ILT chief executive Greg Mulvey said the trust believed it could not give to the endowment fund for three neurosurgeons in Dunedin because of laws governing the distribution of funds.
Instead, it was buying a stereotactic system, at a cost of $150,000.
Dunedin is the national provider of stereotactic radiosurgery, a status which increased its case for three neurosurgeons.
Stereotactic surgery uses highly targeted radiation for some types of brain tumour and vascular malformations.
The equipment would be used for treatment, and brain research.
Campaign project manager Irene Mosley said Southland recognised neurosurgery as a vital service.
"We would all suffer if the service is not able to grow and develop. This equipment will enable that to happen.
"Because this grant is specifically for the purchase of equipment, the funds will not go into the endowment fund.
"For this reason, the community need to be aware ... that we still need around $450,000 to get the endowment fund to a level which will ensure its sustainability long term," she said.
Fundraising had reached $2.516 million of the $3 million needed for the Chair in Neurosurgery at the University of Otago.
Prof Dirk De Ridder, who starts in February, will be Dunedin's third neurosurgeon.
South Island neurosurgical service clinical director Martin MacFarlane was pleased.
"Every modern neurosurgery unit around the world needs to ensure that they have the best and most modern equipment possible.
"With the current restrictions on funding in all levels of health, this isn't always easy. A donation such as this towards new modern equipment is most welcome.
"It ensures that the South will be working at the same standard as other units around the world," Mr MacFarlane said.
