UPDATE (September 18, 2009): More is forthcoming about the outcome of this campaign.
California has approved the non-profit status of 'Save Senator Obama Kogelo School, Inc.' So now I'm merely waiting to receive all that stuff (via snail mail) required to run such a business.
As for donations, the effort is still accepting them, but because there was no proof that the business was a non-profit, Paypal decrypted the donation button. (Recall that the first part of the fund-raising effort was to raise enough money to establish the non-profit.) Paypal breaks the donation buttons but still allows the business to accept donations. I don't get the logic, but, for now, go to Paypal and use the email address obamaschool-at-gmail-dot-com.
Look for obamaschool.org by Monday.