Akai Gurley, 28, was shot in a darkened stairwell of a public housing building in November 2014 after taking the stairs when the elevator took too long to arrive in the poorly maintained apartment block.
He was killed by a police bullet that ricocheted off the wall.
Gurley's death, as with those of other unarmed black men at the hands of police, sparked nationwide protests and debate about police tactics and allegations of institutional racism.
Peter Liang, who had been on the force just months, was found guilty of manslaughter by jury in February and sacked from the police.
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In April, a judge downgraded his conviction to criminally negligent homicide and sentenced him to five years probation and 800 hours community service.
Gurley's family filed a wrongful death lawsuit against the city in May 2015.
"She wants to be able to move on with her life and she now hopes she can raise the child to be someone Akai would be proud of," he told AFP.
The funds will be held in a trust for Gurley's daughter, although her mother, a home health aide, can request monthly payments to help bring her up, he said.