The Hemel Hempstead-born 37-year-old succeeds fellow Briton Ian Poulter, who hosted the 2015 event at Woburn.
This year's tournament was the first since 2008 and was won by Sheffield's Matthew Fitzpatrick.
The Grove has only ever held a European Tour event once before in its history - when Tiger Woods won a World Golf Championship tournament in 2006.
"We knew the British Masters would get great crowds," said Donald.
"The British people love coming out and supporting their events and supporting the British players. It was a fun and successful week.
"Woburn was a tremendous venue and Ian did a brilliant job as the ambassador. It's my turn next and I will be looking forward to coming back and hopefully having even more success and bringing even more people to this amazing tournament."

The Institute for Fiscal Studies (IFS) said the reasons included a rise in the cost of pensioner benefits, and an increase in housing benefit spend.
It said Chancellor George Osborne could need to make more spending cuts "just to stay on track".
The Treasury said its plan was "securing a resilient economy".
The IFS said changes to benefits and tax credits had been expected to save £19bn compared with "a world of no policy change".
Explaining why spending had in fact reduced by £2.5bn in real terms, it said:
"All this has important fiscal consequences," said the report's author, Andrew Hood, adding that slow earnings growth could push up spending.
"Mr Osborne wants further cuts to social security spending to help reduce the deficit. He may end up having to make cuts just to stay on track."
The IFS study comes after Labour released figures it said showed the government had spent £25bn more on social security than the amount it had predicted in November 2010.
The party commissioned the House of Commons Library to compare forecasts made in the 2010 Autumn Statement with how much the coalition had spent since then and intends to spend this year.
Writing on the PoliticsHome website, shadow chancellor Ed Balls and shadow work and pensions secretary Rachel Reeves said savings from welfare cuts had been outweighed by a failure to tackle the causes of rising social security spending.
They wrote: "A key cause of the Tories' overspending is their failure to make the economy work for working people, leaving thousands more reliant on housing benefit."
But the Treasury rejected this analysis.
A spokesman said: "The government's long term economic plan is working, cutting the deficit by a third and already delivering over 70% of the £126bn consolidation set for this Parliament.
"At Budget 2013 we announced a cap on total welfare spending for 2015 to 2016 onwards, bringing over £100bn of spending under new controls.
"However, the impact of the great recession is still being felt in the economy and public finances, which is why we need to keep working through the plan that's securing a resilient economy."
Green Party leader Natalie Bennett pointed to a report from the London School of Economics and the University of Essex that said the poorest groups had lost the largest share of their incomes on average as a result of coalition government policies.
She said: "This report once again goes to prove that Osborne's ideologically-driven austerity economics are simply not working."
The Treasury said analysis of annual budget statements had shown the richest households were "making the biggest contribution to reducing the deficit".

Friends, collaborators and fans have been paying tribute on their social media accounts.
Luke Donald will host the 2016 British Masters at The Grove in his home county of Hertfordshire.
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Welfare spending over the course of this Parliament has fallen by just £2.5bn despite reforms aimed at saving £19bn, economic forecasters say.
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James Horner, the Hollywood composer who wrote the Oscar-winning score for Titanic, has died in a California plane crash aged 61.