Nonprofit Numbers

The fist study of Hawaii's nonprofit industry holds some surprises.

May, 2002

When Hawaii Community Foundation executives commissioned a study on the nonprofit industry in 2001, they went in with certain assumptions. Their main supposition has been proven: Nonprofits are an economic force. The sheer size of that force, however, was unexpected.

Kelvin Taketa, Hawaii Community Foundation Chief Executive Officer says, “I still believe that what the study showed that surprised us was just the scale of the nonprofit industry here and how formidable it is as an economic driver – $1 billion in wages, the fourth-largest employer in the state. I don’t think anybody thinks of it in those kinds of terms.”

According to the foundation’s recently released Hawaii Nonprofits 2001, Hawaii’s nonprofits employed 7.4 percent of the state’s nonagriculture work force and accounted for 41,000 full-time and part-time workers in 2000.

“Frankly, a lot of people look at nonprofits and consider them to be sort of the lower end of the food chain,” Taketa says. “We wanted to have them understand that they actually have significant political power. They actually have significant economic power.”

According to the study, the sector is highly entrepreneurial. Resources are concentrated within a small pool of about 1,000 organizations. About 25 percent of agencies with incomes of more than $25,000 account for two-thirds of the sector’s revenues.

Hawaii’s nonprofits also are long-lived. About three-quarters of the agencies with revenues of more than $25,000 have been operating in Hawaii for more than 10 years. Half of those with revenues above $25,000 have been in business for more than 20 years.

But the sector has historically been characterized by fragmentation. One of the hopes for this study is that it will encourage nonprofits to work together. For example, says Taketa, if nonprofits in Hawaii formed an association, similar to other trade associations, they’d be able to unleash stronger buying power in negotiating goods and services, such as insurance rates.

The foundation also hopes that portions of the business sector will sit up and take notice, because of the dollars that are within the nonprofit sector. “The whole professional services community that traditionally works with private business is overlooking this really big sector, and there is very little crossover. People who do consulting work in the business sector are not moving over to the nonprofit sector,” says Christine van Bergeijk, the foundation’s vice president for programs.

Challenges to Hawaii nonprofits include insufficient funding, cash flow, service capacity and effective use of planning and technology. Taketa says this study offers a perspective on where nonprofits fit in. The Hawaii Community Foundation is embarking on an Organizational Capacity-Building Program to provide assistance and training to nonprofits to build their business practices. Because, in the post-Enron era, the demand for accountability is everywhere, whether an enterprise is profitable or not.

Taketa says it’s a trend that goes back a few years to the firing of former United Way boss Bill Aramony. Taketa observes, “Fast forward to the Bishop Estate as a charitable trust and then you look at some of the issues that happened around Sept. 11. We live in an era where people are going to demand a lot more transparency and a lot more accountability for anything, whether it’s government, whether it’s the nonprofit sector. For all of them, we should expect that there’s going to be more expectations raised by the donors and by the general public and by the politicians, by everybody, about how you conduct yourself and what you do with the money.”

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Kelli Abe Trifonovitch