Learn German: Da die Projekte erfolgreich sind, danken wir deren finanziellen Spendern. - Since the projects are successful, we thank their financial donors.

Both are genitive plural demonstrative pronouns. You use deren when referring backward to something already mentioned (here, die Projekte). You use derer when pointing forward, usually to a relative clause (e.g., 'the donors of those who...'). Since we are pointing back to the projects, deren is required.

Could we use the regular possessive ihren (their) instead of deren?

Yes, ihren works perfectly and means the exact same thing. Using deren instead of a normal possessive pronoun is a stylistic choice that sounds slightly more formal. It is also a very handy trick to avoid ambiguity in sentences where 'their' could refer to more than one group of people or things.

Why does the noun Spendern end in an extra -n here?

The verb danken always takes the dative case. The base plural of 'donor' is die Spender. In the dative plural, you must add an extra -n to the noun unless it already ends in -n or -s.

Why is the verb danken placed immediately after the comma?