what are the benifits to donating land to a town?

Answer 1

generally, land is only "donated" to municipalities when it is "required" to do so in order to get a permit or zoning change approved. many times developers will be required to "donate" a certain amount of land to be used for parks within a master-plan.
if you are simply considering giving some land away try to find a more useful purpose.

Answer 2

Ummm....maybe a tax deduction, if handled properly. If it's a large plot, you might get a street named after you, or even a nice bronze plaque in the town square.