Here's how PayPal looks at Donations:
In the past this was not an issue as probably 1000's of people currently have donation buttons on their web sites and blogs and they are not nonprofits or registered 501(c)(3) organizations, just individuals.
If using the online button creator to generate the Donation item button code, you will see the following notice:
"This button is intended for fundraising. If you are not raising money for a cause, please choose another option. Nonprofits and or must verify their status to withdraw donations they receive. Users that are not verified nonprofits must demonstrate how their donations will be used, once they raise more than $10,000."
Policies have changed and there's new regulations to deal with, such as accounts must be verified, tax reporting, etc. For example, financial institutions such as banks, credit card issues and 3rd party transaction processors such as PayPal are required by law to reasonably verify the identity of the person behind any and all Accounts into which money is collected. This stems from the Patriot Act, Title III, Anti-money laundering to prevent terrorism where as institutions put into place reasonable steps to identify beneficial owners of bank accounts and those who are authorized to use or route funds through payable-through accounts.
Having said all of that, if you are not a Nonprofit or 501(c)(3) Organization, it appears you can still use the Donation item button code as long as don't think you will ever raise $10,000 or more.
Should you simply want to avoid all of this, one easy option is to use a Buy Now item button. You can code it so an amount can be entered right on the PayPal Screen. You can also use the the Shipping Override Variables so as not to charge any shipping if you have a shipping method setup for other purposes. Using a Buy Now type button allows people to give you funds without having a PayPal Account. Note, you would still pay the standard transaction processing fees, same as selling an item and you must have either a Premier or Business Account, a Personal Account won't work.
Another easy option would be to have people use the send money feature. Of course they would have to have a PayPal Account and if they send the funds as a gift assuming they don't use a credit card, there would be no fees unless the funds are being sent out of the country.
And there are alternative services worth checking out. For example, this service has a different set of rules:
http://www.gofundme.com/
Only you can decide what works best for your situation.
