The gift is not the issue; rather, the issue is whether you plan on telling her the truth or not.
In some cases, with dementia patients, residents may hold onto certain ideas and not comprehend the complexity of their situation. My mother, for example, after being in a nursing home for nearly three years, told me that when and if her older sister, who shared a room with her, passed away, she would be ready to come home. At that point, Mom was completely dependent on caregivers for daily needs: medication; meal preparation; showering and more.
Frankly, no gift will soften the blow if someone who wants to go home cannot. I suggest that you visit her frequently and show compassion and understanding. Your kindness to her will go a long way. Bring fresh flowers and spend time with her while arranging them in a vase. Help organize her clothes into outfits (pants and blouses together with socks) in the drawers. Make sure she has all the essential toiletries she needs. Take her to activities like in-house musical performances and sit with her. Most of all, reassure her of your love and concern for her safety and health.