To carry out their activities the terrorist organizations have to have a steady source of financing. In many instances they are financed illegally, but there are also many terrorist organizations are financed by legal sources, among them contributions, charitable societies, etc. Sometimes donors are unaware that their money is being used to finance terrorism. The terrorism-sponsoring states also provide funds.
Hamas operates an extensive social infrastructure based on donations. Over the years many funds and foundations in many countries have been founded to finance the movement. A considerable amount of the money does reach its social infrastructure, but a considerable amount also goes, directly and indirectly, to finance terrorism.
An ITIC bulletin based on documents and information collected during Operation Defensive Shield showed that Yasser Arafat was personally involved in planning and financing Palestinian terrorism carried out by the Palestinian Authority. According to the report, funds from the European Union and donor countries were used to finance terrorism, and the Arab states also provided funds to finance terrorism. Today Mahmoud Abbas' administration publicly rejects terrorism and claims that the Al-Aqsa intifada caused the Palestinians serious difficulties.
One of the ways to fight terrorism is by cutting off its finances. However, as sources are cut off, more sophisticated and varied ways are found to replace them.