Northumberland County Council is considering whether to subsidise its income by selling clothing collected in bins on 44 collection sites on council property instead of handing it over to charities.
The council carried out a market-testing exercise last year with charities and private companies that use the collection banks in its area and found that it could generate £300,000 a year through the sale of items donated to the 44 collection sites in the county.
Ian Lindley, executive member responsible for waste management at the council, said it was facing unprecedented financial challenges.
"We have looked at ways of maximising income, and one potential source that has been identified is sale of materials at these banks," he said.
Lindley said the council would make a final decision on the proposal when it met to set its budget for 2011/12 on 28 February.
Mike Lucas, retail director for the British Heart Foundation, said it benefited from clothing collected in 15 bins on council sites in Northumberland.
"BHF shops sell 80,000 items every day - stock really is the lifeblood of our business," he said. "We can only hope that Northumberland County Council continues to support the nation’s heart charity."
A spokesman for Oxfam said it did not know any other examples of councils doing this, but an increasing number were charging for the use of sites where there were collection banks.
"Increasingly we are seeing local councils put out to tender the right to have a clothing donations bank on a site," he said. "It happens quite a bit, but increasingly so over the past year."
A spokesman for the Local Government Association said the severe and front-loaded government cuts to council funding meant that town halls were having to make savings across the board.
"This will inevitably have an impact on the wider, non-statutory community projects councils have helped pay for in the past or schemes where charities have in effect been subsidised," he said.
"Decisions to reduce support to the third sector won’t be taken lightly and councils should rightly carry out full and frank consultations with affected groups."