Donald began the final round with a one-shot lead, but after an even-par 71 he finished in a tie for second, two shots behind Branden Grace. It marks his sixth finish of T-3 or better at Harbour Town since 2009 - an impressive run of consistency that has yet to produce a victory.
After a slow start, Donald regained the lead with a birdie on No. 9, but he followed with a bogey on No. 10 and failed to make a single back-nine birdie as Grace rallied to victory with a closing 66.
"I played OK today, I just had a couple shots that just wouldn't quite go in," Donald said. "I was expecting someone to play well, and it was a great round from Branden."
Donald has struggled mightily with his game in recent months, and he entered this week's event ranked No. 95 in the world. His best prior result this season was a T-22 finish in Tampa, and Donald said he'll take plenty of positives from a solid week in Hilton Head.
"This is a great step in the right direction," he said. "I'm really positive about my game going forward, positive about the way I handled it today. I didn't quite get it done, but I'm excited about playing next week."
Still, the runner-up finish means Donald's victory drought on the PGA Tour continues, as the Englishman hasn't lifted a trophy since the 2012 Valspar Championship. Each of his last three 54-hole leads have come at Harbour Town, and each time he has left with a runner-up finish on a course that tends to favor come-from-behind winners.
"I think I've got to put myself three or four behind on Sunday," he said. "Leading doesn't seem to be working out for me."