Is it permissible to spend the accumulated orphan sponsorship fund on a special party for orphaned children that includes gifts, meals, or the distribution of Eid al-Fitr money?

You are not permitted to spend money allocated for sponsoring an orphan on anything other than what the donor specified, such as giving gifts, because that is not considered orphan sponsorship. An agent is not allowed to exceed what his principal commanded him to do. If he does so, his action is not binding, and if the money is lost, he is liable.