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Linux is not an operating system. Linux is a kernel. The Free Software Foundation supplied most of the userland programs years before Linux existed. The FSF was working on its own kernel called Hurd that the open system community had been waiting years for but never really materialized. The FSF basically had everything we think of as an operating system except a kernel. Early on Mr. Torvalds said that he saw Hurd as the future and his kernel something to use until Hurd was ready but since Hurd development was going so slowly and Linux development so quickly it left Hurd in the dust. There has been tension between the FSF and the Linux community. The FSF suggested respelling Linux as Lignux or LiGnux to emphasize that Gnu software is in it; Likewise Gnu/Linux has been suggested. FSF feels somewhat slighted since they have supplied most of what we think of as an operating system but Linux gets all the publicity and credit. The basic revenue model for Gnu software was to give the software away for free and sell support. Red Hat used to follow this model allowing anyone to download their distribution and to buy support if they wished. Their current licensing model basically folds the support cost into a license. Red Hat's licenses are not cheap. In fact, a license from Red Hat for "free" Linux is more expensive than a license and support for Sun's commercial Solaris operating system. While there are lots of free Linux distributions out there an enterprise quality Linux with commercial support is quite expensive.
There are several Linux OS organisations. Some people donate money, but most of the time they don't need a lot of money. Because most of the programmers do Linux in their spare time. And some IT-companies and Universities who need the Linux OS the give them servers to upload their programs and sometimes people who work on some of the components on company time. For example the people from Oracle, Novell, RedHat, IBM and Google have been contributing to the Open Office project on company time.
In exchange they can insert interface points that connect the software to their own company software. For example an interface that can make serial letters out of an address database. Or an interface to convert, insert and extract data between a database and a spread sheet. That will boost their own sales.
Most of the development for the Linux kernel, and its various distro's is all done voluntarily, by people who enjoy that kind of work.
Im not actualy too shure but it could be something to do with linux support