It was old hardware; newer stuff at site but not yet mounted. The program is TEST TO FAILURE - it is the same way Falcon was done. Failures are expected - its how everyone learns.
Musk raises or uses his own funds, plus SpaceX is likely profitable from all the government and private contracts.
Taxpayers foot the bill for all the entire Federal budget. Since NASA is part of the Government, it pays for NASA launches. So you could say that the NASA budget pays for Falcon launches. Which money recycles through to jobs, hardware purchases, outsourced contracts, and so on at SpaceX.
That is interesting about the used hardware. Can you elaborate? I suppose it performed well enough to gather enough system performance data. Three or so minutes is quite a long period during a rocket launch.