We all get together and bring bags of clothes we no longer wear. Sometimes we also have swaps for things like (unused) makeup and accessories and home items. We sit in a circle and dump a few bags at a time in the middle of the circle and everyone pretty much just has a free-for-all. I'm sure there are more organized ways to do this, but it works for us and no one has punched anyone else in the face yet. Once everyone has picked through that set, we go through the remainder one at a time to make sure no one missed anything then move onto the next bags. Whatever is left at the end gets donated.
It's a really great way to clean out your closet and get new stuff at the same time. It doesn't really do too much to solve my overflowing closet conundrum though. But at least I have cuter stuff to wear! Have you ever had a swap party?