Donald, a three-time All-American at Northwestern University, birdied the 15th, 16th, and 17th to move into sole possession of first place as part of a 5-under-par 67.
At the par-3 12th, Donald holed his tee shot only to have it bounce out of the hole and come to rest a few feet away.
'I think that shot kept me going. I was getting a little fed up with myself. I had given myself a lot of chances,' said Donald. 'So nothing really was happening and then I hit that shot and nearly made one. That kind of got me kick-started.'
Donald knocked in the birdie putt before going on his late birdie streak.
Deane Pappas, who started the day in a tie for second, carded a 4-under 68 and finished all alone in second, one shot behind Donald. Pappas had five birdies and a lone bogey.
Elder, who needs a victory to retain his playing privileges, had another wild day at the office. After an eagle-2 on the par-4 6th, Elder was to 3-under for the day and three clear of the field.
However, four ensuing bogeys cost him the lead and dropped him into third place.
A shot back of Elder and three off the pace is Chad Campbell, who started strong with four birdies in his first five holes. A bogey at the seventh was followed by 11 straight pars for a 3-under 69 and 4th place.
'I played pretty well today,' said Elder. 'I didn't hit my irons as well today. I chipped poorly which is disappointing but overall I played well. Actually I felt like I drove it well to score low but I didn't execute my short irons well. The course is definitely trickier.'
Six players are grouped together at 11-under and include Brad Faxon and Robin Freeman, who shot the round of the day to vault from 39th into a tie for seventh.
Freeman had it to 9-under and was flirting with a 59 before bogeys on his final two holes of the day left with a 7-under 65.
Defending champion Cameron Beckman (72), Brian Gay (67) and Tom Pernice, Jr. (66) are in a tie for 11th at 10-under par, just five behind Donald.
Full-field scores from the Southern Farm Bureau Classic