I've heard that it's a standard test of stolen credit card info to donate a dollar to a charity to see if clears; PayPal's success in this space seems to be due to strong fraud controls more than anything else, so I suspect this transaction got caught up in that. It's certainly hard to imagine any legitimate purpose to giving just one dollar to a charity.
Paypal is not the service to use when you need to make a transaction without meddling by self-righteous busy bodies.