A few years ago, I organized a project called Software Carpentry. Its aim was to build a new generation of easy-to-use open source software engineering tools. For a variety of reasons, it completely failed to meet its objectives (although it did give a boost to SCons and Roundup).
Today, almost five years later, Google is doing what I should have done with the US Department of Energy's money. Their Summer of Code project is going to award $5000 to each of 200 open source student projects running this summer. According to the project FAQ, the main goal is to identify and encourage young talent. I think it's a great idea, and I wish it every success.