Donald Sterling -- Playing Santa Claus ... IN THA HOOD!!

The "Miracle on 34th Street" has got nothing on this -- Donald Sterling in Watts playing Santa Claus at a charity event with the word "projects" in the title! What could possibly go wrong?

TMZ Sports has learned the disgraced ex-owner of the Clippers will be in the middle of the Watts Housing Projects on Saturday handing out tons of gifts to kids at the 9th annual Chrismukkah Soirée "Party in the Projects."

We're told Donald reached out to Youth Mentoring Kids -- the group organizing the event -- and said he wanted to show up with a sleigh (more likely a Rolls-Royce) filled with toys ... and they accepted.

Sterling's blatant attempt to makeover his image in the black community isn't fooling anyone -- but at least underprivileged kids will benefit.