The Wall Street Journal has a nice piece called "Charity, Beautifully Disguised".

Here in Israel this is fairly common in most religious neighborhoods, and is known as the clothing gemach. Some charge a token fee, 2 or 3 NIS per clothing item, while others are free.

From the WSJ:

From that modest start grew Bobbie's Place, a Brooklyn children's clothing store that is conventional in every way but one—all the merchandise is free. Bobbie's Place serves about 8,500 poor children, many of whose parents are recent émigrés from the former Soviet Union, as well as from Israel, Egypt, Syria and Iran. Ms. Schick said her customers that evening included a teacher who was bringing in a child whose father had committed suicide. Another family had suffered a fire the previous week. "And there are a lot of single moms," she said.

"It looks and operates like a really nice store," said Mr. Schick, an attorney with the law firm of SNR Denton and chairman of the Lower Manhattan Development Corp. "The goal is that it never screams or even whispers charity."

It's almost a stage set: A sign on the frosted-glass front door says, "Welcome to Bobbie's Place." The shelves and racks are well stocked with brand-new merchandise. There are signs addressed to "Bobbie's Place shoppers," and changing rooms where one is given a number tag, like at the Gap, to keep track of the garments they're taking to try on. There's also a computerized checkout system that tallies children's purchases, and a telephone-answering system that greets callers in Persian, Russian, Hebrew and English.

"Whenever I'm shopping," said Ms. Schick of places such as DSW—Designer Shoe Warehouse—and who happily admits the store has overtaken her life, "I'm looking for what makes the experience easier.

"I have a master's in library science I'll use someday," she went on, only slightly wistfully. "And I'm raising five beautiful kids. Sometimes the laundry doesn't get done…but this gets done."

The Schicks' children also work at the store. On a recent evening Estie, 17, was studying for an upcoming Spanish exam while manning the changing rooms. She said the experience has changed her attitude about how much stuff one person needs.

"It's very important to have something to make you feel good about yourself," she said. "But it doesn't have to be a new wardrobe every season."

Bobbie is Yiddish for grandmother, and the store was inspired by the memory of Mr. Schick's grandmother, Renee, a Hungarian immigrant who came to the U.S. during the 1920s, faced hard times and started Schick's Bakery, which still exists in Borough Park, Brooklyn, even though it's no longer owned by the family. Renee Schick died in 1998 and the store also serves as a focal point for her 17 grandchildren, most of whom are involved with Bobbie's Place in one way or another, Mr. Schick said.

To qualify to "shop" at Bobbie's, there's a vetting process: Clients are interviewed over the phone, and the interview is followed up with a call to a social worker or clergy member who can vouch for their need. Once accepted, they're allowed to shop for their children four times a year, in each season, the store most crowded around the Jewish holidays, when the desire for a new suit or dress is most pressing.

The delight of the store, from a kid's point of view, it would seem, is that it carries more than just suits and dresses. There are lots of items that are usually the preserve of families with disposable income—Wall-E undies, children's watches. "They're selling toys, too," one child shouted to his mother.

Bobbie's Place is funded by foundations, friends and family, and costs around $650,000 a year to run; fund-raising, Mr. Schick sighed, is "a beast of a job," especially given the economy—with need soaring, and the manufacturers themselves feeling pinched.

None of the merchandise is donated; it's all bought, if only at a fraction of the retail price. "I'm not a shy guy," said Mr. Schick, who served as a deputy New York state attorney general under Eliot Spitzer, and as president of the Empire State Development Corp. "I'd go to manufacturers and make the case, but it's difficult to get them to part with merchandise in the quantity and sizes you need. But if you have a little bit of money and say, 'I can't pay you what you charge; I can't even pay you what it cost you,' you'll do much better.'"

One customer, Bella, who emigrated from Israel 22 years ago and works for an oral surgeon, said Bobbie's Place has been a godsend since the family fell on hard times after her husband's open-heart surgery. "I was desperate for clothes for my kids," she said, referring to Daniella, 14, Schlomo, 7, and Hodaya, 3, who were with her the evening I visited the store. "Without them," she added, "I don't know where I'd go.

"They love it," Bella, who asked that her last name not be used, added. "They ask me, 'When are we coming to Bobbie's Place?'"

The store also offers local teenagers—Bobbies is staffed by 40 volunteers—an opportunity to perform community service. There were perhaps a dozen girls wearing the almost identical long skirts and button-down cotton shirts of their religious schools tagging merchandise in the back of the store while singing Beatles tunes.

"You're with everybody and everybody is working together for a good cause," explained Dini Hoffman.

"You have a feeling of accomplishment," added Tzipori Weinberger.

Nonetheless, the teenagers remain unseen by the customers. "They come and go through the back," Ms. Schick explained. "Sometimes their classmates are coming through the front."

It's nice to see such a kindness be recognized.