America does not have a nonprofit funding problem.

It has a nonprofit dependence problem.

Every year, Americans donate hundreds of billions of dollars to charitable organizations. Foundations distribute billions more. Governments contract with nonprofits to provide essential services. Corporations sponsor social initiatives. Major donors establish endowments.

Money exists.

What is far scarcer is resilience.

At precisely the moment Americans are asking nonprofits to do more, many of the institutions doing that work are becoming more vulnerable. Nonprofits are expected to address homelessness, workforce development, public health, education, environmental protection and countless other challenges that governments and markets alone have failed to solve.

Yet many of these organizations rest on surprisingly fragile financial foundations.

For years, nonprofit leaders have treated their central challenge as a fundraising problem.

It isn't.

The sector's greatest financial challenge is not a lack of money.

It is an overreliance on any one source of it.

Too many nonprofits are built on a single pillar of support. One depends largely on government contracts. Another relies heavily on foundation grants. A third survives because of a handful of generous donors. These arrangements can appear stable for years, even decades.

Until they aren't.

A recession arrives.

An administration changes.

A foundation shifts priorities.

A donor walks away.

Suddenly, an organization that looked stable discovers it was simply dependent.

Dependence masquerades as stability until the day it doesn't.

The danger is not that nonprofits run out of money. It's that they mistake a single source of money for security.

What appeared to be strength was actually concentration.

And concentration is fragility by another name.

The problem is familiar to anyone who understands risk.

No competent financial adviser would recommend investing an entire retirement portfolio in a single stock. Markets change. Circumstances change. Unexpected shocks occur.

Diversification is not a growth strategy.

It is a survival strategy.

Yet many nonprofits do exactly what investors are taught never to do. They build ambitious missions atop a single dominant revenue source and assume it will always be there.

Hope is not a strategy.

A donor is not a strategy.

A grant is not a strategy.

A contract is not a strategy.

Diversification is a strategy.

But diversification means more than finding additional donors or securing another grant. Increasingly, it means building revenue, not merely raising it.

The strongest organizations understand that financial sustainability requires a diversified portfolio of support. Individual donors provide flexibility. Foundation grants fuel innovation. Government contracts create scale. Corporate partnerships expand reach. Endowments provide continuity.

Earned revenue contributes something equally important:

Independence.

Across the country, nonprofits are discovering something the sector has too often overlooked:

They are not just worthy of support.

They create value.

Consider Goodwill Industries. While most Americans think of Goodwill as a charity, it has long operated one of the nation's most successful social-enterprise models. Revenue generated through the sale of donated goods helps fund job training, workforce development and employment services. In many Goodwill organizations, retail operations are not a side activity. They are the economic engine that powers the mission. Goodwill demonstrates that nonprofits do not have to choose between generating revenue and creating impact. Properly aligned, revenue can be what makes impact possible.

Many nonprofits already possess assets that can generate revenue without compromising mission. They have expertise. They have training programs. They have intellectual property. They have facilities, trusted brands and deep community relationships.

The question is not, "What business should we start?"

The better question is, "What value are we already creating that others would willingly pay for?"

That shift in thinking is producing a new generation of nonprofit leaders. Rather than depending exclusively on philanthropy, they are licensing curricula, monetizing expertise, operating social enterprises, creating fee-for-service programs and building mission-aligned earned-income ventures.

This is not mission drift.

It is mission insurance.

The goal is not to replace philanthropy.

Philanthropy remains indispensable.

The goal is to reduce fragility.

Some organizations are taking an additional step by creating revenue-generating subsidiaries and hybrid structures.

One example is the Low-Profit Limited Liability Company, or L3C, a mission-driven business form designed to pursue social impact while generating modest profits. (Full disclosure: I drafted Illinois’ L3C statute and had a hand in the development of other states’ L3C laws.)

L3Cs and similar structures reflect a reality many nonprofit leaders are only beginning to embrace: society's most persistent challenges often require more forms of capital than charitable giving alone can provide.

The future belongs to organizations that can combine charitable support with sustainable revenue and investment.

Private foundations have an important role to play in that future.

Most nonprofit leaders understand grants.

Far fewer understand Program-Related Investments, or PRIs.

Under federal tax rules, foundations can make loans, equity investments, guarantees and other forms of mission-driven financing when their primary purpose is advancing charitable objectives. These investments can be repaid, recycled and redeployed, allowing philanthropic capital to create impact more than once.

A foundation may participate because of the social return. An impact investor may participate because risk has been reduced. A lender may participate because the project has stronger financial backing. Together, they can finance solutions that none would support alone.

To be sure, no legal structure is a cure-all.

The deeper issue is resilience.

Every nonprofit board should know two numbers:

Where the money comes from.

What happens if it stops coming.

If the largest funder disappeared tomorrow, would the organization still be standing a year from now?

If the answer is unclear, the board has identified its most important problem.

Yet many nonprofits can recite their fundraising totals down to the dollar while remaining unable to explain their concentration risk.

In the investment world, such oversight would be considered reckless.

In the nonprofit world, it remains surprisingly common.

That needs to change.

Boards should spend less time discussing next year's fundraising goals and more time evaluating next year's vulnerabilities. Executive directors should be measured not only by growth but by diversification. Funders should recognize that strengthening financial resilience may be every bit as important as funding program expansion.

After all, when a nonprofit collapses, a balance sheet is not the only thing that disappears.

A child loses a mentor.

A family loses a food pantry.

A worker loses a pathway to employment.

A senior loses support.

Communities feel the consequences long before auditors do.

Every nonprofit has a mission statement.

Increasingly, it also needs a resilience strategy.

A mission statement explains why an organization exists.

A resilience strategy explains why it will still exist ten years from now.

We often ask nonprofits how much money they raised.

We should ask how much risk they carry.

An organization funded by a single source can look successful.

It can even look thriving.

But growth is not resilience.

And revenue is not sustainability.

The nonprofit sector's greatest challenge is not raising more money.

It is reducing dependence.

Institutions do not fail only when funding runs out.

They fail when they discover too late that they depended on a single donor, a single grant, a single contract or a single bet.

The nonprofits that will define the next generation of civil society will not be the ones that raised the most money.

They will be the ones that learned how to survive without any one source of it.