Drawing on the quintile system of categorising schools, South African public schools are bifurcated into no-fee and fee-paying schools. Emerging research has shown that school principals in both categories of schools encounter several challenges with regard to school funding. In this article, we employ contingency leadership theory to examine how school principals respond to the school funding challenges they encounter. An interpretive, qualitative case study drawing on semi-structured interviews with 4 purposively selected principals was conducted. To augment the interview data, purposively selected school documents were reviewed. Through thematic analysis, it was found that principals in fee-paying and no-fee schools employ a cocktail of practices to respond to the challenges they encounter. From the findings, we learn that school funding challenges push principals to enact a form of transgressive leadership where they adopt a context-driven, as opposed to a policy-driven approach to school leadership. Furthermore, the funding challenges drive school principals to renegotiate their roles as professional managers of the school and as ex-officio members of the School Governing Body. This results in school principals becoming more entrepreneurial in their school leadership.