While everyone is mentioning that the person buying it might need it at the lower price, I'd like to offer the reverse situation.
We always donate the items we no longer can use or need. However this year, DH was downsized and we were told he wasn't eligible for unemployment. We used all our savings, the credit cards <shudders>, and all of our tax return to survive and pay our bills on time & the $1500+ unexpected car repair. He has gone back to work, but we wiped out everything while he was looking and put ourselves in debt-not something we are happy or proud of, but the alternative of paying late bills and defaulting on a mortgage wasn't an option to us. There was no extra anything and lots of spaghetti dinners.
So instead of donating all of our items, I've been selling them on a local Mom-to Mom site (think of it like an online yard sale). The money I have made has paid for all the Christmas gifts (my kids and the 6 nieces and nephews I had to cover) plus a few extras that haven't been in the budget lately (like Thanksgiving dinner).
Every month around here is tight, the new job was a pay-cut, but we are just thankful he is working again. Unless we can pay cash, we go without and every cent is going to pay off the cc bills we accumulated while DH was looking for a new job. So if selling the clothes my kids have outgrown rather than donating them for the time being is what I have to do to give my kids a nice Christmas after the crummy year they have had, then that is what I'm going to do.