1 & 2. If a donor's intention when he donated the money was for the purchase of the
particular land in question, you became his trustee and representative with this money. If the
efforts to buy this land have stopped or been cancelled, and the donor requests the return
of the amount donated, then he has the right to have the money returned to him. However,
since this money has been donated for the sake of Allah and is a sadaqa, they cannot
spend it for personal use. You need to advise them that it then becomes their responsibility
to spend it for a similar charitable purpose.
However, if the intention at the time of donation was for the purpose of the project and not
for the particular land in question, then you are not obliged to return them the money, and
you should try to spend it in a timely manner for the project for which it was appropriated.
3. There is nothing against accepting donations from such people, whenever they are willing
to donate, and I advise you to be vigilant not to allow any personal enmity to grow among
the parties involved, since the donors are at the root muhsinoon (good-doers).
4. Yes, you can ask for donations from such people, on the condition that it is not
understood that you agree with the forbidden (haram) actions which they are practicing.
Additionally, it is incumbent upon you to advise and caution them that they must give up
selling such items which are haram.