I have had to learn many gracious and some not-so-nice ways to decline work offered to me. Also, once people start getting quoted prices, their perceived value also changes. Basically I say something like "I appreciate your faith in me, but this is just not what I do and I would not feel comfortable being responsible for it". And then I refer them, like you are doing. If you do have a local guild or local quilt store, either places could be a good for starting point getting referrals. If that is harder to find, you might see about local long-arm quilters, many of whom do offer other sewing services or maybe know people who do.
A lot depends on the quilt pattern and what stage it is in. There's a difference between a great big bag of hexagons and a completed top that "just" needs to be quilted. I have completed some UFOs just for fun. There are some that are simply no fun at all...
I would also have a discussion with the friend on the desired quality of finish/desired goal of the finished quilt and give them some sort of idea on how many hours/how long it would take to finish the project -- like the rough going rate in your area for the machine or hand quilting.