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Friends Donations Collected Through Library Programs

A community member hosts a “free with donation” yoga class at our library, and attendees are encouraged to make a donation each class. These donations are collected by the yoga instructor who hands them to the circulation assistant and identifies it as a donation to the Friends of the Library organization. She keeps her receipts and totals the money each year, claiming these donations on her taxes as her contribution to a 501(c)3 organization (the Friends of the Library).

So my question is, does this constitute as fraud in any way? If so, will this be problematic for the yoga instructor, the Friends of the Library, or the Library itself (municipality) for hosting the event? They are collecting money from other people for providing a service and claiming all the donations collected as their own for a tax write off.

Any guidance on this will be appreciated! Perhaps a simple solution would be to re-word how this is done, saying that donations to the yoga instructor will be made to the yoga instructor and not advertised as a fundraiser for the Friends.

Thank you!