However, Mr Justice Hunt said that it could not be ruled out beyond a reasonable doubt that the intention of Lisa Smith was either charitable or for humanitarian reasons, instead of funding terrorism.
He said the court was not satisfied that the prosecution had met its case and directed a not guilty verdict on the fundraising charge.
The Special Criminal Court is continuing to deliver its verdict on the second charge of ISIS membership.
Smith (40), a former member of the Defence Forces, had pleaded not guilty to being a member of the unlawful terrorist group IS, also known as ISIS, between October 28, 2015, and December 1, 2019.
She had also denied trying to finance terrorism by attempting to provide €800 in assistance, via a Western Union money transfer, to a named man on May 6, 2015, for the benefit of the same terror organisation.