The charity, which works with disadvantaged young people, paid the money to Women2Win, a members association of the Conservative Party, in 2008. The donation was part of a joint fundraising event that auctioned places at a lunch with Baroness Thatcher.
The Charity Commission said a joint fundraising event with a political party was "not permitted under charity law".
The Prince's Trust has agreed to provide training and guidance for staff and volunteers on managing conflicts of interest.
The commission's report said: "Before deciding to embark on a joint fundraising venture with any organisation, a charity should consider both the potential benefits and the risks associated with any such venture and manage these accordingly.
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