King could easily have donated more and made a Big Gesture. Then others would not be motivated to donate, too. King wants to encourage lots of grass roots action, not just for the sake of money but for the sake of community feeling -- or at least, that's what I suspect. If he donates $4m or something, others might feel there is no need for them to do so. A money need is met for the moment, but a neighborliness-building opportunity does not happen.
Also, King probably, and rightly, does not want to get a reputation as a big philanthropist and then be swamped by innumerable others looking to get some of his money.
Yes, people who donate money to charity should avoid publicity like Stephen King says. Making a public show of donating to charity results in a monetary value to the donor when they increase their celebrity status. The donation is no longer a charitable act because the individual is gaining from it.
Yes, people who donate money to charity should avoid publicity like Stephen King says because we should not donate in order to gain fame. We should donate simply because it is what we want to do. We want to help others, and it should not become a self-centered way of getting attention.
People publicly sharing their charitable donations should be praised for raising awareness. This is especially true of celebrities and well-known public figures. They have a way of shaping how others think, and could very well lead others to give to the same causes of similar ones, just by letting it be known that they support the charities themselves.