While I have misgivings about raising tzdekah for this purpose (I think the money could have been put to better use, 1.6 Million is alot of money) but that is another issue
I dont think its a problem with tax deduction, You can give the yeshiva a donation and they are allowed to give bonuses to their employees for any reason , sort of like you are allowed to give the yeshiva a donation and they are allowed to pay salaries with the money, they can give a bonus and the employee can do what they want with the money, pay rent or pay for a wedding