The 39-year-old former world number one is now ranked 96 in the world and without a PGA Tour title since 2012.
But his fifth birdie gave him a four-under 67 and took him to 10 under alongside Canadian Graham DeLaet.
Ian Poulter enhanced his quest for a PGA Tour card with a 68 to earn a share of third place, two strokes back.
The 41-year-old is playing the penultimate event of his 10-tournament medical exemption and will secure his card with 12th place or better.
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He had five birdies to reach eight under at the Harbour Town links.
Donald, four times a runner-up in the tournament, had three consecutive birdies on the front nine and a superb bunker shot to two feet from a precarious plugged lie helped him to save par at the 17th.
He then produced a delicate lofted chip from the right of the 18th fairway that checked and trickled into the cup.
"I've always felt like I pitch the ball really well round here," said Donald.
"The grass lends itself to being able to create some spin and I needed it down there - I didn't have much green to work with - it just came off perfectly with a little side spin into the cup.
"I've hit a few poor drives today and I need to work on that. It was a little bit more stressful than I would have liked but a great short game bailed me out."
De Laet, the world number 128, is still to win on the PGA Tour and has missed four cuts this season, but he eagled the par-four ninth en route to a 67.
Danny Willett, who missed the cut in his defence of the Masters at Augusta, had two double bogeys in a 78 that left him at seven over, and absent for the weekend for a second tournament in succession.
Another Sheffield golfer, Matt Fitzpatrick, who was 32nd at Augusta, also missed the cut after four bogeys and a double bogey in a 72 for a three-over total.
But Scotsman Russell Knox, who missed the cut at Augusta, had four birdies in five holes in a 66 to reach six under, one ahead of England's Tyrrell Hatton.
Andrew 'Beef' Johnston, who has missed the cut in three of his six PGA Tour events this season, is three under after a 71.
Northern Ireland's Graeme McDowell, winner of this event after a play-off in 2013, is eight shots off the lead after four birdies in a 68.
Englishman Luke Donald chipped in for a birdie at the final hole to share the halfway lead at the RBC Heritage at Hilton Head in South Carolina.