Well I think you could do both, You could give a donation in their name.
How does one do this? I usually write a check or give cash anonymously. Not sure how to give a donation in another person's name.
I think you would have to look at a particular charity's website but I know the one I dealt with provided us with cards and everything to give to the teachers.
Or I think you could do something on some nice holiday stationary saying that you gave in thier name.
I have seen some people here mention Heifer International, something about buying a goat or chickens for a family so they can provide for themselves.
http://www.heifer.org/site/c.edJRKQNiFiG/b.888097/
This site provides printable inserts.
I cant find anything on the Philabundance site but they usually send me something right before the holidays.
I would check with the charities you would like to do this for and see if they ahve anything available.