The ad was taken down from a Melbourne street this week after threats were made to the billboard company.
The digital image was accused of being "propaganda" and not reflecting Australian culture.
The campaigners have raised funds to pay for "multiple billboards across Australia".
Dee Madigan, the creative director behind the advert, which was promoting a series of government-backed events, organised the crowd-funding campaign to show that "most Australians are not horrible racists".
"I'm really angry, this was a photo of two young Australian girls celebrating Australia Day," she told the Australian Broadcasting Corp.
"I feel for the Muslim community, they're damned if they do, damned if they don't.
"You get all the racists saying 'oh, they don't assimilate' and then there's literally a photo of them celebrating Australia Day and you get the same people saying 'that's not right' - it's just not OK."
The photo featured on the billboard was one of a series taken at last year's Australia Day event in Melbourne. It featured two young girls holding wearing hijabs and holding Australia flags.
Lawyer and community rights advocate Mariam Veiszadeh said the girls featured in the photo and their family supported moves to reinstate the photo or include it in another campaign.
"From my perspective I explained we could associate those images with something positive, and the girls' time in the media spotlight would be accompanied by thousands speaking up against Islamophobia, gathered around them to stand in support and solidarity," she told Guardian Australia.
Australia Day is a public holiday celebrated on 26 January, marking the day Britain's First Fleet arrived in 1788.

Kieren Church, 30, died after bottles he was hiding broke when he was tackled by a store guard in a shopping centre car park on 9 February.
The 20-year-old guard was arrested the following day after the incident at The Shires shopping centre in Trowbridge.
Wiltshire Police said a report would be passed to the coroner.
A post-mortem examination showed the provisional cause of Mr Church's death was glass injuries to his abdomen.
A campaign to reinstate an Australia Day advert featuring two girls in hijabs has raised more than A$100,000 (Â£60,000; $75,000) in donations.
[NEXT_CONCEPT]
A security guard arrested on suspicion of manslaughter after an alleged shoplifter bled to death will face "no further police action".