The Observer article is clear as mud in an opaque box.
As I understand it, a joint venture with the charities and the mayoral fund was established. The idea being that the charity raises money and the mayoral fund would provide them with an additional 10% as an incentive. The 10% raised was from conventional methods.
Doug Hays clearly doesn't agree with the idea. I, however, think it is great and has clearly produced a huge result, whilst remaining completely legal and doing everything within the rules.