Well if that's the policy fair enough. Might be a good idea to allow additional donations to the fund to ensure there is always enough to pay out.
I also think it might be useful to reward people separately for pointing out errors and providing fixes.
This would encourage full transparency as some errors may take time to be fixed but that should not act as a barrier to them being sought out and reported.
+1
Otherwise people might refrain from reporting bugs until they have fixed it on their own - which might take longer than it would take if they reported it at once.