It depends on who you donate them to and the state the clothes are in.
Every year millions of pounds of clothes are given away to charities, although the nature of these charities or organizations vary from organization to organization, state to state and country to country.
Where They Go
Some organizations collect them, separate them if they are in good conditions and resell them (or give them away) in secondhand stores in your own country, with parts or all of the proceedings going to fuel charities. Others repurpose them and literally recycle them to sell them as insulations or industry rags. A few others package them into bales and ship them to developing nations, where they are sold for pennies on the pound, fueling local economies.
In Haiti for example the 50 years of used-clothes influx has come to completely dominate the Haitian textile market. This is both good and bad. While the local textile manufacturing has been struggling because of it, a lot of people have been able to afford decent clothes for just a few cents. The same holds true for many African nations that receive used-clothes donations.
People Make Money With My Used Clothes?
While some organizations are not-for-profit, others are strict for-profit. That means that while they accept free donations, they will resell them in one way or another, be it as recycled material or as secondhand clothes. This shouldn’t deter you however from donating clothes to these organizations. While your old clothes may be used for the profit of someone else, they are still being recycled in a way that is good for the environment. In the same way even clothes given to not-for-profit organizations will at some point be sold or resold. In all instances your free gift will be exchanged for money, even if it’s just for a few cents.
If you are uncomfortable with the idea of someone somewhere making money off of your old clothes, then the only other option is to just throw them away. This however is not a good option as they would then only end up on landfills. As an environmentally conscious person donating your unused clothes to a not-for-profit or, if the former is unavailable, a for-profit organization is still the best way to go.