What would be better is to find a way to make it self-funding.
My thought is this, I can't remember which group did it, but one band offered one of their albums to be downloaded for free off their website. But rather then simply make it free, they made it so you could buy it for whatever price you entered in, even 0. So while you could indeed get it for free, a vast majority of people still tossed in 10-15 bucks.
Similar thing, source code is freely available. Game can be freely distributed. But the binary download section, you put in a little section where there is a little radio button. one option, is just to freely download. The other option, is to download, and donate a little while you are at it.
End result, its free as in freedom, but you manage to keep the project financially afloat via guilt tripping.