The federal grand jury investigation of former D.C. deputy mayor Ivanhoe Donaldson has been widened to include an examination of payments made to a firm he controlled in connection with a $65,000 city contract, according to sources familiar with the probe.

The contract was awarded to the Poor People's Development Foundation Inc., a nonprofit community group, to conduct a survey on solutions to chronic unemployment. It was awarded in 1984, after Donaldson, Mayor Marion Barry's longtime top political aide and the chairman of the D.C. Democratic Party, had left the city government to take a job in private business.

Cornbread Givens, president of the foundation, said in a recent interview that his group paid thousands of dollars to a Donaldson-controlled business entity after receiving the contract.

The investigation is trying to determine whether the city's selection of the foundation was related to the payments, according to Givens and other sources.

Robert P. Watkins, Donaldson's attorney, declined to comment this week. Donaldson did not return messages left for him at his office over a two-day period.

Givens said he has told investigators that the payments were for assistance on the contract that Donaldson was supposed to provide. He said he has told investigators that he had no written contract with Donaldson.

Givens said he has told investigators that Donaldson has not done any work, and that as a result, the final report -- due last Sept. 28 -- has not yet been submitted.

"We are not part of any scheme of defrauding the government," Givens said. "The bottom line is I paid him Donaldson money to do some work and he didn't do it. We're still doing the work."

Employment services director Matthew F. Shannon, who headed the department when the foundation received the contract in February 1984, declined to comment this week, saying that the investigation is pending. Shannon said the grand jury has subpoenaed the department's records on the contract.

The U.S. Attorney's Office, in conjunction with the FBI and the grand jury, is examining a broad range of Donaldson's government and business activities and could take as long as several more months to finish its work, sources said.

The investigation of Donaldson initially focused on whether Donaldson received any proceeds from about $30,000 in city checks while he headed the employment services department in 1981. The inquiry was later broadened to determine whether he had received any proceeds from about $16,000 in additional city checks issued in 1983 while he was deputy mayor for economic development.

Witnesses before the grand jury have included well-known members of the city's business and political establishment: Delano Lewis, the Chesapeake and Potomac Telephone Co.'s top official in D.C.; John Brophy, a former top District transportation official who is a senior official in a national parking consulting firm, and Willie Leftwich, a Donaldson attorney who, until recently, was a partner in one of the city's most prestigious black law firms.

Lewis, who was finance chairman of Barry's 1982 reelection campaign, said he was asked to testify about an $1,800 check that the campaign made out to a longtime Donaldson friend. He said his appearance had nothing to do with C&P.

Leftwich declined to issue a statement on his grand jury appearance.

Brophy said he was questioned before the grand jury about the relationship between his firm and the Donaldson-controlled company to which Givens' foundation made payments. He said he knows nothing about the contract and added that neither he nor his firm is being investigated.

The foundation, which grew out of the civil rights movement's 1968 Poor People's Campaign, received about $160,000 from the housing department between 1982 and mid-1984 to help public housing residents develop food cooperatives and other cooperative businesses. Givens said the foundation submitted an unsolicited proposal to the employment services department in the fall of 1983 for funds to train city prison parolees in cooperative businesses. He said that idea was replaced by the unemployment survey contract after negotiations with department officials, whom he declined to identify.

Givens said Donaldson "said he could help identify some people that could help with the survey." Givens said that after he received his funds from the city he made several payments to a Donaldson-controlled business entity. When asked the amount of the payments, Givens said, "I can't talk about that. There's an investigation going on."

The city paid Givens $32,500 when the contract was signed on Feb. 23, 1984. The contract specified a second payment of $32,500 when a final report was delivered and accepted.

City records show that the final $32,500 was paid to the foundation about April 10, 1984, five months before the final report was due. The final report still has not been turned in. Department officials, citing the pending investigation, declined to comment on why the foundation was paid in full before it completed its work.

Givens said he complied with all provisions of the contract except turning in the final report on time. He said that last week, the foundation gave the city a "final draft of the final report," and plans to submit the finished report soon.

Givens said he has known Donaldson for 20 years, and added: "I never had an experience with Ivanhoe Donaldson where he did not follow up about what he said he was going to do . . . . Because of the level of professional respect I had for him it didn't dawn on me to have a written contract with him."

Shortly after the department paid the foundation the first $32,500 for the contract, Givens wrote four checks at Donaldson's request to an entity called DATAfacts Inc., according to sources familiar with the contract. Shortly after the city paid the remaining $32,500 to the foundation, Givens wrote out three more checks to DATAfacts, the sources said.

DATAfacts' address on its stationery is the same address as the local office for Datacom Systems Corp., a computer and parking management firm that has three contracts with the city. Brophy, a former associate D.C. transportation director, now heads Datacom's management consulting arm under the name of Brophy & Associates.

Last year, Donaldson was hired as a part-time consultant and elected to the board of Datacom, which is now a wholly owned subsidiary of Lockheed Corp.

Brophy said in a recent interview that Donaldson told him he set up DATAfacts as a firm that would do computer demographics for political campaigns. Brophy said he did not believe the firm ever got off the ground.

Brophy said he told the grand jury that he knew nothing about the Givens contract and that there was no formal corporate relationship between Datacom and DATAfacts.

The grand jury investigation of Donaldson began last year after the city inspector general's office raised questions concerning about $30,000 in checks issued by Donaldson in 1981 when he headed the employment services department.

The grand jury is also examining whether Donaldson received the proceeds of two checks totaling about $16,000 issued while he was deputy mayor in 1983, sources said.

The checks were made out in the name of Judy Zeitler, sources said. Sources said there are indications that Zeitler did not receive the funds and apparently did not do any work for the city.

Zeitler, who now lives in Los Angeles, declined to comment.