Well if you are in s/w development, we all have heard about open source, which is open code but not necessarily free of cost. These open source software indeed costs money and time and if you are wondering how it is funded. Below you will find some answers as much as I have understood.

Let us say you are company A and are competing with company B, you have two options, fight it out by writing best software, well this is a race to the bottom. So a smart option is you fund a non-profit foundation for this project and put your best developers to this project. You also need to make this s/w product open source, now if this is an interesting problem, many other folks will contribute code to your repo for free of cost. These developers do it for free to earn reputation. Since you are the Company A behind this repo, you get to choose in which direction the product grows, after all since you have funded your developer’s will be maintainers of the repo. Now company B sees and joins the foundation and mimics you. So it is a win-win both for Company A , Company B, the non-profit foundation and community as whole.

If you are wondering who are the foundations, I will name a few

1, Linux Foundation

2, Eclipse Foundation

3, Apache Foundation

They all are not for profit, but their revenue are in the millions per year. For e.g. Linux Foundation 2025 revenue is 311 m USD. I don’t imply that they should not be making money, but the point is open source software costs money and time to build and maintain the same.

So next time you hear about open source software do check out who is behind it.