Breaking out of the restricted funding cycle isn’t about chasing bigger checks or fancy strategies. It’s about building an organization that funders believe in and communities rally around. When you start planning with partnership in mind, tell stories backed by solid data, treat your donor data like the treasure it is, and invite funders into honest, ongoing relationships, you set your nonprofit apart.
Struggling with restricted nonprofit funding? In today’s podcast, Yanyn San Luis from The Win Woman and Stephen Halasnik from Financing Solutions discuss breaking the restricted funding cycle: 3 game-changing approaches every nonprofit needs to know.
Summary
Understanding The Restricted Funding Cycle
If you’ve ever worked in the nonprofit sector at any point, you know the struggle: passionate people, meaningful missions, and unfortunately, restricted funding.
What is restricted funding? This refers to any grant or donation that comes with specific conditions attached, dictating how the funds can be used. Most of the time, nonprofits are often boxed in by well-intentioned but tightly controlled support, like a grant earmarked for a very specific program or a donation that can only be used for a certain initiative. This restricted cycle creates a frustrating paradox such that you’re doing good work, but with limited flexibility, it’s hard to grow, innovate, or even sustain the behind-the-scenes operations that make the mission possible.
How Do We Break Out of the Restricted Funding Loop?
The answer isn’t just about asking for unrestricted funds, though yes, that helps. But it’s about changing how we operate, communicate, and engage. Here are three powerful shifts every nonprofit can help you break the restricted funding cycle.
1. Strategic Planning: Think Collaboration and Data-Driven Storytelling
Strategic planning is not new to nonprofits, but too often, it happens in silos. We gather the board, crunch numbers, set goals, and then go right back to operating solo. But the truth is, in today’s interconnected world, the organizations making the biggest impact are not doing it alone.
Partnering with Purpose
Strategic partnerships can be a total game-changer. Whether it’s joining forces with another nonprofit, a community group, or even a private company with shared values, collaboration helps you scale your reach, share resources, and make a stronger case for funding.
Funders love to see collaboration. It tells them you’re not duplicating efforts, you’re building ecosystems—and that’s where real change happens.
For example, maybe your organization provides food assistance, and another local nonprofit focuses on job training. Together, you could offer a more holistic solution to food insecurity. That’s not just powerful programming, it’s a compelling story for funders.
Let Your Data Do the Talking
We all know storytelling matters, but when you combine it with data, it becomes unstoppable.
Too often, nonprofits collect great data but don’t use it to its full potential. Or we rely only on emotional stories without showing the measurable impact.
Imagine presenting a grant proposal that not only shares a heartfelt client story but also backs it up with a 12-month trend showing how your program improved community outcomes by 40%. That’s the kind of storytelling that opens wallets and wins trust.
Start tracking the right metrics. Then, train your team to interpret and share that data in a way that’s human, relatable, and results-driven.
2. Audit and Optimize Your CRM: Your Donor Data Deserves More Attention
To be honest, CRM systems aren’t exactly exciting to talk about. But they’re the quiet engine behind successful fundraising and meaningful engagement.
A good CRM (Constituent Relationship Management system) does not just store names and email addresses. It holds the key to understanding your donors, tracking their behavior, and building long-term relationships. But only if it’s up-to-date and properly maintained.
Clean It Up
How many duplicate entries or outdated email addresses are clogging up your system right now? Be honest.
Doing a full audit of your CRM might feel like a chore, but it’s an investment that pays off. When your data is clean, you can segment donors properly, personalize outreach, and target the right people at the right time.
Use Data to Deepen Relationships
Once your system is optimized, you can move beyond mass emails to meaningful engagement. Who gave last year but hasn’t this year? Who opened your newsletter three times but never clicked the donate button? These are not just data points, they’re opportunities to connect.
Use what you know to craft better asks. Send tailored thank-you notes. Recognize loyal supporters in creative ways. This builds trust, loyalty, and most importantly could help break the restricted funding cycle.
3. Build Transparency and Stronger Communication with Funders
You must understand that funders are not the enemy of flexibility. Most of them want to support effective and sustainable nonprofits, hence, they just need to feel confident in how their money is being used, and that’s where transparency comes in.
Share More Than Just Wins
It’s tempting to only report the good stuff. But smart funders understand that challenges are part of the process. When you’re honest about what’s working and what’s not, you demonstrate maturity, adaptability, and integrity.
Talk openly about lessons learned, unexpected outcomes, or why you had to pivot. This kind of transparency doesn’t scare funders off; rather, it builds trust, hence, a powerful tool to break the restricted funding cycle.
Invite Funders Into Your World
Do not limit communication to grant applications and end-of-year reports. Think of your funders as partners in the mission. Share updates throughout the year. Invite them to virtual events and send personal notes when milestones are hit.
Better yet, ask for their input. This makes them feel involved, not just invested. And when a funder feels like part of the journey, they’re more likely to offer unrestricted support or continue funding over time.
About Our Guest, Yanyn San Luis, From The Win Woman
Yanyn “Yany” San Luis is the CEO and founder of The Win Woman. She has worked with mission-driven organizations like AARP, Latin Grammy’s Cultural Foundation, Teach for America, and other national nonprofits. Yany has led high-impact training for boards, staff, and funders, and spoken at many events and industry leadership forums. Her work has helped nonprofits secure millions in funding, strengthen donor engagement, and elevate their organizational impact. In essence, the Win Woman Firm helps nonprofit CEOs WIN in raising money.
Learn About Stephen Halasnik
Stephen Halasnik is a Managing Partner at Financing Solutions, the largest provider of lines of credit to small nonprofits in 48 states since 2012. A line of credit is like an on-demand bridge loan for nonprofits when needed. Mr. Halasnik has hosted the popular Nonprofit MBA Podcast since 2018. The podcast brings experts together to discuss fundraising, nonprofit grants, executive director leadership, nonprofit boards, and other essential topics. You can learn more about the nonprofit line of credit program here.
