Donations just look bad (case in point, TSR. We don't wanna beg, we'd rather link our users to relevant stuff - we're a music site and only have record label ads). True, it's not a conventional ad, but can you think of a better way of advertising a contest feature?
As for the privacy policy, hmm, possibly, but our audience don't strike me as the type to really care (our hits indicate not too many readers check out stuff like our FAQ, I can't see them reading a legal policy). Personally, the "blah blah blah" bit would endear me to the cause.