Are there any risks to donating a used cell phone?

There must be someway to delete everything on the removal chip (SIM card)
If not, you can remove it and then the phone will need a brand new one before it will work but your privacy will be protected. The SIM card is visible in the back, once you have removed the battery.

Phones generally have a way to do a factory reset whether they have a SIM card or not.

You can reset it before donate.

We have cell phone stores locally (verizon and sprint stores) that have a box to donate used cell phones to Women of Domestic Abuse….I drop mine off there….I let the guy in the store look at my phone and make sure everything is erased before donating it….

Even if we do factory reset all the memory in it will not be completely removed as it may be able to be recovered later.
It is better to give to well known person who wont miss use your phone.

@vamsiviswa Technically correct, but most people don’t have the same need for secrecy as the NSA or FBI, and the odds of having somebody with the skills and inclination to un-erase a phone are lower than the odds of having your credit card information stolen by a “man in the middle” attack. Unless the OP is either a government agent or a drug dealer, a factory reset will suffice.

I would be careful storing important passwords on any of your devices, including your computer. Your passwords should be stored somewhere safe where no one could get into like a safe. Personally I like to store my passwords in the safest spot I know, my brain.