It is best to do all of your non profit paperwork before setting up your Paypal account.
The note below is from one of Paypal's on line forums:
There is a significant discount in credit card processing fees for non profits - it is worth the effort.
Have a non profit - get a break from Paypal
If you are a legitimate non profit organization with the appropriate 501-C3 paperwork, you are eligible to go through Paypal's non profit application process.See also