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Charities expect pinch from slowdown

Isle agencies look for ways to trim

April 7, 2008
The Maui News
HONOLULU (AP) — Hawaii’s charities are preparing themselves for a slowing economy, which they forecast will lead to a drop in income even as the number of needy grows.

The three major sources of funding for charities — public donations, government appropriations and foundation grants — are all expected to shrink this year.

Some charities are already feeling the pinch.

Last month, Aloha United Way laid off four people, citing a declining economy and a drop in donations.

The Institute for Human Services, which runs two emergency homeless shelters in Honolulu, plans to eliminate at least five vacant positions. It expects to make up for the shortfall by training people to do more than one job.

Helping Hands Hawaii, which operates the Community Clearinghouse, is looking to cut costs wherever it can without reducing its services to needy families, executive director Brian Schatz said last week.

‘‘We’re really bracing ourselves,’’ he said.

Nonprofit leaders say recent news about big layoffs at Aloha Airlines, Molokai Ranch and elsewhere will only serve to tighten giving as people worry more about the future and their economic well-being.

‘‘Hawaii is still pretty much in denial. But it’s become more and more difficult to deny there’s a change’’ in the economy, said Hawaii Alliance of Nonprofit Organizations President and CEO John Flanagan this week. ‘‘There has to be some forward thinking.’’

The talk of recession — and dwindling donations — comes on the heels of what many nonprofits considered several good years. That means some nonprofits have something of a buffer before they expect to start feeling the effects of a downturn.

But that cushion won’t last long, warn local and national nonprofit leaders, who are pushing charities to act now to make sure services don’t fall in the midst of economic crisis — when people need help the most.

Diana Aviv, president and CEO of Independent Sector, a Washington, D.C.-based coalition of more than 600 nonprofits from around the country, said charities are expected to provide more help during hard times and yet must do so with less money. But if the economy continues to falter, and if charities don’t get more help, some needy people ‘‘will end up going without,’’ she said.

She added nonprofits across the nation are already scaling down, even laying off.

‘‘We’re expecting that organizations are going to have difficulties in 2008, and much greater difficulties in 2009,’’ since much of the donations garnered this year are to be used next, she said.

For now, local charities are better off than some of their Mainland counterparts. Still, some local nonprofits are already preparing for a drop in donations, grants and government aid.

Last week, about 20 leaders from IHS, Community Links Hawaii and other nonprofit groups met with Flanagan to talk about how to prepare their organizations for the economic downturn. The meeting had an optimistic tone, with leaders saying isle residents are just about the most generous anywhere.

But several also said that many Hawaii families will be hard-pressed to give this year.

Suggestions made during the meeting on how to face the looming recession varied, from starting donation drives earlier to making sure people understand where their money will go.

The ideas will be shared at the Hawaii Association of Nonprofit Organizations convention next month and a national convention this summer. Flanagan said the economy is likely to be topic No. 1 at both gatherings.

There are about 5,000 charities in the Islands, nearly 1,800 of which reported annual operating budgets of $25,000 or more in 2006, according to the National Center for Charitable Statistics.

Flanagan said the organizations represent about 8 percent of the state economy, generate about $4 billion a year and employ more than 50,000 people.


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