First of all please explain to your DD and BFF that it brings you pleasure and therefore is not a waste of time. If she still doesn't get it, maybe explain in terms of food. We prefer to eat stuff that we like the flavor of. Otherwise we would just eat for only sustenance. Does this make sense? If eating certain things simply bring us pleasure as well as nutrition, well then, why aren't we all eating gruel with tofu (or something equally void of flavor but nutritious) for every meal? If a thing brings us pleasure or a measure of happiness it is NOT, IMHO a waste of time (nor money).
Quilting is my passion as well and I would not give it up because someone, even someone I loved dearly, thought it was a waste of time and money. Something that brings pleasure, contentment, a sense of self worth and accomplishment does indeed have value and is not a waste of time.
As far as there being a "glut" of quilts in the charity market, I sincerely doubt this. There are calls everywhere for quilt donations. Quilts for Kids, Quilts of Valor, our very own Green Fairy collects quilts every year for orphans in Romania and all it takes is a look at her blog to see how much they are needed and appreciated. Homeless shelters, Churches, Guilds, Women's shelters and countless other organizations can all attest to there being a need. You can also give quilts to friends.