I am so glad you posted this!!
I don't have the answer, but I think you are right!!
I have to ask you...you said you used to have a donation button up. I put mine up when my blog got going because other "help" blogs (whether rv, seo training tips, etc) all had one and I thought it was a great idea.
However, I am "Dudley Do-Right" by nature and, after visiting Paypal's site after your post, it seems their lingo has changed? I would have absolutely noticed their stating for 501C3s (spent most of my career mode working for non-profits).
Do you think this changed since you first set it up, because I know I never would have when reading "this is for nonprofits" etc.
Anyway, they seem a bit wishy-washy because they are all too happy to take their fees out of the donations, whether you are a nonprofit or not. They mention a limit about $10K etc., too. Plus, as I stated, I only got the idea because other blogs I follow use that button for "If you found my tips helpful, consider donating...."
It is not a big deal to me and I will absolutely take it down in the near future, but I am curious as to what others know about this.
I feel certain that their site, when creating a button, is using different wording now.
Also, they could EASILY gear this to only nonprofits by forcing them to enter their nonprofit info when creating the button. Hmmmm....why wouldn't they? Again, many sites use these...if they couldn't get money from it, they wouldn't have it on their blogs.
Thanks for bringing this up...I look forward to hearing from others...