how to challenge a 5 year old

Before anything else, encourage her to ask questions!
If you can't answer then show her the 'finding out' process.
Don't get stuck in academic mode - introduce art/craft work which is an excellent way to give one-to-one attention and encourage communication and social skills too.

Get her out of doors. There's so much to learn in nature and in towns.

I watched four of my grandchildren 5, 6, 7 and 10) trying to uproot an ash sapling (in my garden) which I'd asked them to pull out. It was very narrow but about 8' tall and very bendy. They rocked and pulled it back and forward in an attempt to uproot it; then they bent it over level with the ground, all stood on it hoping it would snap, but it just sprang back upright. They tried twisting, sawing, digging it out.

It took almost an hour of ingenuity and team effort to eventually remove it by which time it was raining and they were wonderfully mad-splattered.

What they learned about the properties of materials, physical forces and other laws of physicals was beyond any book. And the amazement at the root structure when it was eventually uprooted was pure botany.

DS and DDIL take their DC on Scavenger Hunts:
www.pinterest.co.uk/explore/nature-scavenger-hunts/?lp=true
www.woodlandtrust.org.uk/naturedetectives/

Anya can you send them round to my garden please - ash saplings all over the place
(if not - any hints please? )

With pleasure. They will expect feeding afterwards though!

Plenty of food here - and hot water for showers/baths!

Reading to her, her reading to you.

Usually they're specially bright in one area, and weak in another ( mostly social.)
From the very bright children that I've come across their main need is to be encouraged/helped to inter-react socially.
As well as that, reading. And learn to play a musical instrument. Or taking apart old machines, electric gadgets etc.
I'm against making a big thing about it. Don't treat them as if they're superior/ different from others.

let her lead,I dont think hothousing kids is a good thing .If she is truly gifted it will show but remember many parents believe their kids are gifted and its not always the case...think the awful x factor auditions etc.

Im not sure how you tell if a 5 year old is "gifted academically". There are plenty of children of that age with amazing vocabulary, sophisticated language skills, who can memorise all sorts of trivia or gifted with numbers etc. I agree with others above, don't try to hothouse - remember those programs about the tiger mother who forced her children to do music practice, learn loads of languages, do extra tuition etc for hours every night. They never got a chance to be children and I read some follow up where they refused to go along with the mother's schedule and one ended up making adverts and I can't remember what the other one did but it wasn't some high flying profession.

Oh dear - how I hate the word stretched in relation to bright children. What does this mean? Just answer their questions, follow their lead and above all else encourage them to have fun with their peers.

I have a GS of 8 whom his friends call The Prof, because he has a brain like a planet - but no-one is trying to "stretch" him or making a big deal out of it - school has him free-reading, and he works at his pace in each subject; and they encourage his myriad interests. His parents were determined that he would go to the village school and muck in, rather than the posh city private school - I am sure their decision is the right one. He is a great little chap; and always helpful to a classmate who is struggling.

Lots of books at home; and the ability to look stuff up on the net. He has a dyslexic mother, who always jokes that she has no idea where his brains came from.

No "hot housing" unless the child chooses it. I worry for those children who are pushed.
Think of what does happen in say childrens football teams where the organisers feel they need to ban the parents from the touch line as the parents are so pushy and upset the children.

You don't..... You let the child be a child. Just make sure the child has toys to build with, invent with and of course pencils, pens and crayons and lots of books. I brought up a very bright children..one with a exceptionally IQ. I have bright grandchildren as well. children learn through play.

I don't think you need do anything, just answer questions and provide books, paper and pencils. DD was like this at five and she used to write stories that were made into books. The school recognised her high IQ and she was enrolled at a Saturday school that allowed her to mix with like minded children. DD is very musical and we commenced piano lessons as soon as she turned six, a child's brain is like a sponge.

Offer opportunities, not challenges.

I am intrigued by the fact that this is your DS's Godchild - what do her parents think and have they asked for advice?

As her Godfather, should he be more concerned with her spiritual welfare and leave her academic opportunities to the parents themselves?

Five is far too young to start making judgements. Just give them opportunities to explore anything that takes their interest.

Anya, we have two massive walnut trees that produce kilos of nuts. If we miss a few these dig in an produce saplings that are so difficult to dog out, even at 20cm!.

So plenty of opportunities for you DGCs to develop tree felling skills. Can feed them on vast quantities of courgettes, onions, potatoes and the odd egg. Large pool to clean up in! Ever heard of HelpX?!

Thanks for your suggestions. Don't think I explained myself very well! The family is very supportive. They are a very practically minded family and already do lots of activities with the child. They r a bit unsure how to foster her other abilities. They live quite a way from me otherwise I would gladly help more. They r happy to try out any suggestions.

Although he is the godfather this is not in any religious way. He would be the guardian should anything happen to her parents. God forbid.

I'm with mcem - Before anything else, encourage her to ask questions!

Encourage all kids to ask questions and then say 'what a great question' but never answer it as this can squash a child's interest in asking more - instead ask them where we might find the answer.

I was reminded of that terrible program on TV - Child Genius, I think it was called. The poor children competing were all exceptionally bright and gifted, but their pushy parents were abominable. One little chap said that his father would beat him if he didn't win!
What chance of a happy life do these children have? Better to be a contented Mr Average than a tormented genius.
I agree with previous posters. Let your bright little sparks flourish at their own pace. Love them, hug them and encourage them to be good and kind. If they are exceptional, they will make their own mark on the world with no more than your support and love.

I look after 2 primary school aged grandchildren for a week of every school holidays and the favourite activity is the craft box. It has all the usual stuff - paper, pens, crayons, paper plates, paints, glue, string, old mags to cut up, pipe cleaners, stickers, a special writing book each, sticky tape, scissors etc. They write cards and letters, make books, create an art gallery each time (string blu tacked to the bookcases and art work held up with pegs), beads for jewellery etc. We take picnics to the local parks and playgrounds and at the end of the week they go home happy and I sink into a chair with a large glass of wine and a big smile.

I remember going for a country walk with my DN when she was about 6. She had been given a children's book on identifying wild flowers etc and knew the names of every single one which we saw along the lanes. I don't think her parents pushed her in any direction, she just absorbed knowledge like a sponge.
Some places hold creative craft sessions for children in the holidays - my DGD have enjoyed going to these and really enjoy making cards, pictures, collages etc.

Simple musical instruments - you can buy sets with several different types to try, although my DGD have enjoyed making their own with rice in plastic jars etc. etc - and then devising and putting on a show for us!

www.pinterest.co.uk/maestroclassics/homemade-musical-instruments/?lp=true

Simple sewing - DGD made some hand puppets out of kits and then does a show for us occasionally too.
www.amazon.co.uk/Jungle-Animal-Hand-Puppet-Sewing/dp/B005NICB0G/ref=sr_1_3?ie=UTF8&qid=1502115127&sr=8-3&keywords=puppet+making+kit&tag=gransnetforum-21

Morgana - introduce the child to music - suggest she play an instrument - this will level her and give her a life-long hobby she can turn to when academic gets to her.