It goes to Paypal Giving Fund (another 501c3) and then Paypal Giving Fund sends the money to the nonprofit, or if there's a problem sending it to them then "Pay

It goes to Paypal Giving Fund (another 501c3) and then Paypal Giving Fund sends the money to the nonprofit, or if there's a problem sending it to them then "PayPal Giving Fund will (whenever possible) ask you to recommend another, and grant the funds to a similar charity if you don’t respond"