Tight Times, Bright Ideas

When times are hard for the community, as they have been for the last few years, they’re hard for the people who work to help them, or to fulfill some other nonprofit mission. The mission doesn’t go away — usually the need for the charity services is greater — but some funding streams start to dry up.

The answer, say the people expert at navigating these stormy seas, is often to make better use of the resources at hand. Many of Hawaii’s nonprofits have begun to think more creatively about how to raise money in partnerships with businesses and by thinking more like a business themselves, achieving more efficiency through various alliances, even mergers.

But effective use of resources doesn’t always mean what people might think. The most important resources, said Pierre Omidyar, might not even be the money.

"Money matters in philanthropy and charity, but impact matters more," said the entrepreneur and philanthropist, giving the keynote address at the two-day Conference of Nonprofit Communities of Hawaii, held earlier this month at the Sheraton Waikiki. "As we work with all our partner organizations, most of whom have received multimillion-dollar grants from us, really, the limiting factors there tend to be not the money. They tend to be human capital.

"We’ve really invested in the human capital function … helping their leadership build their team, helping boards govern more effectively," he added. Part of the assistance the network provides is helping with recruitment and leadership development, he said.

Arriving at that conclusion may not have been the first reaction of many at the conference, some of them still reeling from the sucker-punch that was the Great Recession and its effect on government grants to nonprofits. But hearing it from Omidyar — the billionaire founder of eBay and, in his new hometown, the philanthropic Omidyar Network — carried a lot of weight. Among the network enterprises is Ulupono Initiative, comprising both a for-profit entity and a nonprofit organization, that supports through grants and investments various businesses and projects related to local food production, waste reduction and renewable resources.

Claire Shimabukuro heard Omidyar’s message and embraced it. As Hawaii Meals on Wheels’ executive director, and like many other nonprofits, Shimabukuro depends on a small paid staff and an army of dedicated volunteers to fulfill the mission. Keeping the work environment professional and seeing that workers feel engaged, whether or not they’re paid, are essential if the organization is going to weather tough times and hit its service goals, she said.

"The way we treat our volunteers and the way we treat our employees is what the currency is — creating an environment in which what people think means a lot," she said.

Further, she said, charities need to welcome young board members and staff to refresh the talent pool.

"One of the most profound things that is important for us to do is: We need to listen," she said. "Just because someone is 18 or 16 or 20 doesn’t mean they don’t have anything to say."

Besides the human capital, of course, the money itself remains a worrisome issue. The cuts in state grants were devastating, and across the nonprofit sector nationwide is a worry that charitable giving could dry up if deficit-reduction campaigns lead congressional leaders to reduce the tax deductions for donations.

Development officers working for nonprofits find themselves in tougher competition for gifts, especially those whose missions involve the arts, the environment or other causes apart from the social services.

All that concern drove a much higher enrollment in the conference than in its first year, 2010, said Alan Tang, executive director of the Association of Fundraising Professionals, one of the conveners of the event. Last year’s attendance grew by about a third to roughly 550, and roughly 800 people came to Omidyar’s keynote, Tang said.

The conference theme was "The Future is Not What It Used To Be," and while that has a foreboding sound, Tang’s more upbeat take is simply a call for innovation.

"We kind of have to remake ourselves," he said. "The community need is growing, traditional funding sources are morphing and changing.

"We’re looking for people needing to be transformed."

Shimabukuro said a small but growing element in her organization’s financial portfolio comprises "commercial co-ventures," one of the latest trends in nonprofit sustenance. Businesses approach with a proposal that the nonprofit help drive customers for a limited charity promotion in which the commercial entity — a restaurant seeking to offset a slow-traffic period, or a store opening a new outlet — gives a share of the proceeds to the charity.

Such partnerships must be forged carefully, said Hugh Jones, a deputy attorney general with the state whose division oversees more than 4,500 public charities, charitable trusts and private foundations in Hawaii. Part of that duty is the regulation of the co-ventures to make sure the charity isn’t abused; both sides need to be clear on what exchange is being made, Jones said.

"A business might claim to be benefiting a charity, and the charity might not even know it’s being done on their behalf," he said.

Part of this new businesslike environment for nonprofits is thinking of ways to join forces. Mergers have not been that common even in Hawaii’s relatively small business sector, it was uncharted territory when the Honolulu Academy of Arts and The Contemporary Museum decided to go through it.

Both entities did the financial planning needed for a smooth transition: Staffs were merged without layoffs, said Stephan Jost, executive director of the academy, now doing business under the name Honolulu Museum of Art.

"I think for the Honolulu Academy and The Contemporary Museum it works because both institutions know on a deep level that we had to change," Jost said. "What I wish we had done better was the soft stuff — the explaining to our volunteers better why we were doing this."

There are many additional, less radical tools in the growing nonprofit survival kit, said Lisa Murayama, executive director of the Hawaii Alliance of Nonprofit Organizations, another conference convenor. Some of the attendees wanted to learn more about fundraising through text donations, Murayama said, while others needed more foundational guidance on getting their group organized. The event had to appeal to the full spectrum of organizations with widely ranging experience levels, she said.

But what everyone needed to hear was that nonprofits being entrepreneurial requires that they take more risks, she said: Innovation is essential, but it’s scary.

"It’s OK to fail, that comfort needs to be part of our culture, be comfortable with failure," Murayama said. "It’s worse to not even try at all."