This one's not completely free, but it doesn't break the bank, and it's one of my absolute favorite family activities.
Jaaxx and I gather up the two kids and head to the bookstore or library, pick out something brand-new to read (or sometimes we're already reading on something) and hit the local coffee shop. We choose a nice spot on the patio, and the kids and I settle in with our reading materials while Jaaxx orders coffee for the grownups and hot chocolate for the kiddos.
Going to the coffee shop may not sound thrilling, but we always have such a good time. There's the change of scenery, people watching, and warm sunshine. There is the little rush that we all get from just having picked out a brand new book or magazine to dig into. There's the sharing and conversation between the whole family that always ends up happening. One of us will read something interesting and share, or one of the kids will have a question about something they read, or something interesting will happen around us.
A free variation on this would be to take a big thermos of beverage, some cups, and reading materials from the library to a public space like a park or court yard. In fact, our library itself has benches outside that would do the trick.
For more cheap summer fun, see my earlier post: Mom, I'm Bored: Free Summer Entertainment