My daughter wanted to take a couple of her friends to a local pizza/arcade place. Kind of like a Chucky Cheese. If this is something your sister may like and there is a Chucky Cheese is your area, you can go to the CC site and sign her up on their birthday list with your email. You will get an email with offers (coupons) to make a good time there affordable.
What are her interests, and what kind of a kid is she? Is she shy, outgoing, does she have lots of casual friends or just one or two close ones? Match the party and activities to her style.
If she's more on the shy side, invite her close friends to join you doing something cool that she/they have never done before. Attending a live concert or a play, going to a rock-climbing gym.. something that matches her tastes and interests. You might also look into contra dancing, which is great fun, family-friendly, and has terriffic live music and a welcoming community.
If she's the outgoing type, with tons of BFFs, a party that engages the kids, gives them choices and makes them think can be a lot of fun. Have the food be "make your own." Think tacos, or burgers with lots of different toppings. They can all make their own sundaes for dessert. Most 12-year olds will never have done a scavenger hunt before, and there's no boy/girl awkardness if you randomly assign teammates by picking names out of a hat. That also avoids the "nobody wants me on their team" misery. Give prizes for things like most items found, the largest number of low-hidden or high-hidden items, the most red items, etc. You can also get them playing charades, another fun, old-fashioned game they've probably never heard of.
Another possibility for a big party would be something unusual and educational. As an example, a friend of mine is a reptile educator - she brings her animals to birthday parties and schools, talks about them, lets people handle the animals, and so on. Kids love it, especially the ones who start out afraid of snakes - they often end up leaving the party wanting one of their own. If your sister likes the idea, see what's available in your area.
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