Sometimes you have clothes that are nice that you just can't wear anymore, or never wore at all. Those are easy to sell, to gift someone else, or bring to a thrift store as a donation.
Things that are stained, ripped, that are tearing along the necklines - those will only be thrown out at the donation store, unless they have a downstream option for textiles. Most places don't, by the way. In this sense, your recycling efforts are wasted and you are making the thrift store bear the burden of your disposal needs. What makes me really cringe, though, is to think of developing countries where any fabric at all, any carelessly thrown away textile, becomes a source of potential income for poverty stricken rag-pickers. I wish I could just send my old clothes there!
Some donation stores do this: it's called downstream recycling. It's worth asking around in your community to find something like this.
Bear in mind that the next best solution is to simply use (and use again) your own textiles until they become truly unusable.
What to do with un-wearable old clothes?
I like to make rags of all kinds. When you consider that people go to places like Home Depot and spend their hard earned money on bags of rags, you will laugh and feel ahead of the game.
Soft tee shirt materials are good for house cleaning and dusting, and can be reused many times.
You can set some nice ones aside for gentle facial cleansing.
Some rags (the less soft and absorbent ones) are best used once and tossed: rags for the workshop, for changing the oil in your car, washing your car, used in the potting shed, or with your paints and clay in the art studio. And used for dropcloths when house painting, fiddling with the furnace or wiping up pet mistakes. You can use these too, to clean the mud off your dog or the little wet feet of your cats.
Some are good to keep for sewing materials, for making patches, for stuffing into quilt work, plush toys or pillows, or ripping up to braid into rag rugs. Soft fleeces can be made into reusable menstrual pads - there are lots of online patterns for this.
Old ripped and stained (but clean) towels and blankets are usually gladly accepted by animal shelters to clean, dry and make bedding for their charges. You can also ask about if they will take old sheets and pillowcases. I know I had a local thrift store that would save all the really old blankets and other bedding for the asking to people with pets. When my cat had a litter one summer, I was able to get a whole bundle of throw blankets to make a birthing nest and kitten bed.
Give your old clothes and bedding some thought before tossing in the trash as unusable! Remember that in some places in the world, even the lowliest discard will be used many times until the fibers are worn apart.
There are also books on Amazon for the creative-minded to transform old clothes into unique new garments: New From Old: How to Transform and Customize Your Clothes
and Rip It! How to Deconstruct and Reconstruct the Clothes of Your Dreams
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