I give away most of the everyday wear clothes to friends. The nicer items I plan to sell on the Hellobee classifieds soon! But I also hold onto a lot of Charlie's clothes because Olive can wear them.
I saved all of Charlie's baby clothes in case we had another boy, but once we found out that Olive was a girl, I gave away almost all his clothes since they were very boy-ish and my mom had too much fun buying clothes for a girl. I'm a lot smarter about buying more gender neutral clothes now so both kids can wear them. Some things we'll be able to get 4 years of wear if they've remained in good condition!
What do you do with your LO's outgrown clothes?