My 4 year old came home from a birthday party the other day with a loot-bag that save for one small trinket, contained solely candy.
4 year olds are thrilled with anything. You could put coloured popsicle sticks and cotton balls in a loot bag and they'd be happy - why do you need to send home sugar?
For guests of our daughters we generally raid our local dollar store and buy things like little fairy skirts, wooden puzzles or cars that can be put together and painted with parents, felt doorknockers where we included lettering for kids' names, small dolls, stickers, beading kits for personalized bracelets, pirate hats, squishy balls and play-doh.
Thankfully, my loot bag manifesto is a short one:
I hereby proclaim that an enlightened loot bag contains no candy!