A Melbourne charity organisation has condemned commercial operators it says are using cash-starved non-profit groups to work Canberra donation bins.
But a Canberra charity said the funds raised helps keep their doors open.
The National Association of Charitable Recycling Organisations says second-hand clothing dealers export millions of dollars in goods collected from donation bins.
The group's chief executive, Kerryn Caulfield, said the commercial operators would do anything to get their hands on goods, including misrepresenting legitimate charitable recyclers or recruiting hapless charities for the use of their brand.
Clothing collected from the bins is sorted and exported in a market worth an estimated $100 million each year.
The charities are paid per kilogram of clothing gathered for the use of their brands.
To stay within the law, some operators include a small-print declaration that they are commercial but many consumers do not read the fine detail.
Lone Fathers Association operates about 80 bins in the ACT, which are managed by a third party.
Association president Barry Williams said the charity, which relies on fund-raising and government grants as well as profits from the bins, receives 5¢ per kilogram collected.
The group receives about $1600 a month from the deal. Mr Williams, who has been involved with the group for 40 years, said the cash was ploughed back into the community.
''It helps us keep our doors open,'' he said.
''We're a charity, we live in Canberra and the bit of money we get stays in Canberra.
''We spend the money on welfare in Canberra. We're assisting people all the time.''
Mr Williams said the Lone Fathers Association receives 13,000 calls in the ACT annually.
''We don't close, we run 24 hours, people call us at all hours.
''If anyone has a problem with the way we run then they're welcome to come spend a day helping out and answer calls from people.''
But Ms Caulfield warned allowing the commercial trade to flourish risked breaking the current charitable recycling model.
''It's big business,'' she said.
''Allowing commercial operators to dominate recycling of used clothing means the next time there's a natural disaster and the community is in need, government would be purchasing from commercial companies for benevolent purposes.''
Ms Caulfield said education was required to prevent charities lending their name to commercial operators
''It affects every other charitable recycler by stripping the marketplace of donated goods and puts doubt in the public's mind.
''It's wrong to put doubt in the community's mind. The public has a right to know.''