EP 50 / Is Your Nonprofit Ready for More Money? with Sharmon Lebby
"If we just had more money" is one of the most common sentences in nonprofit work. I've said it, and I'd guess you have too. More funding can do a lot of good, and it does the most good when your organization is set up to hold it.
In this episode of Nonprofit Nook, I talk with Sharmon Lebby, Founder and CEO of Blessed Designs Consulting. Sharmon has spent more than 20 years helping nonprofits build strong foundations, and right now she's also serving as an interim executive director, so she's living this work every day.
We talk about how to tell whether your organization is growing faster than its infrastructure, what it looks like to be ready for significant funding, and where to start if you listen and realize there's some shoring up to do. If you have a grant application out right now, this one is for you.
SHOW NOTES
What happens when the big check finally arrives and your organization isn't ready to hold it?
Sharmon Lebby has seen it up close. She's the Founder and CEO of Blessed Designs Consulting, a nonprofit strategist with more than 20 years of experience, and she's currently serving as an interim executive director while running her own business. Ask her why more money doesn't automatically make an organization healthier and her answer is direct: most often, everything just sort of falls apart.
Sharmon is also a former neuroscience research associate, so she thinks a lot about how our brains work. She points to research showing that when we want to make something better, our instinct is to add. More money means more people served, more programs, more of everything. We pile it on without asking whether the foundation we built can carry the weight.
Money is a tool, and a tool only helps when you know what you're going to do with it. A hammer is great for hanging a picture. Use it for everything and you'll end up tearing down some walls.
In this episode of Nonprofit Nook, Sharmon joins Wendy to share the signs that an organization is growing faster than its infrastructure can support. Everything depends on one or two people. Nobody can take a week of vacation without things slipping. The team is already worn out. There's no reliable way to track what's coming in and going out. Larger funding also brings more compliance, and the IRS and your state will want more from you.
They also talk about what ready looks like. Your processes are written down, including how you do things and why you make the decisions you make. Your board can talk about the organization with confidence and clarity. Everybody is rowing in the same direction. And you could leave on vacation tomorrow and come back to an organization that's still going strong.
From there the conversation turns to governance. Wendy and Sharmon dig into why the strategic plan should drive the fundraising, what happens when the person or donor who brings in the money starts steering the mission, and why saying no to funding is sometimes the right call. Sharmon also has a lot of empathy for development directors, who by one estimate she heard last an average of 18 months, often because they're asked to raise money nobody has explained to them.
Beyond the checklists, this is a conversation about moving out of a scarcity mindset. It's hard to hear "money is just a tool" when you're trying to survive. Sharmon's encouragement is to build slow and build solid, and to start with whatever made you cringe a little while you were listening.
If you lead, volunteer with, support, or dream of starting a nonprofit, this conversation is a reminder that the work you put into your foundation is what lets the next dollar do its job.
In This Episode
You'll hear Wendy and Sharmon talk about:
Why more money tends to magnify what's already happening inside an organization
The warning signs that your nonprofit is growing faster than its infrastructure, including depending on one or two people to keep everything going
What "ready for more funding" looks like, from documented processes to a board that can speak about the organization with clarity
How knowing exactly what the money will do makes your grant applications stronger
Why documenting how you do things, and why you decide the way you do, matters as much as listing what you do
How to move from "I need more money" to "what does our organization need in order to handle more money well?"
Why the strategic plan should drive the fundraising, and what a well-rounded board brings to that work
When it makes sense to say no to funding so you stay aligned with your mission and values
Connect with Sharmon Lebby + Blessed Designs Consulting
Website
https://blesseddesignsco.com
Nonprofit Launch Academy
https://blesseddesignsco.com/nonprofitlaunchacademy
Free resources from Sharmon
https://blesseddesignsco.com/friends
Instagram
https://www.instagram.com/blesseddesignsco/
Sharmon Lebby on LinkedIn
https://www.linkedin.com/in/sharmon-lebby/
Register for Your Financials Tell a Story, September 24
A Nonprofit Nook workshop on how reporting your financials tells your nonprofit's story.
https://www.eventbrite.com/e/your-financials-tell-a-story-tickets-1998973064246?aff=oddtdtcreator
Connect with Wendy + Nonprofit Nook
Nonprofit Nook
https://nonprofitnook.com
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Wendy Kidd on LinkedIn
https://www.linkedin.com/in/wendykidd/
More from Boss Level Engaged
Boss Level Engaged
https://www.bosslevelengaged.com/
Boss Table
https://www.bosslevelengaged.com/bosstable
TRANSCRIPT
Wendy: Hi everyone, welcome back to Nonprofit Nook. Today I'm joined by Sharmon Lebby, Founder and CEO of Blessed Designs Consulting. Sharmon is a nonprofit leader, speaker, writer, and consultant with more than 20 years of experience working across nonprofits, movement building, and ethical entrepreneurship. She works with mission-driven organizations to strengthen their strategy, governance, and operations, helping leaders build organizations that are sustainable, effective, and equipped to grow.
Sharmon brings a unique perspective to this work, combining big-picture strategy with the practical realities of what it takes to run and grow an organization. Sharmon, welcome to Nonprofit Nook.
Sharmon: Thank you so much for having me.
Wendy: I'm so happy we crossed paths, and I love that we had so much in common, especially working as an interim executive director for a hot minute, which you're still doing, right?
Sharmon: I'm still doing it.
Wendy: It's so much work.
Sharmon: It is so much work. So much work.
Wendy: And keeping up with your business on the side. I totally feel for you.
Sharmon: It's been a wild ride.
Wendy: I can only imagine. But I really appreciated the fact that you reached out, and I loved the topic you reached out about. So today we're going to be talking about the excess of money that sometimes we have that we're not prepared for. What happens when you get that money and you weren't ready? So let's start with that, Sharmon. Why doesn't more money automatically make an organization healthier? What happens sometimes?
Sharmon: In all honesty, what I see most often is that everything just sort of falls apart. Usually in these situations, the organization is completely dependent on one or a few people to keep things going. And when you bring in more money, we're automatically adding on more things.
I should go back, because I'm a former neuroscience research associate, so I'm always thinking about the brain and how we work. There was this paper that basically talked about how it's a human instinct to add more to make things better. And that's what we're constantly thinking, right? We automatically think we just need more money. Once we get more money, we can serve more people, and then we can add more programs, and we begin to just pile stuff on when we get that money, without thinking about whether or not the foundation we built can actually hold it.
Wendy: Yeah. I mean, don't we do that in our personal lives too? Like, if I just had money, I'd solve all the problems. But I also know having more money brings its own set of problems. So what are some warning signs that an organization is maybe growing a little faster than its infrastructure can support? That's basically what we're talking about.
Sharmon: Absolutely. The first one, of course, is that it's completely dependent on just a few people. If you cannot walk away, if one person can't go on vacation for a week without things falling apart, that's a problem, right? If we are completely dependent on that person to do anything, then we already have a problem. We're setting ourselves up to fail in that way.
If you are burned out, or you have staff members and team members who are just overwhelmed, that's a flag that you probably don't need to bring in more money, or more anything, yet.
The other thing is, if you don't have a good way to track and measure what you're already bringing in and what's going out, that's also a sign that you don't need to bring in any more. Because my big thing is, when you start bringing in larger amounts of money, that's more compliance. That's more information the IRS is going to want. That's more information your state is going to want. You have to have a good system underneath for managing your finances before you try to bring on anything else.
Wendy: Right. And I think a lot of people assume they're just going to hire more people to handle all that. The thing is, you need to have a plan for who you need to hire, what they're going to be doing, and what they're going to cost you, so that you know what you're spending new money on, as well as what that person can do for you, before you even hire them. There's just so much planning that goes into it that I think people kind of skip past. They just work on that grant application, right?
Sharmon: For sure. And it's funny that you mention grants, because I always try to tell people this is actually going to help your grant application. If you can figure out exactly what you're going to do with that money, if you know exactly what that person is going to do for you, your grant application is going to be that much stronger. They already know, hey, these people have a plan. These people know what they're doing. They completely understand the impact this money is going to have and what it's going to do for their organization.
Wendy: Absolutely. And that's exactly what we mean by strong infrastructure: having plans, having documented processes, and being able to build on those. If you don't have a good foundation, you're just not going to understand what to do with this money, and it's not likely to do a whole lot for you. So how does a nonprofit leader know whether they're actually ready to pursue significant growth or additional funding? If we feel like we're strong, what does that look like? How do we know?
Sharmon: I think, one, it looks like that documented process you just talked about. We have systems. We know that pretty much anybody could walk in off the street, and don't pull anybody off the street to test this, y'all, but anybody could walk in and kind of do what you do, because you have the processes in place to make things a little smoother.
It looks like your board being able to talk about your organization with confidence and with clarity. The people who are working with you and for you and around you really understand what your organization is, what its purpose is, and where you're going. Everybody's rowing in the same direction. We're able to get together and talk and have communication and really build this thing out and make plans.
And I think when you're in that place, when you know, hey, I could go on vacation tomorrow and leave everything, and this organization is still going to be going strong when I come back, I think we're in a good place to start looking for that funding.
Wendy: Yeah. So to take it back a step, for a nonprofit leader who's maybe listening to this and going, "Ooh, we're not ready. I know we applied for that grant, and we've got this potential boulder rolling toward us." How do we catch it? How do we do well? What are some of the things you think they should look at first? What should they start with?
Sharmon: That's a good question. I feel like a lot of this is going to be determined by what it is that put up a red flag for them. What did you hear that put up a red flag? That's where you're going to start. What kind of freaked you out a bit? Like, wait, I have no way to manage my finances. We don't have an accountant. And I don't necessarily need you to have an accountant, but I need you to build some kind of spreadsheet. I need you to have some kind of log of what you're doing. Wherever it is that set you back, made you cringe just a little bit, that's where you're starting.
A lot of times that's with the financial management. Sometimes it's just systems. Like, hey, I'm running this completely by myself and I don't really have help. My board members aren't really doing anything. So that's where I want you to start. I want you to start writing down all the things that you do.
This is one of the mistakes I made when I created my first organization. I made a list of all the things I did, but I didn't tell anybody how I did them. So that's the other thing. It's not just what you do, but how you do it and how you're making the decisions you're making. Why do we use pink on the flyer instead of blue? What does that decision process look like? I've seen organizations where people come in and want to do the marketing and make all these flyers, and the brand colors are this, and we're getting flyers that look like that, and we're like, okay, where's the continuity here?
So we're writing down those processes. We're documenting everything we do. We're explaining how we do it and why we make the decisions we do. And I think ultimately that's probably where you start.
Wendy: Yeah. I think the key here is to change your mindset. How do we change that mindset from "I need more money" to "what does our organization need in order to handle more money well?" Any tips for that?
Sharmon: I feel like this is the hardest thing anybody can do, a nonprofit leader or just anybody out on the street: changing your mindset, and what that process ultimately looks like. I think it starts with awareness and recognizing that something has to change.
There's a lot of controversy surrounding this phrase, but a mentor once told me that money is just a tool.
Wendy: It truly is.
Sharmon: It really is hard to hear when you're just trying to survive, and you feel like you don't have anything, and nothing's coming in, and all you're thinking is, I need money, I need money, I need money. But at some point we have to move ourselves out of that scarcity mindset and recognize that there is absolutely money out there, but money is not going to fix everything. It just can't.
So it's recognizing that money is a tool, and you just need to figure out what exactly that tool is going to do for you and how you can use it. It's a tool just like a hammer, and you're not going to use a hammer for everything. You're going to end up tearing down some walls when you're trying to hang a picture.
Wendy: Absolutely. Well, I want to dig into this in a little more detail. When I look at nonprofits that are grassroots, small nonprofits, they're trying to get that dollar, right? We've started, we need money to fund what we're doing, and we have all these grand ideas about what we're going to do service-wise for people when we have that money.
But I think it all kind of comes back to the board, and tell me if you think I'm wrong here. If they haven't been creating strategic plans, if they haven't been working with the executive director and coming up with a firm "this is what our mission is, this is how we're going to get there, here's the growth we want to see, not just today but five years down the road," then we need to set some milestones down this road, and we need to build out the team to make sure that when we get that money, we're applying it to staff to be able to provide that service. Wouldn't you say?
Sharmon: One hundred percent. It usually always comes back to governance. Even thinking about when organizations are just getting started, or when they're smaller, I think it's really important to think about who we're putting on that board and who we're bringing into this team.
Let me tell you, I just had somebody block me on Threads the other day because they were like, "If your board isn't fundraising, what are they doing?" And I was like, well, I hope they're governing.
Wendy: Right there on the nose. Oh my gosh, yes.
Sharmon: But at the same time, I think it's really important to build a really diverse board, a board that allows you to have all these different skill sets. People who understand how nonprofits work, people who understand compliance, and then the people who understand that fundraising component and can help amplify that in your organization and help your board get around that as well. All of these components are really important.
When we start missing pieces, then we don't have that strategic plan and we don't have that forward thinking. We don't have people who are saying, "Hey, we're getting away from our mission a little bit here. We may need to circle back and maybe take away some programs if capacity is just not where we're at right now." If we don't have the people to run all this stuff, then we're going to have to say no, and slow down, and take some things away, even though our immediate thought is always to add more and more and more. Sometimes it's taking it away that makes things better.
Wendy: Absolutely. I did an interview with another podcast guest who talked about growing to over 400 chapters. They were very clear: we had to be so selective in our mission and keep our focus on just the one thing we did to be able to see that growth and solve this problem nationwide versus just locally.
And I think that when we don't have the structure in place, it feels to me that those who bring in the money, whether they're the fundraiser on the board, or the development director, or a staff member, when they bring in that money, it now becomes their idea as to what to do with that money, instead of having a strategic plan. Or it's the donor driving it, saying, "Well, I'm giving you the money, so here's what you have to do with it." Both of those can lead to disaster, because ultimately they're going to stray from the mission. Now it's about their personal mission, not the organization's mission.
I think that's something for people to be aware of too. Sometimes it's okay to say no to the money, because the money isn't appropriate for what you're wanting to do.
Sharmon: I talk a lot about being mission or purpose aligned, and values aligned, and moving everything in your organization from that standpoint. What you said is exactly right. People will go for what seems like easy money, and all of a sudden we're flipping what we do. We're having to change things around and not serve the communities and the people we had been serving, because somebody else has decided for us that, no, we need to be doing this. We're not really thinking strategically, not thinking about what the organization is, what the whole goal and purpose and vision was, and how we fit funding and programs inside of that.
I think this is the only time I'm going to tell you guys to think inside the box. Stay inside that box.
Wendy: That's a good way of putting it. I love that. Let's stay inside the box until we are ready. Like you said before, you know you're ready when you have these things in place.
And I hear it all the time. Nonprofits say, "We paid $10,000, $25,000 for this piece of paper." But that piece of paper is really what should be driving your fundraising. Your fundraising shouldn't be driving the strategic plan. The strategic plan should drive the fundraising, because you've got to know what you're going to do with that dollar, for so many reasons. You have to be trustworthy for your donors. You have to be able to say, "This is what I'm going to do with that dollar," and be able to report back that you did it. Whether it worked or not, you at least did what you said you were going to do. Versus you take a check from somebody and then say, "We're not sure what we're going to do with it, but thanks for the cash." That doesn't help your trustworthiness as a nonprofit.
Sharmon: Not at all. And it's actually a situation I'm dealing with right now. A lot of organizations, especially when dealing with BIPOC-led organizations, are giving the money with no strings attached, just unrestricted grants. And I'm super appreciative of that. That's amazing. But now we're in this position where, how do we report what we did with the money? How do we build that when it wasn't something specific? It's a little bit of me recognizing, wait, this is something completely different than I've ever had to do before. I didn't have these guardrails. So now I'm like, we did everything with the money. But we still have to report back, right? So this report is probably going to be five million pages long, because we did all kinds of stuff.
Wendy: Right. Love that for them. Love that they were able to do all the things.
Well, I appreciate you coming on and talking about this, because I'm such a strong proponent of board governance, as well as knowing what to do with your money. I hope the nonprofit leaders who are listening are taking good notes and doing a self-evaluation of what's going on with their group. Do they have a strong board? Do they have a handbook for the board? Do they have job descriptions for the board and for their staff members? Do they have job descriptions for who they need to hire, so that when they're asking for money they can say, "This is where that money's going to go"? Do they have their systems documented, like you talked about so eloquently? Do you have it written down how you do what you do, so that when you hire the next person, you can teach them that? I think those are all things to question for yourself before you just turn your development director loose and go crazy.
Sharmon: Yeah. And y'all, I have so much empathy and sympathy for development directors. I was listening to another podcast and they said the average one lasts 18 months. And I'm like, y'all are burning them out. You're burning them out because we don't have these systems in place when we're bringing them in and expecting them to raise money. So, yeah. Do it for your development director.
Wendy: Absolutely. And I hear from them too. The board members are just like, "Hey, you didn't raise enough money." But if you're not looping them in as to what the money's for, how are they supposed to raise that money? They don't know what to say to people. They're just making it up as they go. And that's what leads to burnout, right? All these cautionary tales.
I do want to take a moment to talk about what you've got going on, the Nonprofit Launch Academy. I think this is something important for people who are in that grassroots, small, we're-just-starting-out stage. This is a great way to check off a list. Would you tell us a little bit about it?
Sharmon: Absolutely. This came out of my own nonprofit-building woes, and working with other people and seeing people make the same mistakes. We're just doing the same things over and over. We're up at three o'clock in the morning on Google, trying to figure things out.
This academy was really built to go with you as you're going. I always say to build slow and build solid, but the point is to build as you go and to get all that you need. It's a step-by-step process. We've got eight modules that take you through all the different phases and elements and pillars of your organization that you're going to need to get as solid as humanly possible in order to move on to the next phase.
We start off with researching your community, figuring out if your organization is really needed. And maybe it's not, because sometimes that happens.
Wendy: Right. We did a podcast on that too, on when not to launch a nonprofit.
Sharmon: Please go listen, y'all. But going through that process, building an identity for your organization. People often look at branding like, that's just my website, my logo, my colors. It's so much more than that. It's how you want to connect with people. How are you approaching people? What does all that look like? All of that is part of your organization's identity and your branding.
Then we're moving on to legal structure, because maybe we're thinking 501(c)(3), and maybe a 501(c)(3) is not what you really need to do. And we move through that whole process of building your operations, building your board, building those systems, and building a digital identity, making sure you have all of that in place, or at least have the plan in place, before we get ready to fill out that paperwork to get our tax-exempt designation.
Wendy: I love that you have this, not only for the people who are just now considering launching a nonprofit, but for those who are maybe only a year or two in and want to double-check themselves. And it's so affordable. You're only offering it for what, $297?
Sharmon: Yes.
Wendy: That is so fabulous. So what's the link for people to go find out about that?
Sharmon: That is blesseddesignsco.com/nonprofitlaunchacademy, all one word.
Wendy: Perfect. We'll have that in the show notes so everyone can check it out. Thank you so much for coming on today, Sharmon. I really appreciate it. I know we're going to stay in touch, because we are kindred spirits.
Sharmon: I hope so. Yes.
Wendy: So, guys, take a look at this, think about what's going on with you, and make sure you are ready for that check when it comes, because we want you to be ready. Thanks, everyone, and we'll see you next time on Nonprofit Nook.