To have a server running cost both time and money.
So far the servers have been paid for and maintained by grandrolf - running on hardware placed at home.
The 17th of January 2018 the servers was moved to a hosting provider
It's not in any way or form demanded to make donations to be able to play on PalCraft and it will not give any benefits in-game (this might change - if it does, only stuff that are cosmetic and don't effect gameplay, to be in compliance with Mojang EULA).
Information about what's allowed and not allowed can be found here: https://account.mojang.com/terms
Current balance and detailed information about donations made and expenses - is available to members on Discord.