LOS ANGELES (CBS) — Juan Orellano wants to help the less fortunate.
"I try to put some clothes [aside] for other people," Orellano said.
He usually brings old clothes to a Planet Aid collection box in Sherman Oaks.
"Because I like to help people and I guess this is a good opportunity."
But, is it?
CBS2 investigative reporter David Goldstein sought advice from Bill Hranchak, of the Partnership For Philanthropic Planning. The Pasadena-based organization helps people find the right charity.
"If one of your clients came to you and said, 'I want to donate money to Planet Aid,' what would you tell them?" Goldstein asked Hranchak.
"I'd say – Why don't you consider Goodwill or Salvation Army."
But plenty of people donate bags of clothing to Planet Aid. They claim 165,000 pounds a week are donated to their facility in Commerce.
All of this is collected from about 1700 yellow bins that are placed all around Southern California.
Michael Moore, of Planet Aid Los Angeles, said the donations aren't distributed locally.
"So, the sweater, pants, shoes that I put in that box…they don't end up with any family in Southern California?" Goldstein asked.
"It's not local," Moore said.
"No family in the United States?" Goldstein continued.
"No," Moore confirmed.
Where does it all end up?
Planet Aid is a nationwide, non-profit organization that collects the clothing, sells it and then claims to use the money to help those in need in third world countries.
On their 2010 tax return, Planet Aid lists revenue of almost $36 million.
But, according to CharityWatch from the American Institute of Philanthropy, Planet Aid spent only 34 percent of that money on program services to help the needy.
That's 34 cents of every dollar.
CharityWatch has a recommended target of 60 percent for charitable organizations
CharityWatch gives Planet Aid a failing grade for spending such a small portion of its budget each year on its programs, and, yes, it's certainly one of our lowest ratings groups.
However, Planet Aid claims that they spend 78 percent on program services because they include the cost of recycling clothing. They say recycling "saves landfill space", and is, "a significant contribution in the fight against climate change" by reducing carbon dioxide.
CharityWatch doesn't buy it, saying recycling is just part of fundraising.
"They are really playing some accounting tricks here because once you reallocate all their collection costs back into fundraising, where it really belongs, they actually spend a very low percentage of their budget each year on their programs," Laurie Styron said.
In some cities, Planet Aid has hurt local charities like Goodwill. But, they say, not here.
"We think there's enough for a variety of organizations."
Goodwill sells clothing and other donated items, and says 93 cents of every dollar they get goes to help disabled and disadvantaged people find work.
CharityWatch gave Goodwill an "A".
And, Goodwill successfully sponsored legislation this year mandating collection boxes in California display the name of the charity and where the money is going. Planet Aid does this but Goodwill issued the reminder to teach donors to be aware of whom they're giving to.
Good advice in this time of giving.
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