J.,
It's so nice you want to do something. My friend has been giving hand-me-downs to me for years...now our daughters, ages 13 (mine) and 17 (hers) are the same size, so no more hand-me-downs, but our friendship is close, give and take, and I never felt the need to do something specific re the clothes, since we do things for each others' families all the time. I also have given my son's clothes to her son, when they were very little, but as they are just 1 month apart (my son, the younger, being the taller one), that doesn't happen much anymore, other than with cleats, dress shoes, etc. I also hand down (or donate) all of my daughters' and sons' clothes, and I never expect anything in return. I just look at it as a cycle of friendship.
If you want to do something, I don't think you need to spend $$. This hand-me-down thing could go on for another decade. You don't want to feel like you have to buy something each time, and your friend might not want to continue giving hand-me-downs if you buy her something for them. (I would be very uncomfortable if I gave my kids' clothes to a friend or family, and in return I was getting presents.) I like the idea of reciprocating with your time. In essence, that's what my friend and I do, very informally. Her son mght spend a Saturday with us, my son might spend another Saturday with them, my friend's husband might take the boys to the movies, another time I might take the boys mini golfing, etc.
Good luck, and enjoy those clothes!