I managed this after a brief conversation with Paypal Support. So, you edit the company profile (click on the Edit link to the right of where the company logo sits. Check the box marked "This non-profit is a registered charity" and then in the Product or Service type box, select Charitable or Social Service Organization (see below). After you save the new information you will be directed to enter info such as charitable registration number etc. Hope this info gets you over the 'sticking point'.
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