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Hawaii’s nonprofits are rapidly reaching a breaking point. Here is how we got there and why something must change.

In recent years, the demand for social services has steadily increased. The Covid-19 pandemic further exacerbated homelessness, food shortages, mental health problems, and other pressing issues. We don’t expect this imperative to return to pre-pandemic levels anytime soon. In addition, the cost of providing these critical services is rising.

The state, cities, and counties can’t meet these social service needs. So, they turn to those who do it best — organizations such as Hale Kipa, a 501(c)(3) nonprofit agency that works with youth and their families who often have nowhere else to turn.

The expertise that community-based organizations like provide is indispensable, and the partnership between state, county, and city governments is the most efficient, cost-effective way to deliver these necessary services.

Just as the local governments rely on us to support our youth and families, we depend on them for funds to run our programs. Roughly 90% of Hale Kipa’s revenue comes from state, city, and county contracts.

However, despite the community’s growing needs, state contracts have been level for almost 10 years. The state isn’t funding our contracts at their true costs. In fact, at the height of the pandemic, when job loss and isolation were devastating Hawaii’s communities, the state reduced our contract amounts by 10%.

Even with these challenges, Hale Kipa continues to provide the same scope of work. Our heart’s mission is to serve. We simply will not turn people away in their time of need.

Filling Financial Gaps

In addition to inadequate funds, payments are frequently late, and it can take three to six months to receive them. To avoid gaps in services, Hale Kipa often must front costs. Other smaller nonprofits typically end up borrowing money to operate their programs.

Hale Kipa and other nonprofits have only one option to help fill financial gaps and keep their programs running — fundraising. But organizing galas, auctions, or other events takes time, manpower, and money. We already struggle to do more with less. Fundraising diverts energy from our core mission — strengthening families and communities.

While we grapple with these cash shortfalls, our employees contend with low wages and burnout. Last year, the state gave its deserving employees a cost-of-living salary increase, yet it won’t approve the same for our hardworking, dedicated staff.

As malama, we are caring stewards of our programs, providing hope and light for youth and families in darkness. Hale Kipa employees love their work, but it can be emotionally draining. They are often deeply affected by clients’ past traumas. Because we can’t provide competitive wages for this rewarding but intense work, it is challenging to hire and retain qualified staff.

The state also limits funds for overhead, making it difficult to cover salaries for essential positions such as CEO and CFO. Overhead isn’t bloat. It’s necessary. Nonprofits are businesses and businesses need money to cover operating expenses.

Lastly, we are paying to advocate for ourselves. Hale Kipa is one of 50 nonprofit member organizations that fund the True Cost Coalition. The True Cost Coalition works to ensure the government provides the true costs of contracts and improves how the state and nonprofits partner to deliver quality services.

If the state, counties, and cities continue to underfund nonprofit contracts, the quality and breadth of our programs will decline. For example, instead of providing shelter for four homeless families, we may only be able to accommodate two. Instead of providing services for 100 youth, we will only be able to serve 80.

Gaps in service are even more concerning. Where does a homeless teen go if their shelter temporarily (or permanently) shuts down?

If we continue this trajectory, nonprofits like Hale Kipa will have no other choice than to say no to these underfunded contracts. We urge the state, county, and city governments to fully fund our contracts at the true cost of what it takes to provide these programs and services. The state must give us the resources to care for vulnerable community members.

Despite the devastating impact that the fires on Maui will have on the stateʻs budget, we must also not lose sight of the recurring needs of our underprivileged communities and partner together to ensure they are met.