I spent the weekend doing a massive purge/organization of our apartment. I have lots of kids' clothes to get rid of! For the clothes that have been worn a lot, I just sell them in a big bag for super cheap on my parenting listserv. For nicer items that are in great condition, I sell on the Hellobee classifieds!
Most of my friends' kids are around the same age so I don't really pass things down to family/friends.
What about you?