Jackson brought the former Carlisle United boss to Lincoln on a week-to-week basis shortly after his own arrival at Sincil Bank, but the club will receive full compensation from Leeds as McDonald signed a contract in December.
Jackson said: "I'm obviously very disappointed to lose Neil as he's done an excellent job here in a short period of time. But I can't stand in his way as Leeds are a bigger club and best wishes go to him from myself, the players and the fans and I really hope it works out for him as he's one of the best coaches in England."