As I noted before, too ... the OP doesn't say that the children ever asked for the bracelets, just that they admired them. I can imagine the parents being reluctant to contradict the Sister on what was her decision. After all, it's not their place to tell her she's being rude or that she shouldn't give them away ... they're her property; she can do whatever she wants.
This is all on Sister.
If the kids asked, I'd feel differently. As a parent, I imagine I'd have swooped in and said, "Oh, no, we don't do that!"