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The Honolulu Advertiser
Posted on: Sunday, June 29, 2003

COMMENTARY
Nonprofits play vital role in economy

By John Griffin

One of the better developments here and elsewhere in recent years has been greater appreciation of our civic sector, that vast group of mostly nonprofit and often volunteer organizations that operates in parallel with government and business.

One reason for it has been tougher economic times and resulting government cutbacks. Such conditions bring more attention to the role of nonprofits in helping to form society's safety net of services for the poor and disadvantaged.

More community understanding is another reason. For example, lots of eyebrows went up last year when a Hawaii Community Foundation study subtitled "The State's Silent Economic Partner" outlined the extent of the nonprofit sector here.

Depending how you count, we're talking about Hawai'i's fourth- or fifth-largest employer, providing jobs for some 41,000 full- or part-time workers, not to mention more than 47,000 volunteers.

Hawai'i's 6,000 nonprofits generate substantially more than $2 billion a year in revenue. More important, they perform essential functions in an amazing array of activities that touch everybody in the state.

The list includes health and human services, civic and social organizations, PTAs, Aloha United Way activities (serving 64 organizations), private schools and colleges, art galleries, museums and other cultural facilities, sports clubs, scouts, churches, humane societies, neighborhood associations, civil rights and environmental groups. One list shows more than three dozen types of tax-exempt organizations.

Kelvin Taketa, president and CEO of the charitable and grant-making Hawaii Community Foundation, lists three kinds of nonprofits, categorizing them on the basis of how they get their money. (Taketa also writes a monthly column in the Sunday Advertiser business section.)

Big nonprofits often depend mostly on public and private grants, and on government contracts to provide services, some of which government has provided in the past. Taketa lists affordable housing as one example. Some of the big nonprofits' staffs are partly unionized.

At the other end are smaller organizations that get nearly all their operating money from fund-raising. This would include churches and environmental groups.

In the middle are those that charge fees for admission and other services, such as museums.

Nonprofits on all levels may engage in business activities in keeping with their public-service missions. That could range from community bake sales to small shops to large retail outlets such as those operated by Goodwill and the Salvation Army. (One national figure I came across is that Girl Scouts in a few weeks sell 10 percent of all the cookies bought in the United States every year.)

Several questions reveal much about the way the nonprofit sector is evolving with issues of potential controversy. The first is from an online column by John Flanagan, the former Star-Bulletin publisher and columnist who now heads the Hawaii Community Services Council, which provides planning and training for nonprofits. Flanagan asked: "Which human services model does Hawai'i want: 'Patchwork quilt' or 'Wal-Mart'?"

He was paraphrasing a presentation by Geri Marullo, CEO of Child and Family Service, Hawai'i's largest nonprofit. The thesis for her doctoral dissertation from the University of Hawai'i cites forces that are creating larger and fewer nonprofit health and human service providers, leading toward a dozen or so "big box"-type conglomerates.

That may mean more businesslike efficiency and more statewide grants and contracts. But Marullo also worries that it could shrink the safety net while losing the local touches that many nonprofits provide.

She writes: "Are nonprofit health and human service organizations still a part of the solution? Are we truly mission-driven in addressing societal injustices that government has failed to recognize and act upon? Or are we merely mechanical engines of the political economy of government policy and nonprofit and service delivery systems?"

Given the choice between nonprofits moving closer to government as a kind of dependent "shadow state," or embracing more for-profit components of entrepreneurial activity, she clearly favors the latter as the "American Way."

One possibility being discussed and tried is more collaboration among nonprofits. Flanagan talks of "all kinds of huis" acting together on common issues such as the homeless.

Taketa cites synergies, such as cooperation between those who provide basic care for the homeless and nonprofits that then help the same clients get jobs. He also notes "lots of ways for collaboration" among nonprofits short of mergers and acquisitions. These include sharing office space and joining together to buy computers or even life insurance for workers.

The complex picture you get is less of do-gooder charities than of nonprofit professionals seeking efficiencies and other improvements.

Relations with government are necessary in terms of grants and meeting the many bureaucratic requirements. Ironically, such red tape can be onerous to the point of hindering volunteerism. One veteran of nonprofits wondered whether the admirable community groups being formed to fight Hawai'i's "ice" problem could end up stalled or sidetracked by bureaucratic hurdles.

Nonprofit relations with business are also mixed. The work of business people as volunteers is appreciated, and nonprofits look to business methods as models for greater efficiency. Many nonprofits operate for-profit businesses.

On the other hand, the point is often made that nonprofits are not the same, and have human-services standards to meet, separate from bottom-line profits.

So there are tensions. Some nonprofit operators complain the business sector does not understand them and treats them as charities rather than services that seek to improve society and as potential customers.

On the other side you find some in business who complain that nonprofit "people huggers" don't understand business or see that a healthy business sector is vital to their survival.

There are many more aspects to the picture, such as the need for more youth and training, the blurring of lines with business and government, and the idea that Gov. Linda Lingle might do well to call a nonprofit-sector summit, as she has for tourism.

However it is done, the civic sector needs more understanding and attention as a vital ingredient in holding our society together and bringing needed improvements for all Hawai'i's people.

John Griffin, former editor of The Advertiser's editorial pages, is a frequent contributor.