Let them pay you and then you can donate it to some needy charity.

Well, if you presented the quilt as a birthday or Christmas gift, would they still insist on paying?

Offer maybe to let them pay for the fabric you buy - you could give them the receipt - for the fabric, batting and back. Your assembly and quilting could be your act of love.

Donate any money that is gifted to you for the quilt to your Church, or charity of your choice. this way you are help more then just your friends.

Could you ask them to "pay it forward"?

Lots of good ideas here. A gift certificate from your local pizza shop or restaurant - or some place you like to go would be nice. Definitely accept the offer to pay you in some way.

This is always a personal quandry. When I made my very first quilt I asked a lady in my quilting class if she would quilt it for me. She did and when I asked how much I owed her, she said "Nothing" and, much to my dismay, ran out my front door. For weeks I asked her at each class to let me pay her or at least treat her to lunch. She always said she was too busy or was going to be out of town. After 5 months I finally told her that apparently she didn't want to be in my presence so I wasn't going to ask again. I guess some people just don't know how to gracefully accept a "thank you."

I would take any money & donate it to the heart association.

Just put a price tag on it for the cost of fabric & maybe an extra $10.00 bucks. Just let them know that is your price for that type of quilt. If they insist on paying more then except it gracefully & invite them out to lunch a few weeks later at your expense.

Sometimes it is Receiving that we Give. By accepting payment you may be giving them more pleasure than you know. If it bothers you to have the money make a quilt to donate there are many great causes or start one of your own. I have a friend that donates a quilt to a school here grandchildren used to go to. The school if very appreciative and it gives my friend great pleasure and the money from the raffle helps the school. There are always the Linus project, soldiers etc that gratfully accept quilts.
Good luck in finding a solution that is good for everyone.