"I feel so bad but it wasn't up to me," said McDonald.
Boss Andy Hessenthaler had previously hinted that the striker wanted to stay but he told Kent Online: "We won't be getting Cody."
Gills winger Andy Barcham has rejected a new contract at the club.
Hessenthaler continued: "We are disappointed to be losing Barcham and Cody but what can you do? Barcham sees himself playing in League One and, as a former player myself, you can't blame them for wanting to play at a higher level.
"It's not about money for those two boys, it's about football. They are thinking about the football and that's what they want to do. I am disappointed but we need to now go out and try and replace them as best we can."
The club are still waiting for decisions on Bayo Akinfenwa, Chris Palmer, Kevin Maher and Joe Martin, who have all been offered new deals.
Source: BBC Sport
Source: BBC Sport