Donald Sterling -- It's Scary Being Santa in Tha Hood ... Backs Out of Toy Drive

Donald Sterling pulled out of a charity toy drive in Watts Saturday night ... because his security team feared for his safety in the hood with racial tensions running so high across the country.

TMZ Sports broke the story -- Sterling was scheduled to show up for something called the Chrismukkah Soiree "Party in the Projects." But a rep for the ex-owner of the Clippers tells us he abruptly canceled after we posted the story.

Apparently, Sterling wanted his appearance to be a surprise. We're told his security team was worried too many people knew where he was going to be -- and considering his track record with the black community ... things could go south quickly.

Donald's rep says he still donated a sedan-full of toys during a Friday night event held in a much more ... Sterling-safe environment -- Beverly Hills.

L.A. City Councilman Joe Buscaino -- who reps Watts -- probably didn't help matters by coming on TMZ Live, and demanding Sterling stay away ... unless he's ready to donate much more than toys.