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Municipal Friends Group Accepting Donations

[This question about Friends of the Library and $$$ is from a municipal public library]

We have a newly re-organized Friends group that does not have 501(c)(3) status but would like to accept donations. I know that the library can act as a pass-through for grants but I was wondering if this also applies to undesignated monetary donations?

Friends of the Library not being friendly

Is it legal for a Friends of the Library group to hold their funds and not to use those funds to support the library's mission? OR refuse to pay for library program and services when ask by library staff?
Can they lose their 501c3 status, if it is proven that the funds are not being used to benefit the library?