The whole framing of this question is wrong. It isn't clear what location you are in, but in my city I don't think you could find a $500 meal.
First - The limit depends on the donor. If the donor just gave $10 million to the charity than a $500 lunch should be fine. If the donor just gave a $100 then the lunch is a loser.
Second - How was the invitation extended? The invitation should set the expectations. Perhaps you could offer choice between several restaurants with a specific meal at each. Or perhaps a single restaurant with 3 choices. A price range is another option. I entertained a lot many years ago and a large unexpected lunch bill would have had my boss blow his stack. I typically ordered first to set a unspoken price range on the meal. Something mid-range.
Third - It is unclear who you are in this charity and why you are doing the entertaining. Is this just a "thank you" lunch, or were you to to discuss some specific ideas about the charity?
Fourth - I'd be inclined to indicate on the invitation that alcoholic drinks were not included, especially if you and the donor would be driving to the restaurant. Drunk driving is a significant problem in the US. You don't want charity in a legal mess where the donor got drunk and had a serious accident after the meal. (This may not make the overall meal cheaper. My experience was that we either ate or drank about $100 each.)
So all in all the charity's policy for such meals needs to be more carefully thought out. But all in all I can't imagine that a serious donor, that is who believes in some cause, wants to see all the donated money spent on entertainment.