The app in question declares itself this way: AnkiDroid is a free, open-source flashcard app for Android with over 10 million installs, used worldwide for various purposes, primarily in medical education and language learning.
But it's registered as a 501(c)(6) non-profit, which is a designation for a "business league or industry association". This is what you use if you're a Chamber of Commerce, not a flash card app!
Obviously we're all reading this expecting that Anki is a 501(c)(3) charity, like most open source organizations, and it's just not. And the distinction is definitely impactful for tax purposes, something a payment processor is going to care about. Both organizations are exempt from tax themselves, but charitable donations are also deductable, and Anki isn't a charity. Likely Google isn't set up to record the distinction in an auditable way.
The bottom line is that Anki's lawyers messed up. Or plausibly are running some kind of scam (e.g. they take the "donations" and then hand them over to a for-profit "member" company). They need to fix their registration if they want to take money from people, this isn't how you do it and this is surely not the only problem they'll have. Seriously, my Fraud Meter is dinging at about 19.6% here...