All perfect praise be to Allaah, The Lord of the worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhiwasallam, is His slave and messenger.
Allaah The Almighty Prohibited extravagance and wasteful spending Saying (what means): {And eat and drink, but be not excessive. Indeed, He likes not those who commit excess}[Quran 7:31]. He also Says (what means): {And do not spend wastefully. Indeed, the wasteful are brothers of the devils.} [Quran 17:26-27]
In a Hadeeth, the Prophet, sallallaahu ‘alayhiwasallam,said: "Eat, drink, dress and give in charity without wastefulness and with no conceit." Ibn `Abbaas said: “Eat what you wish and wear what you wish as long as these two do not touch you: wastefulness and conceit.” [Al-Bukhari]
Moreover, Allaah The Exalted Prohibited the consuming the orphan's wealth unlawfully Saying (what means): {Indeed, those who devour the property of orphans unjustly are only consuming into their bellies fire. And they will be burned in a Blaze.} [Quran 4:10]
Hence, you should ask one of your female relatives to advise the mother of your cousins and clarify to her the unlawfulness of what she does. If she concludes that the mother will persist in her extravagant spending, it is preferable that you restrict your charity to those orphan children to the necessities, in the form of clothes and the like, instead of giving cash money to the mother. But, let not the wastefulness of their mother stop you from helping them, as sponsoring orphans is one of the best deeds that please Allaah The Almighty. In a Hadeeth, the Messenger of Allaah, sallallaahu ‘alayhiwasallam, said: "I and the sponsor of an orphan will be like this in Paradise(holding up his index and middle fingers together with only a small gap between them)." [Muslim]
Allaah Knows best.