My guild does one of these sales every year; I think our leftovers go to a local charity shop that specializes in re-selling things like fabric and yarn. The shop helps support the local senior center.
It's a fun sale, fabric is $2/lb which is sooo cheap. I pick up a lot of scraps for my crazy quilts, and some yardage too. This year I bought something like 13 yards of fabric in pieces 1-yard or more, plus a couple more yards worth of scraps and paid $10. Score!!! (Not that I needed any of it at all, but at those prices I couldn't resist!)