Taking three to five years to reach profitability is normal. In the mean time, we paid out $300,000 in no-strings-attached gifts this past year. That does not feel to me like the wrong thing to be doing. :-)

Chad, the passion and effort you've put into your project are clear. I hope it will eventually become beneficial to you, if not directly, then down the road through the doors it must have opened to you. That being said, I think I'm not the only one who would have advised you to let go of something that is half dead (edit: meaning "vegetative" by comparable standards). Also, wouldn't the mission be better served as a project at github rather than a profit seeking enterprise? Wouldn't Reddit gifts arrangement be the right model? After all once you put a link at the place where people go magic is possible. Just something to think about. Sunk cost is tricky but it is never too late to make the right decision. Ok. Almost never....

We paid out $41,000 in our first year, and $300,000 in our second. How is something that just grew 632% half-dead?

Read HN's welcome: "As a rule, a community site that becomes popular will decline in quality." Your top 2 Receivers have never contributed anything of value to the community (this is subjective, I know but the majority would agree with me) and yet they receive an amount most others would dream of receiving. Yes, a person has the privilege of doing whatever they want with their money but your website is endorsing bad actions so I won't support it. Just because the amount you payed out increased, it doesn't mean that (community & value wise) it isn't half dead.

Sorry, this is my opinion.