The money goes to me, not to the core GNU Octave development team.
"Support free software on Android. Money provided will guarantee the
continued development, maintenance and support for Octave for Android.
It will also help in the development of other Android applications that
will make your device into something amazing. Unlocks all features and gets rid of nag screen."
If you wish to give money to the core team, their website has the ability to do so www.octave.org
Currently, it is just the ODE and financial toolboxes that require donation. For those two packages, if you donate any amount, they start to work. If you are unhappy with that, I am going to be adding a $1 choice soon (there is much more changing than that soon).
I have a pretty good understanding of the GNU Public License, the license which you are referring to. That license allows charging for distribution. The free-ness that is guaranteed by the GPL is not $$, but instead that the program can be modified freely and redistributed by users.