The ruling comes after a petition submitted by the organization over discrimination. The Open House will also receive NIS 25,000 to cover legal costs.
The petition was submitted following the refusal of the Jerusalem Municipality to allocate funds out of its culture budget for the organization, for years. In the last three years, payments were stopped to the Open House altogether.
Judge Yehudit Tzur ruled that the criteria set by the municipality are discriminatory.
"The way the municipality conducted itself in relation to the Open House's request creates reasonable suspicion for discrimination," Judge Tzur wrote.
"Even if clerks in the municipality have a hard time accepting the gay community, and believe this is an unwanted phenomenon, the municipality cannot swerve from fundamental principles and ignore this community. It must treat this community with equality, out of recognition of the supreme value of equality, and out of respect for the values of tolerance and pluralism, which exist in the heart of democratic society," the judge wrote in the ruling.