'Recycle' or Reuse?

So, I've had this question floating around my head for, like, forever.
Is it better/more ethical to modify a possession you have to make it more useful/pleasing to you, or to donate it to charity? (For example, reconstructing t-shirts vs. giving them to Goodwill.)

I'm having trouble deciding.

• I need to pare down, but I don't want to get rid of things that I could use and then find myself replacing them in a few months.
• I don't get a tax break for donations, but my mom and dad do, so I give them my stuff to donate along with theirs, but we're not talking anything more valuable than a few old cotton sweaters and t-shirts.
• I want to alter some clothes to make them more like things I like (v-necks instead of crews, for example), but I'd hate to cut them all up and then decide I don't like them, but now they're not good enough to donate.

I'm overthinking this, so I decided to post it and let you do the work instead!
(I also emailed it to Unclutterer.com, so if I hear anything from them, I'll post/link it.)