Group by NAME and YEAR, categorize NAME
Add the CASE expression to the GROUP BY clause.

SELECT   PROJECT_ID,
         CASE WHEN SOURCE_NAME = 'A' THEN 'A'
              WHEN SOURCE_NAME = 'B' THEN 'B'
              ELSE 'OTHER'
         END SOURCE_NAME,
         SUM(AMOUNT) AMOUNT,
         YEAR
FROM     FINANCE_SOURCE
GROUP BY PROJECT_ID, 
         CASE WHEN SOURCE_NAME = 'A' THEN 'A'
              WHEN SOURCE_NAME = 'B' THEN 'B'
              ELSE 'OTHER'
         END,
         YEAR