His paternal uncle gave him some money to donate, then he died. What should he do?

Praise be to Allah.

Firstly:

If your uncle gave you this money and delegated you to donate it, but you delayed doing that until he died, then you must donate it in full, no matter how much it is, because this comes under the heading of a person donating some of his wealth whilst he was still alive, which is permissible regardless of the situation.

But if he left the money with you as a trust, and he used to take some of it sometimes, and add more to it sometimes, as you mention, and he asked you to donate what was left of it after he died, then in that case it comes under the ruling of a bequest. If you verify that this money is less than one third of your uncle’s estate, then you must donate it, and you do not have the right to return it or give it to his children.

But if it is more than one third of the estate, then you must donate one third, and return the surplus to his heirs.

Secondly:

If the owner of the wealth did not stipulate a specific cause for his donation, then it should be spent on the poor and needy.

Ibn Muflih (may Allah have mercy on him) said: The needy are one of the categories to whom charity may be given, and if deceased owed something to Allah, such as expiation and the like, then if there is charity that has been given without specifying to whom it is to be given, it should be given to either of these two categories."(Al-Furu‘ (6/359); see also al-Mughni  8/211).

As your uncle did not specify to whom it was to be given, then this money must be spent on the poor and needy.

And Allah knows best.