Given your update I do see why this situation is so conceening. It does not sound like SGD's needs are being met, to a point where she is having regular intervention from social services.
In light of this, giving money to SD probably isn't the thing that would help SGD. It sounds like SD needs significant parenting support and education in order to meet her daughter's needs. Alternatively, it would need to be considered whether she is fit to care for her daughter.
Sounds like her dad has her 50% of the week. Is he any better? Couldn't he take a role in potty training/weaning?
If I was your DH and I could, I would likely refuse to comply with demands and set boundaries, but would instead offer help which would actually help SGD. Such as looking after SGD a couple of days or evenings a week and taking her to classes.
In a dysfuntional family setting where there is abuse, children should always come first. Not adult children who are carrying out the abuse - the actual child.
Assuming he is a half decent parent, I would hope DSG father does get majority care as this child is being abused and neglected.
But that is all largely beyond your control as apart from suggesting to your husband, you can't make him set healthy boundaries with SD.