Most folks will have a white elephant gift exchange before Christmas, but it always made more sense to me to have it after Christmas -- when you actually have gifts you want to exchange. For those who are unfamiliar with the white elephant concept, this is how it works.
Everyone brings a wrapped gift that's valued at a certain amount (in my experience, this is usually around $10). While one purpose behind the event might be to dispose of something you don't want to keep, you don't want to bring something you really wouldn't want to be stuck with yourself. (I used to participate in an annual gift exchange with a group that liked gag gifts. These definitely liven up the gift exchange, but it stinks to find yourself taking one of these home.) In fact, depending on how the game goes, you very well might be taking back exactly what you brought.
You drop off your gift in a pile with the other gifts, and you're given a random number from one to the number of participants in the exchange. This number dictates what order you will draw a gift in. The lower your number is, the earlier you get to select a gift. The catch is that, when it's your turn, you can choose to either open an unopened gift or steal a gift previously opened by someone else. However, so that the person with the highest number does have too much of an advantage, a limit is put on how many times a gift may be stolen -- usually two or three, depending on how many people are taking part in the exchange. Other endgame variations are also common, for example, allowing the person(s) with the first one or two numbers a chance to steal at the very end.
We happened to be in Thailand the week before Christmas, and a friend of mine from Bangkok told me why this exchange is called a "white elephant". As you probably guessed, white elephants -- which are more chalky grey than truly white -- are very rare. As a result, they are considered favorable portents and, in Thailand, automatically become property of the king. But at the end of the day, there's not really anything particularly special about a white elephant vis-a-vis a regular grey elephant. And depending on what you need the elephant for, a particular grey elephant may be even better than a particular white elephant. So a white elephant gift exchange merely recognizes the fact that one person's ordinary grey elephant may be another person's white elephant, and vice versa.
