Well, a donation is basically a person giving a person, charitable cause, or fundraiser money in return for something. Nowadays, this is normally accomplished via fundraising websites. I've never actually done one for cosplay, because I think it's weird quite frankly. The only way I'd consider doing it would be if there was a set minimum donation, and for each donation level, the person who donated would receive something in return, like a print or something.
Does that help explain it any?