very cute    I love it 

Another question... Would they want wash cloths and hand towels as well?

Also not a craft, and like magdalen's idea:
You can donate any to the local SPCA, ASPCA, RSPCA, etc.
Volunteering in a shelter myself, I happen to know that they always need new towels, blankets, etc. They'd be very much appreciated there, too.

So.. do they care if they are old and shabby? We have a lot that are stained or bleached.. so I'm sure I could donate those and still have a couple left over for rags and fillers for hot pads.

Thanks for the ideas

Perhaps you could paint them or cover with fabric or resin and screw them on the wall in the babies room to use as small shelves or like shadow boxes.

Let us know what you decide 

We have a ton of old towels, a lot of them we got after gramps passed away. Anyway, some of them have holes in them, most of them are fraying and old. I hate to just throw them away and I know there has to be something I can do with them..

I appreciate your ideas! 

HAHAHAHHAHAHAHAHA

I never want to see this again!
 
HA

very cute, but you need to take more pictures!

That is great! And your baby fits in there so well. Good job!

That is way cute, I love it!!!!

Thank you