I know of “rag mills” where clothes that people think are going to homeless and poor people are sold by the pound to high dollar “resale” retro clothing stores.
Fact is, it is not the intended audience.
Might as well have an ebay storefront (the kind of private business that says “we will list your items for you”) only don’t give credit or cash to the donors.
That is not recycling/recovery.
You have an idiosyncratic definition of recycling, and you completely misunderstand how charity works.
The point of donating goods to charity is to support the work of that charity. If you’re donating your old suits and last year’s fashions thinking they are going to homeless people, your lack of due diligence is on you. What homeless people need is clean, durable work-type clothes, but more than anything socks and underwear. The clothes you donate go into thrift stores to raise money for the charity. If they can make more money selling to hipster boutiques and rag mills, more power to them. If you don’t trust the charity to do the right thing with the money, donate to another charity.
“Rag mills” usually refer to places that shred the clothes and sell them as pulp to places that make high-end paper out of cotton and linen fibers. If you are offended that your stained, threadbare shirts are being sold by the ton for cash instead of worn by homeless people, you need to get over it and do your homework. And while we’re at it, the clothes you donate for earthquake victims in Haiti or starving people in Africa rarely get there. Cash is much more portable.
The point of recycling its make something useful out of something thrown away. Often that means reducing it to raw materials that can be reused. Sometimes (in Europe more than here) it means burning it to generate electricity. Sometimes it means cleaning it up and selling it on to someone else — there are companies that do nothing but repurpose computers that are a few years old, off-lease or out of date for businesses but still perfectly usable for home users.
The fact that you don’t consider this “recycling,” that you think it would be somehow preferable to destroy perfectly usable goods just so that you can say you did it, is your problem, not anyone else’s.