I’m also in Chapter 3 and still haven’t figured out the happiness thing. Like Scott says, don’t worry too much about it. Just donate enough to buy the upgrades.
Ammo is over by Arthur’s wagon. Walk around it and you’ll see stuff sitting out. Meds are over at Strauss’s wagon.
It took me a while to find the wood, hay and sacks of food in Chapter 3. Wait for daylight, then walk around and you’ll see that distinctive stump with an axe leaning on it in a spot sort of approaching the lake.
For crafting purposes, donate only animal skins/parts that are explicitly marked as for crafting, in the lower right of your screen in the upgrade menu. If it says “Funds” then there’s no crafting value. Once Pearson has what’s needed for something, it’ll automatically be purchasable in the upgrade menu.