You're right that someone who is receiving Medicaid medical coveragemay have only about $2,000 in assets (not counting a home, car and some personal property). The same is also true for SSI eligibility. But many people are unsure of the rules regarding Medicaid and giving assets away. While there are restrictions on giving away assets, even to charity, if Medicaid is paying for nursing home care, there are no such asset-giveaway rules regarding Medicaid coverage for regular nonresidential medical care. Since the person you're guardian for is paying for her own foster care room and board, it sounds like she only has Medicaid coverage for medical care, and that Medicaid is not paying for her residence. If that's the case, then she may make charitable donations "“ or spend her money in any other way, including on things for herself "“ in order to keep her assets under the allowable Medicaid limit. As long as she does not keep cash assets of over the state's allowable asset limit for Medicaid medical care coverage, Medicaid will not concern itself with where that money goes.
One final word of caution. As guardian, you are required to handle her finances in a way that benefits her. Giving away or spending a small amount every few months in order to keep her on Medicaid is certainly of benefit to her. But how and where you spend that money is also an important issue. If she would like the money to go to this particular charity, or if she can no longer make these kinds of decisions but you know that she gave to this charity in the past, then these donations are probably a legitimate way to spend her extra cash. However, if this particular charity is your choice rather than hers, then perhaps you should consider finding ways to spend the money for her personal comfort or benefit rather than giving it away as a donation.