I have donated 1000 GRC to PrimeGrid back in March 2016 (when they started accepting GRC for donations). I must say it was never mentioned back then they will buy hardware with that money. Here is their donation webpage from that time. The donation drive for new hardware was started only few months ago and their donation page was then updated accordingly.

All said and done, I don't feel that my donation was embezzled in any way. Under conditions specified in March 2016, PrimeGrid admins could have taken it as their salary (normal procedure with SETI@home donations). After that, it's their private property and they can do with it as they like.