Can someone link to / quote the section in the Checkout TOS that restricts use of "donate" or "donation"? I'm only finding this: https://checkout.google.com/termsOfService?type=Seller which only mentions "if Seller identifies ... as "non-profit" and is verified ... then Seller may use the Service to process donations from Buyers." Which is not "may not use 'donate' or 'donation' unless == nonprofit", which seems to be claimed by a great many comments on the interwebs.
I've never used google checkout from the merchant side, so I just poked around for a bit. I'll avoid doing the whole lmgtfy thing, but this appears to be what you're looking for:
Content policies seems to be the most-likely damning.
Mentions of donations elsewhere are heavily paired with "donate" buttons, and I don't know if they had used such a button. Cost + voluntary bonus does, to me, imply valid use of the word "donate", and I'm hoping for something concrete, given the number of authoritative-sounding "can't say 'donate' w/o 501.c3" comments.
Though I'm not attempting to sign up. That's the TOS from the bottom of https://checkout.google.com/sell