I am a coordinator for Project Linus and appreciate your concerns as kiddiewinks pick up nasty smells soooooo quickly. I would suggest leaving the fabrics outdoors on a washing line overnight, the colder the better, doesn't matter if it rains, and then put them in a cold rinse and dry. Works a treat, "tip" if you want to get back the fluffiness on your towels leave them out overnight when there is a frost forecast, wow what results.

I find that with my thrift store finds. Many times a thrift store will get a ton of fabric from someone who has passed. Occasionally that fabric can smell musty. Being the frugal person I am I usually grab the fabric and I will wash in vinegar/laundry detergent and that takes care of it. I agree hanging on the clothes line outdoors works wonders but for those of us in the chilly winter climates that is not an option.

My sense of smell is not all that great. Hard to believe dogs and cats have a great sense of smell when they almost touch whatever they are smelling.
In the summer I keep the hanging bags of moisture absorber in the closet that has my fabric in it.
I pre-wash all my fabric and wash all finished quilts. I use fabric softner also.
I don't donate to any kid outfits. They seem too picky for my time and efforts.

First: I thought quilts should never be in plastic for long term storage. Use cloth covers, as in old pillowcases.

Second: I don't think dogs or cats care about bad smells. They might like it better that way.

Third: Yes, you can hang clothes on the line in the cold. Have you heard how the dryer was invented? A woman in North Dakota (or maybe it was South) was sick and didn't want to go outside to hang up the clothes. There was no question. Clothes went outside, windy or not. She asked her 12 year old son to do it. He did it, and said, "There's gotta be a better way." His mother was able to use the dryer he invented before she died.
The clothes come in stiff as a board, but smell heavenly.

Despite all the suggested remedies for old fabric sometimes the best thing is to dispose of it. If you wouldn't use the fabric for a quilt for yourself or a loved one I don't think you should you it for a charity quilt.

Actually rainwater really helps with the smell. It's just that we look goofy hanging fabric with a slicker on!

I agree whole heartedly. Trying all the recommended washings, rinsings and airings, if there is still a bit of odor, I wouldn't use it.

Smelly Fabric
 

When I have smelly fabric from various reasons, I hang it on the clothesline. A few hours in the sun will help more than chemicals. Winter is challenging though. Pick your best weather and sunny day.
I do it year round. Today it rained. Maybe tomorrow will be better.

I agree!. If you have to go to these lengths to get smells out of fabric, please don't donate it for use by children. There are people who make quilts for homeless people called "ugly quilts". Adults living on the street or under bridges could actually use anything to keep warm. That is if you can stand the odors while working on the fabric. As someone else said here, all fabric can't be saved. Your heart is in the right place:)

I'm super-sensitive to odors, and vinegar will remove a musty odor from fabrics, and will eventually remove cigarette smoke, too. Put additional vinegar (1/2 cup) in the rinse cycle, too. It will evaporate in the dryer.

Airing out helps a lot, too. We leave stinky stuff in our garage as long as possible.