This fund supports the development of free (as in freedom, aka libre) fonts, free software tools for font creation such as FontForge, and free font distribution projects such as the Open Font Library.
TUG provides administrative support for the Libre Font Fund because fonts have always been of great and abiding interest to TeX users, although these projects are not specific to the TeX system.
TUG also provides administrative support to the related CraftingType font workshops and the kickstart new fonts initiative, to increase the collection of free Google Web Fonts. Many of those fonts are also available on CTAN, with TeX support, thanks to numerous volunteers.
TUG's support includes accepting donations in its name. Donations to TUG and thus to this fund are generally tax-deductible, at least in the USA.
The fund is primarily overseen by Dave Crossland.