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I heard that it was some sort of emergency fund or something.

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up vote 10 down vote accepted

From http://en.wikipedia.org/wiki/Ubuntu_Foundation

The Ubuntu Foundation is a purpose trust founded by Mark Shuttleworth and Canonical Ltd. to ensure the long-term maintenance of the Ubuntu Linux distribution independently of the commercial activities of Canonical Ltd. Its initial funding commitment is $10M Its current advisory board is made up of chairman Mark Shuttleworth, founder of Canonical Ltd., and representatives of the Ubuntu Community Council and the Ubuntu Technical Board.[1]

Although it was originally announced that the Ubuntu Foundation would employ core members of the Ubuntu community[2] as of 2008, the Foundation remains dormant. Mark Shuttleworth describes it as an "emergency fund" in the event that Canonical's involvement in the Ubuntu project ends.

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See also ubuntu.com/news/UbuntuFoundation –  txwikinger Aug 5 '10 at 6:09
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In order to gain acceptance as a commercially supported operating system, there was the promise made that LTS (long term support) releases would be supported for 3 years on the desktop and 5 years on the server.

Businesses needed to know that the support behind Ubuntu provided by Canonical was not about to disappear.

The first LTS release was 6.06 Dapper Drake in 2006 and at that time there was some doubt that Canonical could promise this support commitment at all.

Would they even exist in 5 years time?

Mark Shuttleworth put his money where his mouth is and put up $10M to hire Ubuntu Community Members as the Ubuntu Foundation so if Canonical disappeared as a Company the community would have the resources to continue to support the distribution.

I am not sure what has happened since then but this public promise allowed doubts of the viability of LTS releases to be put aside and helped the adoption of Ubuntu.

DistroWatch discussed this back at the time.

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