A report released Thursday finds that budget cuts and program changes at the federal level could disrupt essential services statewide by Hawaii nonprofit organizations.
The report, commissioned by the Hawaii Community Foundation and performed by the University of Hawaii Economic Research Organization, identified grants, organizations and sub-sectors at political risk under the Trump administration, allowing local leaders to respond in advance.
Findings conclude that 74 federal grants to 59 Hawaii nonprofits — worth $126 million in unpaid balances — are politically vulnerable. More than half are to health care programs, with significant exposure also in human services, environment and education.
Programs serving Native Hawaiians account for more than half of the state’s politically vulnerable funds.
“Some of the findings are pretty stark,” UHERO Executive Director Carl Bonham said Thursday in an online press conference. “I mean, over $100 million in unpaid grants that are, basically, politically vulnerable grants where either there’s already been an executive action that risks those unpaid balances not being paid or it’s an area of target, whether it’s (diversity, equity and inclusion) or Native Hawaiian.
“Most of that $100 million, over half of it, is in health care programs and Native Hawaiian-serving programs. And a real concern is, if you make cuts to these kinds of programs at the same time that there’s cuts elsewhere — whether it’s Medicaid or (Supplemental Nutrition Assistance Program) or tax credits for Affordable Care Act — then the strains on the system just compound. So, we want to be prepared for that.”
Roughly one in three federally funded nonprofits depend on Washington for more than 20% of their revenue. Human services nonprofits are among the most financially exposed: federal direct grants provide 36% of all dollars spent in the sub-sector and make up 28% of the average recipient’s revenue.
Terry George, Hawaii Community Foundation president and CEO, indicated the report’s release at the beginning of a partial federal government shutdown is coincidental. He said the tipping point came in early spring “when we began hearing from some nonprofits about cancellation of federal contracts or threats of such cancellations.”
“And then, once the (One Big Beautiful Bill Act) was passed by Congress and signed into law, many of our nonprofits were now much clearer that they were facing dramatic funding shortfalls for the coming year,” George said. “But we needed clear data … to know how we ought to respond, so we could understand, strategically, which services and communities face the greatest risk, so we can target support effectively.
“The initial findings were alarming enough that we reactivated the Hawaii Resilience Fund, which we’d activated during COVID.”
George said HCF already has started awarding grants from the Hawaii Resilience Fund.
“We’re actively seeking other support so we can grow the Hawaii Resilience Fund to at least $1.8 million by the end of October,” he said. “The need is that urgent, and we really look forward to supporting a collective community response, because not any single funder — be you state government, local government or individual donor — can do this yourself.
“We need to do this together, and starting with good data is the first step.”
Mary Scott-Lau, founder and executive director of Women In Need, a nonprofit serving domestic violence victims, said one of her organization’s homes, which allows victims to bring the family pet, fell victim to the federal budget axe.
“Completely gone. We had to re-house them,” Scott-Lau said. “We found homes for five of them. Two of them we couldn’t find a home for. They went back. … So it’s really a crisis right now for people fleeing domestic violence. They don’t have anywhere to go, unless they go to a shelter. But they can’t bring their animal.
“Your animals become part of your family, and that’s why we opened it. But we got cut, so it’s devastating.”
Carla Houser, executive director of Residential Youth Services and Empowerment, or RYSE, said she and other homeless youth services providers were notified of impending cuts a few months ago.
“Federal programs support thousands of Hawaii’s children, youth and young adults with supports in education, health care, nutrition, child care, economic security,” Houser said. “These cuts will also impact our neighbors. Homeless youth street providers on Oahu, Kauai, Maui and Big Island are all going to have significant impacts. As you can imagine, when a young person ages 14 to 24 is on the streets, without that lifeline from trusted adults, our efforts to reunify runaways with their families, our efforts to connect young people to mental health treatments, are all going to be interrupted.”
Houser said she and others are “reaching out for support from our local governments and our foundations to push back at a lot of these harmful cuts to the safety-net services that community-based organizations are here to provide.”
Michelle Bartell, president and CEO Aloha United Way, praised Scott-Lau and Houser for their courage in speaking out.
“For what they represent, there are many more nonprofits that are very hesitant to come forward and raise the urgency issue in a public way, because they’re very concerned about retaliation,” Bartell said. “They’re concerned about looking vulnerable and weak to other potential funders. And they are very protective of the populations that they are serving.
“So they really have gone into retrenchment mode. They are not sitting idly by. Our nonprofit leaders are very resourceful, very innovative. They’re all scrambling to do what they can to ensure that they can continue providing the services, but this is where we all have to come in and help.”
Bartell also praised the report, which she said “helps to point out where the potential gaps are and where we can fill up the gaps by coming together.” She added that Aloha United Way has “auto-renewed” grants to some of the safety-net organizations.
“The last thing we want them to do is to have to reapply for something,” she said. “We also have our workplace giving campaign going on right now, and we do hope that folks in the community who are in a position to do will so step up and support. … We’re also encouraged by our state, that has appropriated $50 million in emergency funding. We have been diligently working with the state to try and get more clarity around that process.
“And we do hope we will have more news to share soon.”
Email John Burnett at jburnett@hawaiitribune-herald.com.
