The New York Daily News said the club was mulling whether to close one of its four sites in Harlem or cut back on sports and tutoring programs throughout the neighborhood.
Now, the non-profit won't have to do either, thanks to Combs' donation, the newspaper said.
The money will help pay for basketball games, math and reading tutors and gym classes for about 3,000 children.
"Being from Harlem, I heard they needed help, and I wanted to help," the hip-hop mogul told the Daily News. "[This] is something that I am proud to do."