Pass through donation

To record a pass-through donation, @Playawest45, your club will have to create a bank deposit to receive the foundation donation.

But first, since this is a two-sided transaction, you'll have to record a transfer donation from the non-profit foundation by creating an expense or check. Here's how:

1. Head to Create + and then select Check/Expense.
2. Pick the bank or payment account from which the funds are coming.
3. Enter the Payee, Payment Date, and the Payment Method (Optional).
4. In the Category column, select an Asset or an Equity account to reflect the funds going out of the business.
   Please note that you can consult your accountant or tax authority to ensure the account selected is accurate.
5. Enter the amount from the Amount column.
6. Hit Save and close.

Then, switch to your non-profit club to enter a bank deposit to receive transferred funds. Kindly refer to the Receive transferred funds section in this article: Transfer funds between companies.

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Why would the donations be collected in Asset or Equity account? Seems the donation is liability as the money needs to be sent out. 

@Westknight 

As you surmised, the response from @Jovychris_A is incorrect.  You're correct that the donation should post to a liability account.  Set up an other current liability (OCL) account called "Due to Foundation" or whatever makes the most sense to you.  Then, post the deposit to the Due to Foundation OCL account.  Assign the same Due to Foundation OCL account to the payment made to the Foundation.  That will zero out the liability account and keep this off your Statement of Activities.

Missing something else. I created a bank called Foundation Donations. I changed the invoices Products and Services to donation that used the income account Foundation Donations bank. But the donations are showing up as negative number. How do I fix that?

I decided then to try passing the donations directly to a donation liability account. I modified the products and Services Donation to point to the donation liability account. Re-entered the donation in invoices. But the effect is to pass the amount of the invoice to donation liability account. Ok, if the donations were paid. 
But a problem if the donation is not paid because that amount shows in the donation liability account anyway. 

At least I no longer have negative numbers.  

Another Try.

Using Jovychris idea of bank deposit. Select the donation cause, change from liability and make that a bank (leave default of cash on hand). Go into the cause bank account. Delete the transaction so now has no money.

Go back to deposit details, select the transaction.  

Select the sales receipt and deposit the money to cause bank.

Get message must edit the deposit as it appears first.

Go to Chart of account and select Paypal balance.

Not able to delete the Orig Name Paypal to PayPal – 2

Going to the Paypal App.

If I select another Products and services category then the full amount including the merchant charge goes to that account. Have to leave as Paypal sales item.

Select the transaction Id and that kicks back to log into Paypal website.

Paypal by default puts the deposit in the general fund.

Under Sales transactions is the receipt.

Paypal fee is not in the product/Service.

Go to Products and Services.

Add Paypal fee. Select income account to be Paypal Fee expense.

Go to the All Sales and select the Sales Receipt. Change Service to donation cause  bank

Then to move the money out created an expense to move the money to the donation cause recipient