One of my favorite holiday projects is to donate toys at Christmas time. I stock up when Target clearances toys up to 90% off. From the photo you can see I picked up the Glee board game, Anything Goes game and more.
The LEGOs I got a few weeks ago. They were 90% off and were located in the check-out lanes.
I am donating them to our local city hall, who distributes the toys. Other good places to donate are the local school or Toys for Tots.
I also highly recommend checking out Angel Tree, if you have toys to donate. It works a little differently though because you pick out an angel from the tree and each child requests specific toys and clothing items.