HAWAI'I'S NONPROFITS
Cutbacks in grants to nonprofits no solution
By Kelvin H. Taketa
As Hawai'i's newly elected leaders prepare to take office, it is clear that there will be extraordinary pressure on state and county revenues. The idea of cutting government grants and contracts to nonprofit agencies might seem like an attractive strategy in helping to balance the budget.
It is not the right solution for our community and here's why:
First, we must abolish the myth that government cutbacks can be made up by increased private contributions.
According to the Hawai'i Community Foundation's study "Hawai'i Nonprofits 2001," most of the nonprofit revenues come from government sources; this allocation reflects the fact that many of these agencies provide important public services.
Still, nearly 71 percent of Hawai'i nonprofits receive contributions from individuals, corporations and foundations. Private contributions account for 19 percent of total revenues — nearly double the national average of 10 percent.
Hawai'i's people are indeed generous. Our most recent study, "Hawai'i Giving Study 2002," shows that in 2001 an incredible 92 percent of Hawai'i households made charitable donations, with an average contribution of more than $1,100 in cash and goods.
With the people of Hawai'i clearly giving at or near the limit of their capability, government cannot look to them to make up the difference.
Second, we must remember that the services and benefits these agencies provide are the foundation of what makes our community work: childcare, food and shelter for those less fortunate, education and work force development, culture and arts, sports programs and houses of worship.
In many cases, they deliver essential services more efficiently than government and can stretch government money with other financial resources and volunteers.
Moreover, many of these agencies experience a surge in demand for services precisely when there is the temptation to reduce public support in weak economic times.
Finally, we must recognize that the nonprofit sector represents a major economic force in our community.
The "Hawai'i Nonprofits 2001" study showed that nonprofit agencies employed more than 7 percent of the non-agricultural work force — fourth in employment size in the state. Their economic leverage is considerable, with 39 percent of the expenditures used to purchase goods and services in Hawai'i and only 4 percent going out of state.
The one thing that our government leaders can count on is the dedication of the nonprofit sector to deliver as much value as possible given the circumstances.
Brookings Institute researcher Paul Light said: "... Unlike the federal government, the nonprofit sector cannot disguise its deficits by ignoring future liabilities or changing the start of the fiscal year.
"And unlike the private sector, it cannot shelter itself by eliminating unprofitable product lines or declaring bankruptcy.
"... The nonprofit sector will do what it has always done: It will ask its work force to work harder and longer; and its work force will do just that."
Kelvin H. Taketa is president and chief executive of the Hawai'i Community Foundation, a statewide charitable-services and grant-making institution endowed with donor contributions.
