How can I raise money for a business incubator?

First and foremost, realize that a business incubator (or accelerator) is itself a business.  It this needs to provide a value to its customers (other startups) and needs a business model that brings in more revenues than pays expenses.

The difficulty in creating a working model is that the clients typically had no money to pay.

Y Combinator, TechStars and the othe big-name accelerators use a venture capital model to overcome this issue.  They raise a pool of funds and invest in their participants.

The more common model is grant funding.  Many cities run incubators, using government fuss to cover the expenses.  Some of these supplement those funds with corporate sponsorship's.

Next, you'll find some incubators tht simply charge their clients a fee.  UP! Global NEXT and Founder Institute use this model, in dozens if cities around the world.