Rookie Moms Heather and Whitney explain how to host a clothing swap, in which you exchange all of your perfectly-usable-but-boring clothes for fabulously stylish duds. The magic is that somehow your boring stuff looks wonderful on someone else, everything's free, and everyone has a good time.
Heather and Whitney describe an adult-only event, but obviously this would go down well for kid clothes too. Yes? My post about preparing used clothes for resale will help you get ready (especially that stain-removing tip). If you include toys or gear in the swap, give 'em a once-over with a Magic Eraser before the big day (thanks for the suggestion, Kelly Jeanie).
Related: Avoiding bed bugs in used clothing