How do I add the option for donation designation?

Click on "Edit Form". Then, choose "Tributes" under the Build Your Campaign section of your campaign editor page

Scroll down to find the "Ask for donation designation  (dropdown)" sub-heading and click the toggle button next to "Enable donation designation" to turn it on.

You can then enter your designation label (aka how you ask donors what they want their donation to go towards) and your designation values (the possible fields of designation).

Save your donation form and you're all set!