Paypal seems to have a long and ugly history of aggressive-yet-incoherent legal interpretations.
They lock down donations to any unpopular group, and refuse to release already-held funds. They freeze Kickstarter campaigns as soon as someone says the word "fraud", and cause the exact damage they're trying to prevent by tying up all the funds so neither backers nor creators can get the money.
They're incredibly capricious, and as far as I can tell have taken the stance that overcaution is always acceptable.
Because PayPal doesn't want to lose money from customers that use their complaint system or worse through chargeback from the credit card companies.
As far as donations for dubious causes goes well if they think that it will either lose them business due to reputation, or worse lose them money if a government decides to freeze those funds they will cut it off.
PayPal for the most part is not a fractional lender when you have a 1000$ in a PayPal account PayPal has to reserve the full amount, PayPal isn't protected from a run over by central banks and what limited protection it has is probably performed by underwriters at not the most beneficial of terms.
If some one is opening a donation account for ISIS, anti LGBT or w/e you might call an "unpopular cause" and that either causes them a huge PR headache or worse a government decides to freeze those funds they lose a lot of money.
This can be complicated even further since while the funds are frozens the users who transferred these funds might be eligible for protection under PayPal's own policies and if not then they can always initiate a chargeback from their own credit card company.
They lock down donations to any unpopular group, and refuse to release already-held funds. They freeze Kickstarter campaigns as soon as someone says the word "fraud", and cause the exact damage they're trying to prevent by tying up all the funds so neither backers nor creators can get the money.
They're incredibly capricious, and as far as I can tell have taken the stance that overcaution is always acceptable.