One can use "big abelian categories". A "big abelian group" is a class that satisfies the same properties as an ordinary abelian group except that the underlying class doesn't need to be a set. Then a big abelian category is a category with the same properties as an ordinary abelian category except that the hom's aren't abelian groups but big abelian groups (see: Mitchell: "Theory of Categories", VII.1, page 164).
The usual proof that $C^D$ is abelian if $C$ is abelian and $D$ is small carries over without difficulties to show that $C^D$ is (big) abelian if $C$ is abelian and $D$ is any category.