I think this is actually a good law. When a company loses a suit, the purpose of the suit is not just to penalize the company, but also to provide relief to those who were wronged by the company's actions. Therefor, the money from the suit should be designated for the victims, and in the case of penalties imposed by the Federal Gov't, to the US Treasury (so as to offset the costs of the gov't in pursuing the case). If the victims so choose, they are welcome to request that their portion of the settlement be donated to a charity, of their choosing, but the gov't shouldn't get to divert funds to charities on some list. And allowing the violating company to reduce their total penalty just be donating, that defeats the purpose of penalizing them!