I'm Jewish, so I grew up without Father Christmas IYSWIM. I found it difficult to believe that other children believed in him - it sounded scary, and I was quite glad not to have to deal with it. I think I only discovered about other kids' beliefs at about the time they were working out the truth, so I was never in a position where I might spoil it for them.
So I grew up, and married a non-Jew. He wanted to do stockings for the dc. I felt very uncomfortable. It felt like i would be telling my dc lies, and I don't like the idea of presents coming from nowhere and needing no thanks or acknowledgement. But then I realised that I would do the tooth fairy thing, so how would the FC thing be any different? And in any case, it was important to dh, his tradition, and one loaded with happy memories that he wanted to create for his dc.
So we compromised. We do stockings, and leave out mince pies and a drink, but we never threaten that FC comes only to good children. Also we point out to the dc that they get two lots of gifts: presents under the tree, that are from mummy and daddy and gran and grandad etc, as well as the little gifts that the Christmas fairy brings to all children, but that there are many children get no tree presents because, sadly, they have no parents to give them presents, or they are too poor to buy presents. So on Xmas Eve, when the dc hang up their stockings, they each choose a toy of their own to put in the stocking, together with a bag of homemade mince pies, for FC to take away with him and give to a child who hasn't got any tree presents.
It works for us. Dh and the dc have their happy tradition, my conscience us salved, and the dc get a chance to learn and practice a bit of altruism.