Let's say I donate £10. So Paypal takes it's cut and whoever else along the line and the balance for the fund is net. Is that correct?
If the donation is not payment for "merchandise", but a simple donation, how could it be charged under merchandise?
It is up to the person keeping records as to how they classify such costs, there are no hard and fast rules. Whoever does the end of year accounts for HMRC and Companies House might ask questions as to the reason for separating 'Bank charges', 'Paypal charges - donations' and 'Paypal charges - merchandise'. They would then decide whether to group such charges together or not. They may also advise as to the level of separation required in future years also.
The Fund pays tax on it's profits from sales. The website was used to sell things, but the whole £36K couldn't be written down as 'cost of sales' because the website fulfilled other purposes too; raising awareness and accepting donations, which are not taxable. I assume a percentage of the website costs were used to decrease the Fund's profit on it's sales, and so were the Paypal charges for purchases, but not those for donations.