I-Team: Planet Aid Investigation

CBS3 Philadelphia/June 14, 2007

There are hundreds of charities asking for your donations, each of them competing for your generosity.

Local charity, Planet Aid, collected 58-million pounds of clothing in one year alone and you may be surprised about where your donation is really going.

You've seen them around the Delaware Valley, clothing donation bins to help the poor, but you're about to find out these boxes are not all the same.

Because one local organization may be profiting off those clothes you donate.

"What they want to do is make themselves look like a non-profit," Goodwill's Mark Boyd told us.

And the secret ways that group is using the money, to fund unorthodox schools, have led some to call them a cult.

"There were subjects like watch a DVD on Battlestar Gallactica," said one student of one of the schools affiliated with Planet Aid.

For more than 100 years, Goodwill Industries has collected clothing to benefit their job training and education programs.

But lately, people there have seen a hit on their collections.

"We are struggling to maintain our historical level of donations," said Boyd.

And it could be these bright yellow boxes that are hurting the most.

These yellow bins are owned by an organization called Planet Aid. There are 500 of them in our area; at gas stations, grocery stores and on sidewalks. Nationally, the organization collects 58 million pounds of clothes a year.

Kai Nielson works for Planet Aid in Philadelphia

"Is planet aid for profit or not for profit?" asked Jim Osman.

"We are not for profit," responded Nielson.

But as you'll see what the organization says it is and what it does may be far different than reality.

Planet Aid is a registered charity with the IRS. The fine print on the boxes explains that donations collected are then sold and the proceeds support Planet Aid projects around the world, and their own promotion video shows children in Africa benefiting from food donation.

"We donate to a variety of programs, but one of the big programs that we send money to is teacher training colleges," said Nielson.

So called Training Colleges that are not in Africa, but rather California and in Massachusetts, where students are forced to fundraise as part of the curriculum.

"We had to raise in six months about $7,000," said one of the former Teacher Training College students.

And the CBS 3 I-Team has learned The American Institute of Philanthropy estimates that only 23-percent of the funds collected through selling those clothes you donate actually goes to the programs Planet Aid claims to support.

The American Institute of Philanthropy gives the charity an "F".

Michael Durham, Tvind Alert Web site, said what's happened over the last 20 years or so is the people that began this and control the organization have moved into a huge profit making organization.

British journalist Michael Durham - after years of research - says the fundraising and profits from the clothing donations are really going to a group called Tvind which has 860 million dollars in assets.

Critics call Tvind a cult because they say it requires members to cut off from family and friends and restricts information from the outside world.

Kai Nelson with Philadelphia's Planet Aid wouldn't address critics directly but defended his organization... saying again the oft-repeated claims that any proceeds go to help the poor in Africa.

"It doesn't concern me, we know where our money goes and we know why we do what we do," said Nielson.

But this long time Philadelphia business owner who agreed to host a Planet Aid box is concerned about what we're exposing.

"Somebody comes for charity and you just let them do it - wow, I can't believe that. I don't think that's fair, especially to people in need," said Phil Esposito of Esposito's Gas.

We contacted the Federal Trade Commission and it was never taken any action against Planet Aid or it's affiliate organizations. Some places are passing laws banning the placement of the donation boxes in their communities. In New Jersey, under consideration is a bill that would make it more difficult to place a box without providing more information on the charity.