Apologies first of all @MidnightMeltdown if the following (bound to be long) post reads like I'm replying "at" you personally. It's not meant that way, just using your post as a jumping off point. Hope that's okay 🤞
There are several unfortunate problems with charities' clothes banks:
Charities often have "textile bank" painted on the side of their collection banks. Donors frequently assume this means any textiles, including stained or really filthy, torn etc. I'm not saying donors are deliberately dumping filth, but that they honestly misunderstand because the term "textile bank" is misleading.
The banks aren't emptied by textile recycling firms. The fabrics aren't recycled into other useful items. although it's probably nice for people to imagine that's what happens. The donation banks are emptied by the charities' own drivers, who take the contents to the charities' shops.
Shop staff, and occasionally volunteers, then have to sort through those donations. The worst few instances I've heard about have involved clothing, bedlinens and duvets stained/smeared with (presumably human) urine and excrement. Dirty (really dirty) underwear also makes a regular appearance.
A couple of the biggest charities have dedicated sorting centres. But ultimately it's the same process: people sorting through other people's shit.
Once the shop staff have sorted the donations, they know that the recycling firms will not accept dirty or damaged garments and linens. A missing button or two, yes. A tiny moth hole, yes. Wear on a handbag or pair of shoes, yes, up to a point. Stains, dirt, rips, no. Poo, definitely no. These firms are in the business of working with the charity sector to make money for themselves, by buying in bulk and re-selling, not out of altruism. Years ago, they used to be called "rag merchants" but that's not the right descriptor any more: they won't take rags.
The textiles that aren't acceptable to the recycling firms go into the charity shops' rubbish bins. Charities are businesses and therefore they pay for their refuse collections. Say you have 100 shops, each paying £15 per week for uplift of refuse, that's an annual bill for your charity of £75,000. Some charities have 50 shops or fewer, some have 300.
"Someone will be along" to say "Oh, but charity shops don't pay any rent, so what's £75K on rubbish collection?" Just to preempt that: charity shops pay exactly the same rent as any other business. They get a discount on business rates.
Paid shop managers aren't going to pressure their volunteers into sorting through bags full of horrible filth, because that's a very quick way to lose volunteers. So paid staff tend to deal with these donations themselves. Their expertise (yes, they have a lot of it) would be better used doing something more profitable for the charity.
While shop managers are busy sorting through textile bank donations of (occasionally literal) shit, volunteers will often be busily under-pricing valuable items - clothing, art, ornaments - and putting them out for sale. It's a lose-lose in terms of income for the charity, and frustrating for shop managers who are under pressure to hit sales targets.
Someone else on Mumsnet will probably be along to say "But this is stuff that people are giving to charities free! Why can't they be grateful?" Just to preempt that one as well: it isn't free stuff if it's costing the charity money to get rid of! Costing employee time and salaries, cleaning products, disposal costs, loss of income from better quality product being sold too cheaply, stress levels of paid staff causing high turnover and affecting volunteers, recruitment and training costs.
Every charity shop manager (and driver) I've spoken with would be delighted if textile banks would all just disappear. Charities are reluctant to get rid, in my opinion and experience, because of the off-chance of finding the motherlode: the mythical haul of bags chock full of Chanel, Dior, YSL, a Birkin bag with a Faberge egg inside.
I've worked for a few charities, and visited quite a lot of shops for work. It varies by area, but @Notyouthful is absolutely correct: donation banks do encourage fly-tipping. Just like after Christmas and New Year's, when there's a mountain of boxes full of bottles around the bottle banks, if one person does it, there's a pile on. Not a lot can happen to a bunch of bottles, but bags of textiles will be damaged either by rain or by condensation building up inside the bags in hot weather. It will all end up unusable, even if it was any good when it was bagged up in the first place.
Without wishing to cause too much offence, please take things that can't be sold to the tip/municipal recycling centre instead of to a charity textile bank. If you'd be embarrassed for a charity shop manager to sort through your bag of donated clothing in front of you, please take it to the tip.