Someone wouldn't offer you a gift if they didn't think you were worth it. Rejecting it is awkward for you and the giver, unless you are incredibly selfish and like rejecting people that are trying to make you feel special.

Try to put at least the same amount of thought into your response as someone has put into offering you something they have worked for and are willing to share with you.

If someone offers me something I can't use or don't need, I say thank you and be honest with them by saying I appreciate you thinking of me, I can't use this but I know someone. Would you mind if I passed it on.

They don't feel rejected, they know I appreciate their thoughts and also know whatever they offered is going to someone who needs it.

I feel rejected.
I feel it is rude to reject a gift