Gimp

In the Layers tab, you can directly change the percent transparency of any layer with a slider

select the area to preserve; IF YOU WANT THE EDGE TO FADEOUT, SELECT A BOX JUST INSIDE THE ENTIRE IMAGE; YOU CAN ALSO USE THE MAGIC WAND TO SELECT AN AREA, AND SHRINK AND GROW AS NEEDED
SELECT->FEATHER, GIVE IT ABOUT 5 PIXELS; THIS APPEARS TO DO NOTHING BUT PUT A BIT OF ROUNDED CORNERS ON YOUR SELECTION, WEIRD EH?
INVERT THE SELECTION, AND HIT DELETE – vioala, GIMP FADES OUTWARD. YEs, IT’s weird!

Choose the text tool and draw some text (doh!)
Select the newly created text layer on the Layers page
Right-click on the newly created text layer and select Duplicate – you now have two layers of text
Choose the text tool again
Select the first layer and double click on the text
Right-click text, select “Create Path from Text”
Select->From Path
Layer->Layer to Image size (don’t do this earlier to avoid “issues”)
Select->Grow Selection->4 pixels
Fill with the desired text border color
Select the second layer and double click on the text
Right-click text, select “Create Path from Text”
Select->From Path
Layer->Layer to Image size
Select->Grow Selection->1 pixel
Fill with the desired jelly-donut filling!