Go through drawers, closets and jewelry boxes, etc. Find things that are clean, in great condition and give them as gifts.
Decorate paper bags, boxes with homemade designs or get gift boxes at dollar store.
We have had similar parties like this for years. We call them White Elephant Auctions. No money changes hands, but we all vie for the best (or worst) of the items and have a lot of laughs and a great time! The really awful ones are frequently displayed like trophies or recycled as gag gifts. One memorable one - a stuffed bird - has been gifted back and forth for years - to gales of laughter.
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