We rotate toys that way DD doesn't hve so many out at once and I get to "give her new toys" at appropiate times through the year as we see how she plays we give away toys shes seems to ingnore or outgrow (somone will use them) or ones we deem inappropiate. She got 11 gifts this year
2 will be put away and used during her homeschool studies because of the excess parts and the messiness [play doh set and counting game]
another will be used just with us at least untill she understands how to use it better [storybook player]
from the 7 remainding
3 will probably become perment toys untill she out grows them [play food and kitchen pots pans and dishes]
the remaining 4 will rotate with her current ones we kept for her. ones she really likes stays out longer. so far this has worked very well for us.
I moved away from battery operated toys and was trying for a more "waldorf inspired" house. I had no problem sending my parents websites for toys, suggesting what the children would want/need. I did this with my inlaws, too. Both sides also know my kids LOOOVE books and if they want to buy lots of something, make it books! And they have known for years that we don't want them giving tons of gifts on holidays/birthdays.
They have always been very understanding about it (and we have been understanding of them, too). Last year my MIL asked specifically what she should get the kids and this year my mom did too (she has been the most resistent to battery free/old fashioned type toys for her grandkids- she looves the bells and whistles and Disney, etc!). My sister even bought the kids a wooden zoo animals set instead of like last year where she bought the noisiest toy of all for my son.
As far as I know, they appreciated the communication. I know they would not like knowing their gifts were donated or returned. They spent the time and put thought and money into buying them and I know they would want to buy something that was appreciated by everyone. Just my thoughts on it.