I donate to many charities and would support any family member doing something like running a Marathon when the money is going to charity. Your niece is 'giving' a great deal in time, effort, commitment etc, etc, and her family will have been involved too in one way or another - things like watching children while she trains, doing extra chores, driving duties she might usually do. If they are well off I would be pretty sure they themselves are making a sizeable donation.
We had an IT business and where I drew the line was a customer asking us to 'sponsor' his daughter and her Mum to take her horse to a show in England, (we are in north-east Scotland). We would have been funding their travel and accommodation. At the time our own daughter, (now 34), was 12/13 and was doing 4 X dance classes, drama class, violin lessons, guitar lessons, ice-skating, orchestra, hockey, tennis lessons every week....and we were paying for it all, not asking others to fund her 'hobbies'!!