The admin of my local lemmy instance is very transparent about hosting costs and has a ko-fi for donations. Last I saw there were enough funds to last several months but I have seen additional activity on the donations since. They have a strong focus on a geographic community and it looks like there is no shortage of people happy to contribute because of the need that fills.

It depends on the instance, some don’t have much of a reason to exist and are probably going to be an out of pocket thing for a sole operator as a hobby project until they lose a job or get bored. Others are going to have some more structured organization running them with some sort of funding structure.