ACCRA, GHANA, Dec. 21, 2006 -- Christmas is one of those times of the year when many Americans clean out our closets and donate some of our used clothing to a charity. Perhaps we hope that Santa Clause will replace them with shiny new shirts, jeans, blouses and shoes. Or maybe we just want to do some good.

Watch World News with Charles Gibson, 6:30PM ET for more on this story.

In New York City, AnnMarie Resnick told ABC News why her family donates clothing at Christmas time. "By the time my kids grow out of it," she said, "it is generally in good condition, and I want someone else to get good use out of it." And who does she think is benefiting? "We hope, and we think we know, it is people in our neighborhood who just aren't as fortunate as us. And who need it."

And the same sentiment from Marc Kaplowictz, who told ABC News: "I am assuming that is helping people who need it more than we do."

But do most Americans really know what they're doing when they donate clothing? For instance, do you think you are giving your beloved but worn jeans to someone with no money to buy their own? Perhaps some poor person in your hometown, or even far away in Africa?

Wake up and smell the money. Your used clothes are usually sold, not given away.

According to various estimates, here's what happens to your clothing giveaways. In most cases, a small amount of the items, the best quality castoffs -- less than 10 percent of donations -- are kept by the charitable institutions and sold in their thrift shops to other Americans looking for a bargain. These buyers could be people who are hard up, or they could be folks who like the idea of a good deal on a stylish old item that no longer can be found in regular stores.

The remaining 90 percent or more of what you give away is sold by the charitable institution to textile recycling firms. Bernard Brill, of the Secondary Recycled Textiles Association, told ABC News: "Our industry buys from charitable institutions, hundred of millions of dollars worth of clothing every year."

So, at this point, the charity you have donated clothes to has earned money off of them in two ways -- in their shops and by selling to recyclers. Then the recycler kicks into high gear. Most of the clothes are recycled into cleaning cloths and other industrial items, for which the recyclers say they make a modest profit.

Twenty-five percent, however, of what the recycling companies purchase from charities is used not as rags, but as a commodity in an international trading economy that many American may not even know about. Brill, from the textile association, picked up the story. "This clothing is processed, sorted and distributed around the world to developing countries," he said.

Take that pair of bluejeans you may have recently donated. Your jeans are stuffed with others into tightly sealed plastic bales weighing about 120 pounds and containing about 100 pairs of jeans.

The bales are loaded into huge containers and sold to international shippers who put them on ships bound for Africa and other developing regions. Again, the price of your old jeans has increased a bit because the shipper had to buy them.

By the time the bale of jeans is unloaded from a container here in Accra, Ghana, it is worth around $144. That's $1.30 per pair of jeans. But when the bale is opened up and the jeans are laid out for sale in the so-called "bend over" markets, customers bend over and select their purchases from the ground for an average price of $6.66 per pair of jeans. That's a 500 percent increase in value just by opening up the bale of clothes.

So now you know that about 70 percent of your old donated jeans are being used as cloths to wipe oil off of engine parts and the remaining 20 to 25 percent of pants that left your closet with no value are ultimately sold in Africa, where American clothes are extremely popular, for an average price of about $7 per pair. That's a bargain for African shoppers -- most of them are low-income earners who cannot afford to buy newly made U.S. clothes.

And jeans are by no means the only American charity clothing items on sale here. I saw everything from T-shirts with U.S. logos like "General Motors" to major league baseball caps, name brand dresses, sports shoes and even underwear. All of them used.

There are two ways to look at all this. One view is that it is wrong for entrepreneurs to profit from what you give away to charity, and that by dumping huge amounts of cheap U.S. clothing on the streets here, African textile industries are closing their factories and laying people off because they cannot make clothes as cheaply as those American items found in the bend over markets.

Bama Athreya, deputy director of the International Labor Rights Fund in Washingtron D.C., told ABC News: "Many of these countries in Africa used to have a fairly well-developed indigenous market for textiles and clothing and particularly for hand-crafted or hand-tailored clothes. And we've seen those markets virtually disappear over the last decade or two."

Athreya concedes that the African market for used U.S. clothing is not the only reason African workers have lost jobs. ABC News has spoken to various sources who point out that Africa also lags in production techniques and suffers from lack of infrastructure, job training and from corruption that undermines efficiency. But, added Athreya, "There is no question that the secondhand clothing market has had a significant impact on domestic African clothing production. The tailors, the small producers have been put out of business. Those were good jobs for Africans and there are no jobs taking their place. This is a trade that feeds on the poor rather than benefits the poor."

And if Africans can't keep their factories open in order to make clothes, they can't make clothes to export to the United States, thus they continue to suffer economically.

Neil Kearney, general secretary of the Brussels based International Textile, Garment and Leather Workers Federation says the practice is exploitative, "It is neo colonialism in its purest form. It's exporting poverty to Africa, a continent that is already exceedingly poor."

This state of affairs upsets AnnMarie Resnick, a woman we met in Manhattan while she was donating clothes, who told ABC News: "It stinks. I don't like it, but I would still give. There are a lot of people who are going to constantly profit, because this is probably happening with really nice people. With us -- and we profit too -- we get a tax deduction. If I knew how to send to Africa myself, I would."

Marc Kaplowictz, whom we also met while he was donating clothes in New York City, has mixed feelings: "And who ends up with the profit there? Big picture, obviously I would be against that. I am obviously the little guy in this process. I don't know. I don't think the answer is to have people stop donating."

The other view is that the donated clothing market is actually the American way, that your old clothing is used at every step to create new wealth and to help people who are less fortunate. First of all, charities like Goodwill Industries and The Salvation Army make clear on their Web sites that proceeds for charity and thrift shops, as well as from bulk sales to recyclers, go directly to support education, work and drug rehab programs for people who would otherwise suffer greatly. After all, isn't that the spirit in which you gave your clothes to begin with?

Brill, of the Secondary Recycled Textiles Association, told ABC News that it is a win-win situation. "It provides thousands of jobs here at home [in the U.S.] and it provides hundreds of thousands of jobs in Africa." And he added: "It also diverts waste material that would otherwise go to land fill. It goes to recycling, so it helps to protect the environment."

Both the Goodwill and the Salvation Army point out on their Web sites that much of the donated clothes are sold in their charity shops to raise money for a variety of good causes. But there is no mention of the fact that some donated items are sold overseas at a profit to private enterprises. One Goodwill source stressed that Americans should continue to donate their used clothing because U.S. charities need their cut of this market in order to help other Americans in need.

Most people we spoke with seemed to agree.

Lynn Novick, also donating in New York, told ABC News: "So someone's making money every time they are sold? At least they are not going in the garbage, and going totally to waste…I will continue donating."

And Valerie Adam, of Manhattan, said, "It is kinda the American way, isn't it.? Somebody discovered something and turned it into a business. I will continue donating. We Americans we collect so much. We accrue so much."

And here on the streets of Ghana, Africans, for better or worse, end up buying a lot of what we give away.