Imagine running a nonprofit as though you’re hosting a dinner party. You’ve been given a generous budget—but only to buy the food. The tablecloths, plates, glasses, and even the electricity to light the room? Those aren’t covered. You’re left scrambling to find the resources to make everything work, all while ensuring your guests have a great experience.

 This is what restricted funding feels like for most nonprofits. While program-specific funding is critical, it only covers the “food”—the direct costs of delivering services. But what about the “table” that holds it all together? Flexible funding, also known as unrestricted funding, fills this gap. It allows nonprofits to allocate resources where they’re needed most: covering essential but often overlooked costs like staff salaries, utilities, training, and strategic planning.

 These “admin” or “operational” costs are the backbone of any nonprofit. They ensure programs run smoothly, staff are supported, and the organization can adapt to new challenges. Without them, even the best-funded programs risk faltering. Flexible funding provides nonprofits with the freedom to focus on their mission, innovate, and build for the future—just like ensuring your dinner party has both the yummy food and the foundation to succeed.

 Has this intro made you hungry? Grab a healthy snack and let’s dive in.

Now, think about two different realities:

 In the first, Sara’s nonprofit relies entirely on restricted funding. They’re forced to lay off two staff members, halt all programs, and wait for a new grant cycle to rehire and restart. The cost of severance, rehiring, onboarding, and lost productivity spirals into tens of thousands of dollars.

 In the second, they have access to flexible funding. They can pivot immediately, reallocating resources to retain your team, transition programs online, and implement safety measures like providing masks and sanitizer. Instead of closing their doors, they step up to meet the moment.

Sara had indeed a reserve, and was able to pivot and be one of the first responders during the crisis!

During the pandemic, many nonprofits with flexible funding were able to thrive. They launched innovative solutions, like virtual mental health services and meal delivery programs, that kept communities connected and safe. These organizations became lifelines in their communities, not despite the crisis, but because they had the flexibility to adapt.

 We’ve all seen the power of preparation—whether it’s a savings account for personal emergencies or a well-stocked pantry before a storm. Flexible funding is that preparation for nonprofits. It’s not just about weathering the storm; it’s about emerging stronger, ready to meet the next challenge. Let’s champion flexible funding and ensure every nonprofit has the freedom to serve when it matters most.

Vik’s nonprofit is writing a grant to maintain your gender-responsive program. Without this grant, the program will need to be discontinued the following year and many women and gender-diverse individuals will lose access to life-saving services. But they’re short-staffed because the funding Vik secured earlier, doesn’t cover administrative support. Everyone is stretched thin— the program manager is handling some write-up alongside having activities to deliver, their communications officer is juggling to come up with impact data, and Vik is trying to do it all.

The deadline of the grant arrives, and it’s chaos. Vik manages to apply at the last minute and is not sure of the quality of the document. Despite the team’s best efforts, this process is repeated and often interferes with the quality of program activities. Vik and their team are exhausted. On top of it, they notice that there was another funding opportunity that they have missed. 

Let’s pause and think with Vik for a minute, what if it could be different?

Now, let’s rewind and reimagine this with flexible funding. This time, Vik has administrative staff funded by unrestricted resources. There’s a dedicated grant writer who helps in capturing impact data and compilation, a marketing specialist to create buzz and appealing visuals, and the program manager can focus on the programs. Things run smoothly, donors are engaged, and the organization has strong relationships with your supporters. In this scenario, Vik was able to build a team, albeit costing more. Vik argues that, although the team’s time is typically considered admin costs, and frowned upon, the organization cannot have impact without these costs! Vik becomes a staunch supporter of flexible funding, and promotes it in their network.

Now, let’s rewrite this story with flexible funding. With unrestricted resources, Sam’s organization invests in a strategist to develop a five-year growth plan. Their staff receives the training they need to feel confident and stay motivated. They test a new revenue model, attract additional grants, and successfully scale their program to five new regions.

Flexible funding allows their nonprofit to stop treading water and start building for the future.

Think about the nonprofits you admire most. Chances are, they’re the ones that not only deliver programs but also build trust, invest in their teams, and adapt to meet evolving needs. Flexible funding makes that possible. It’s not just a financial tool—it’s a statement of trust, a commitment to sustainability, and an investment in the power of people working to change the world. 

Nonprofit executives, you need to take action. You can push back on outdated funding models, make changes in your programs and operations that value flexible funding, be part of a network to advocate and raise awareness about flexible funding. Flexible funding is more than financial freedom—it’s a lifeline for nonprofits to adapt, innovate, and sustain their impact. As these examples and calculations show, investing in flexible funding is not only cost-effective but also vital for building resilient organizations that can respond to crises, plan strategically, and deliver high-quality services. 

As donors, funders, and partners, you have a choice: you can continue to focus narrowly on programs, or you can support missions. You can empower nonprofits to do what they do best—solve problems, save lives, and create hope. Flexible funding is smart philanthropy. It saves money, builds stronger organizations, and ensures that every dollar has a ripple effect, touching more lives and creating more impact than we ever thought possible. 

The time for change is now. Let’s liberate the nonprofit sector from restrictive practices and invest in their full potential. Together, we can build a stronger, more sustainable future—for nonprofits, for communities, and for the world. 

Flexible funding isn’t just generosity—it’s smart philanthropy that saves money, strengthens communities, and transforms lives. Let’s champion it together.

Author Bio

Janine is a nonprofit leader and a certified fundraiser who enjoys helping meaningful nonprofits to grow. She builds on her wide experience to build a context-specific and adapted strategy for every organization she works with. She loves to solve puzzles, take long walks and learn new things.