Keep on Giving

We found out we were pregnant in September.  I felt sure it would be a boy but to my surprise I received a 2nd beautiful daughter.  One problem - I'd decided without much deliberation that we wouldn't have anymore children.  I have a son from my first marriage who's nearly 10 years older than our daughter.  So, considering that and the time that my husband and I actually spend together per day (at the time we only saw each other on weekends because he worked an odd version of 2nd shift and I worked 1st and 3rd)
After deciding that we wouldn't have any more children I'd starting selling all our daughters clothes and toys at yard sales - COME AND GET IT.. $.10 EACH OR A BAG FOR $1.   Needless to say... I sold alot!
When we found out that we were having a girl we let friends know that I'd gotten rid of the clothes from LuLu's first year.  Our friends were sooo sweet!  Everywhere we looked friends had daughters that had grown out of their clothes!  So bags of clothes started showing up left and right!
At Christmas we went to Hubby's bio-mom's house... She said she had gotten some clothes for the baby and LuLu.  When we got there she brought out a few boxes.  She mentioned where the boxes came from but I didn't recognize so I didn't give it much thought.  One box had nothing but baby boy clothes in it.  (this was before we found out we were having a girl, so no biggie...)  The second and third boxes both had clothes of varying sizes; 5T, 6, 10, 12, etc.  Our daughter was in a 4T at Christmas. She seemed so happy to be able to "hand" us a box of clothes that I really couldn't say anything to her. 
I get these boxes home and start to go through them to rewash (cause that's what I do) and sort them.  Not only are the sizes all out of sorts, but the clothes are too.  Some of the clothes were for boys... some were for girls.  Some of the clothes had tags... some had been worn nearly threadbare.  I started wondering where the clothes had come from.  I asked Hubby.  He said it was a donation store for sheltered families and shut-ins... !! WHAT?!   So, let me get this straight... She's given me stuff that was sent in for people who have NOTHING?  This made me feel horrible.  I feel like I'm an accomplice to some sort of theft!  I don't want to accept these "gifts" if they were actually supposed to be donations. 
I understand feeling compelled to get your grandchildren something, but at the expense of others??   And how could anyone really not see it that way?  If she can't afford to give a boat load of things to them, why not give them one thing, or nothing... I know how about trying to be a better grandparent to her grandchildren than she was mother to her son... because from what I hear that left quite a bit to be desired. 
She's continued to give us "gifts" of clothing since then.  They are the same.  Clothes that are much too big or too little for one daughter or the other.   She's been told that she doesn't need to get the kids anything, but she persists.  I've even expressed how we're running out of room because of the clothes that everyone is giving us.  The ones the girls can wear AND the ones that even the oldest of the girls has to wait 2 or 3 more years to wear.  She literally pouted the last time I said something about it... pouted!
So, what am I to do?  Just smile and make her happy... keep my mouth shut, take the clothes, wash, separate, and store them for the next 2 or 3 years until they can wear them?  Or remind her every time she gives them a box clothes that we don't have room for them?  What would you do?

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