Don't ever label anything as a donation via PayPal unless you have the actual documentation to back this up. Depending on your situation, your account can be locked when failing to provide the information, and worse, to be able to unlock it you have to refund the monies received and then ask for it again via a different method - if you can get it unlocked.

No don't, unless you're a real charitable organization. Would be better to offer a premium tier.

To avoid the PayPal/Donation problem, why not sell something, e.g. API docs. You pay €X and the author will send you a HTML file of the API docs. One-time, once-only price.

Then you have something you sold and you can use the money for hosting, avoiding 'donation' entirely.