I have said this a few times before in private conversations too.
Just have seasonal ladders where factions compete for the prizes given at the end of the season. Have termed wars penalized in such a matter that a faction that tries hard but loses even harder, still gets more ladder ranking points than a RW that is being timed out.
Give out non-tradeable bonuses, like 5% extra gym gains that are non tradeable so you actually have to be in said faction and can't just trade it all away for money.
Make payouts appear at end of season, and not after a single war so that factions actually have to fight a few to get anywhere on the ranking as other factions that do want to try and fight would end up before the termers.
Make factions be able to select a roster (say 50 members ladder, and a 75+ members) and have those compete in a ladder season rather than the whole factions so tight knight communities can stay together and yet have a competitive fight too. Obviously, bigger ladders should give more rewards so you don't get a shaz and co to basically lockdown a roster consisting of 10 people :)
The possibilities of faction vs faction (RW, TW, ...) is literally endless. It's not hard to come up with some improvements overall to make players work for their money and improvements in still a fair reward system. Currently, it's just a "wait-for-time" upgrade system without much dynamics available.