From the BBC, we find a statement from Boyle as well as more details on the donation.
Child actors Rubina Ali and Azharuddin Ismail, who played young versions of two main characters, were moved to new homes by the Indian authorities.
"Having benefited so much from the hospitality of the people of Mumbai it is only right that some of the success of the movie be ploughed back into the city in areas where it is needed most and where it can make a real difference to some lives," Boyle said of the charitable donation.
"Despite intimidating odds, extraordinary work is going on to help people break the cycle of poverty through education. We're delighted that this initiative will add to that ongoing work," he added.
The cash will fund a five-year project to help poor children in the city, which will be run by the organisation Plan.
It is thought the charity, which works in nearly 50 countries, will train people in good hygiene and set up education schemes.
Plan's Marie Staunton said: "Around one billion of the world's population live in slums and there are 100,000 new slum dwellers every day.