www.fabric.com does have organic fabric: "Organic Cotton Fabric
100% organic cotton, 60'' wide.
Organic cotton is grown in an environment where no pesticides, chemical fertilizers or herbicides have been used for a minimum of three years. Organic yarn spinners have set isolated processing areas in order to segregate the organic cotton from the conventional cotton. The dyeing and finishing of organic cottons also follows a strict procedure for chemical use in processing, eliminating all materials harmful to the body and the environment."
It is $12 per yard and they only have three colors!
If you use scraps that would be recycling!! I would think that being made by her godmother with lots of love would offset the fact that it isn't totally "green". Good luck.