharityWatch generally excludes the value of in-kind (non-cash) donations of goods and services from its calculations of Program % and Cost to Raise $100. More information on how grades are calculated and the treatment of in-kind donations can be found on the Our Process page.]

According to the Planet Aid audit of December 31, 2024 (Note 1, Operations and Nonprofit Status):

"...The Organization’s revenues are derived from used clothing contributions that are sold worldwide, corporate grants, private contributions, and solar revenue. The Organization also has a retail store in the Rockville, Maryland area. Donated clothing and other goods are sold to the general public at this location..."

According to the Planet Aid audit of December 31, 2024 (Note 12, Concentrations):

"...In 2024 and 2023, a significant amount of sales were made to certain geographic areas outside the United States which also made up a significant portion of accounts receivable as of December 31, 2024 and 2023. It is always considered reasonably possible that customers might be lost in the near term..."

Planet Aid reports that 59% and 88% of its "Sales" and "Accounts Receivable," respectively, were concentrated in the "Central America and North America" markets.

According to the Planet Aid audit of December 31, 2024 (Note 15, Employee Retention Tax Credit):

"As of December 31, 2022, the Organization determined that it qualified for both the 2020 ERTC and 2021 ERTC and accounted for them as conditional grants under ASC subtopic 958-605 at the time of application. No amounts were included in the calendar year 2022 financial statements. These grants are conditional upon meeting certain performance requirements and the incurrence of eligible expenses. In the opinion of management, these conditions were met as of December 31, 2023, and therefore, the entire amount of the grant, $5,406,176, that the Organization expects to receive was recognized as revenue in 2023 and is presented as contracts and grants...

...As of December 31, 2024 and 2023, $532,511 of the above amount was outstanding and is reflected as grants receivable..."