Green was charged by the Scottish Football Association for making comments using words of an "offensive and racist nature" during an interview with The Sun newspaper last week.
Green later apologised for describing commercial director Imran Ahmed his "p*** friend".
"I've known Charlie over 40 years and he's no racist," McDonald told the Daily Mail. "Far from it. He would hardly be working with Imran if he was, would he? People are looking for trouble where there is none.
"We have a coloured employee working with us in Manchester. Charlie brought him in, he hired him. How does that square with being racist? Listen, Charlie is a wheeler and dealer. Sometimes he says too much.
"In football, you have to be very careful what you say about anything. People can twist things. They want to stab you in the back. But, take it from me, he is no racist."
Green was given until Wednesday to respond to the charge.