It's a bit rude: one organisation (the local KH) collecting money for a specific project the donor is interested in, but then passing the funds to another organisation to do other projects anywhere.
It'd be kind of like signing up for one of those programs to sponsor a child in the third world and getting all exited you're going to see the results of that sponsorship, just to be told your money has been taken from that child and put into a fund to be used to help someone somewhere one day.
Probably legal, depending on the circumstances and local laws, but alienating for donors with self-respect.