I assume just tax money like the books in the library. They dont solicit for donations (for money or tools), and the tools are all pretty much the type you would expect for rentals (more durable than you or I would buy for something we might only need once). For example, they have all Park Tool brand bike tools. There might be liability reasons not to take tool donations.

They also have art, seeds, kids toys, puzzles, and musical instruments.

They take donations of seeds (which I contribute to) and puzzles.

It's a library system with maybe like 8 locations, and they spread the non-book collections across the different branches, so one has the tools, another has art, etc.

I actually just found some neat stats on my local system, and the expenditure for the system's whole collection (including books, digital media, and everything) is only 1/10th of the total expenditure. The way they lresent the numbers means i have to calculate things a little weirdly. On average, they spend $0.75 per use of an item. This is going to fluctuate year to year since I only see yearly expenditure and usage, and obviously, items last more than a year.

I dont have usage rates of the tools specifically, but something like a bike tools kit that costs $280 would need to be used 210 times to be hit the same cost per use of an item. I think that's definitely doable because the rental periods are only 1 week, and you often need to place a hold to be able to get something.

Total expenditure of my library on collections is $8 per capita per year. I would gladly 10x that with my tax money. Obviously storage/administration isnt free, but still, it's absolutely affordable, and I think it would be even for a small system.