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.
This sounds like a lovely service to both the library and community, so I am going to make this answer as positive as possible.
First, it is clear from the question that the instructor (a “community member”) is not a library employee. So, they are either doing this as a volunteer or as an independent contractor.