The Linda Norgrove Foundation began in 2010 after the Lewis woman died in a failed attempt by Navy SEALS to rescue her from the Taliban in Afghanistan.
Her parents, John and Lorna, who live in Uig on the island, started the organisation as a way of creating something positive from the tragedy.
So far the foundation has funded almost 50 grassroots projects, including orphanages which care for some of the country's most disadvantaged disabled children, homes for widows, education for girls and emergency medical help for women who have been severely abused.
Almost £400,000 of the money distributed so far has come from fundraising all over the world, with some donations from unusual places. A recent donation of £1,600 came from British Embassy staff in Kabul after one of their colleagues spent a night in a snow hole outside the embassy.
Last year the foundation also received a grant from the United States International Development Agency (USAID) to help fund Afghanistan Reads - a network of community libraries and literacy schemes for women and girls in several communities across the country.
Literacy in Afghanistan is among the lowest in the world. It is estimated only 20% of women are literate, and the figure is three times lower in rural areas. Research from UNICEF Afghanistan suggests that only a third of women educated to primary school level retain their literacy skills because of a lack of ongoing access to written materials. Regular use of libraries in the community and locally based literacy classes, in the home as well as the community, are recognised as a way of addressing these challenges.
Mr Norgrove said: "We are delighted to have reached this great milestone.
"Linda passionately believed that empowering women was fundamental to changing the future of Afghanistan for the better.
"Thanks to the generosity of everyone who has helped raise funds for the Foundation we are able to make a real difference to some of the poorest and most disadvantaged people and we'd like to thank everyone who has made that possible."
The foundation is run solely by volunteers, with administration costs covered by an anonymous donor. This means almost all the money raised goes directly to projects in Afghanistan.
Last year it joined up with another charity established in memory of another young woman from Britain to fund a home for disabled children in Afghanistan.
The Karen Woo Foundation was set up by the family and friends of Karen Woo, who was a doctor from Hertfordshire who was killed on a medical aid mission also in 2010.
The team she was part of had taken a week to trek to the remote province of Nuristan, where over the course of eight days they treated in excess of 1,500 people for ophthalmic, dental and general medical problems.
The Afghanistan conflict began within weeks of the September 11 terrorist attacks across America in 2001, after US President George Bush intervened when the Taliban refused to hand over the mastermind Osama bin Laden, who was thought to be hiding in the mountains.