Even as the coronavirus paralyzed the YMCA of Honolulu, plunging its revenue to zero, the organization decided it couldn’t stand down when so many people were struggling.
So amid unprecedented fiscal bleeding, the YMCA launched two new initiatives in March — child care for essential workers and a lunch program for disadvantaged youth who were no longer being fed at school.
It did this by quickly raising funds from new sources, including more than a dozen foundations and a $950,000 grant from the city of Honolulu.
Despite the urgent need to keep them going, these programs — which provide a safety net to people in a pandemic-ravaged economy — are now in jeopardy because the money’s running out.
“These are tremendous financial difficulties for us and we recognize that we have to be creative in terms of a new business model,” said Michael Broderick, president and chief executive officer of the YMCA of Honolulu.
Hawaii’s nonprofits are adapting their services and business models to patch up sudden funding gaps generated by the financial chaos unleashed by COVID-19.
Experts say the current economic climate will undoubtedly force some philanthropic organizations to merge or close.
The Kauai Veterans Council, which operates a museum, office for veterans’ services and community event space, wrote in its application for a CARES Act grant that the pandemic has cut off the organization’s revenue stream, putting its center at risk of closing permanently.
The survival of Hawaii nonprofits is not only consequential to the people they serve, but also to the broader economy. The philanthropic sector makes up an estimated 8% of the state’s workforce, employing about 56,000 employees.
Nonprofits focused on arts and culture, education, recreation and the environment are staring down steep revenue drop-offs because they depend on participation, tuition or box office fees for programs that have been shut down or dramatically scaled back.
Some of these groups are losing previously awarded grants as donors redeploy their resources toward more urgent missions like hunger and rent assistance.
Even as demand for food and housing security grows, organizations that respond to these needs are preparing for the trickle-down effects of slashed government budgets, which provide the bulk of their financing.
Nonprofit hospitals and rural medical clinics also face immense challenges to recoup staggering revenue losses as patients avoid the doctor and skip routine and preventative care visits due to fears of contracting the virus.
“The best business model is a paying customer — but that customer isn’t showing up anymore,” said Michelle Kauhane, senior vice president of community grants and initiatives at the Hawaii Community Foundation. “Business modeling really has to change and that shift is going to be significant enough that not every single nonprofit can survive.”
Better Outlook For Larger Nonprofits
The YMCA reopened its fitness facilities and swimming pools in mid-June with new, more expensive protocols in place to limit the risk of the virus. But Broderick said only about 30% of the organization’s membership has returned.
Enrollment in the YMCA’s A+ After School Program, which normally serves about 7,000 children, has plunged by as much as 80% at some schools even as it has become more expensive to operate. The program now requires more staff — and more disinfectant — to meet public health and social distancing guidelines.
About 60% of YMCA staff remains furloughed. The organization is too big to qualify for a federal Payroll Protection Program loan.
But the YMCA’s large size also works in its favor. Experts say the nonprofit’s flexibility to deploy new initiatives while suspending those that don’t mesh with the new COVID-19 landscape is an advantage it can harness to ride out the pandemic.
The organization also owns all but one of its buildings and has no debt, putting it in a better position than many other nonprofits.
“There is no question that the Y is going to survive,” Broderick said.
The future is much less secure for small nonprofits like Hapa Mana, a youth athletics organization that depends on $10,000 in private grants to operate free after-school and weekend sports camps for kids.
“I do believe that our communities have been permanently changed.” — Bryan Talisayan, executive director of Mental Health America of Hawaii
Co-founder Jordan Conley said the organization’s programs are canceled indefinitely, putting its entire mission on hold.
Meanwhile, Conley, who works as a personal trainer, said he left the state to live with family in Ohio after business dried up leaving him unable to pay his rent. It’s not clear when he’ll be able to return to Hawaii, he said.
Declining volunteer participation is another problem. At Honolulu Habitat for Humanity, fewer willing volunteers — coupled with social distancing restrictions — have forced the nonprofit to expand its use of contracted labor, making every house more expensive to construct.
While waves of eager volunteers are pitching in at beach cleanups or fostering pets to combat the loneliness and boredom of the pandemic, participation is suffering where volunteering means working together in close quarters.
“This whole coronavirus situation is affecting people’s ability to give their money and time, and that will affect agencies’ abilities to provide services and keep everybody employed,” said John Fink, president and chief executive officer of Aloha United Away. “If those jobs are lost, the ripple effect will be felt in the community.”
Art And Artists In Need Of Aid
Although their business models are severely challenged by the virus, arts and culture nonprofits are having a particularly difficult time justifying their need for emergency funding.
The Hawaii Theatre Center, which relies on ticket sales for nearly 80% of its revenue, lost $3 million in the first half of the year and expects to lose another $3 million by year-end, according to Gregory Dunn, the theatre’s president and chief executive officer.
Several longtime funders have notified the theatre that they are choosing to refocus their philanthropy on COVID-19 relief efforts, Dunn said.
“We are completely devastated and we’re very much exposed in terms of our inability to find alternate sources of revenue,” Dunn said.
In September, the theatre plans to launch a fundraising telethon to coincide with the 98th anniversary of its historic building. Another effort underway would morph the theatre into a stage for live broadcasting.
The theatre plans to offer the use of its stage and broadcasting equipment to other performance arts groups so patrons can continue to enjoy their work online while the virus remains a barrier to live performances.
Figuring out how to monetize this endeavor is tricky, however. With shows postponed indefinitely, the theatre has already pivoted to online programming. But so far that has generated just a trickle of revenue, Dunn said.
Meanwhile, the monthly operating cost to maintain the historic theatre building is about $100,000. All but three of the theatre’s 49 staff members have been furloughed.
“Our problems are the same as everyone else’s, there’s just a few more zeros behind it,” Dunn said.
At the start of the pandemic, Mental Health America of Hawaii, an advocacy and education organization, learned that one of the foundations it relies on was planning to revoke funding for suicide prevention so that it could support coronavirus-related health needs, according to Bryan Talisayan, the nonprofit’s executive director.
Talisayan said he was eventually able to convince the foundation to reinstate the funding after he proposed a new plan to use the money to address community mental health needs exacerbated by COVID-19.
Now Talisayan said the organization will redesign its mission to become a direct service provider, offering Hawaii residents mental health support services for the first time. That’s where the need is, Talisayan said, and that’s where the money’s going.
The nonprofit is creating a project to address the mental health challenges of essential workers.
“I do believe that our communities have been permanently changed and so we are changing, too,” Talisayan said.
New collaborations between nonprofits are also being forged.
Lisa Maruyama, president and chief executive officer at the Hawaii Alliance of Nonprofit Organizations, said some small, struggling nonprofits are voicing interest in pooling resources or consolidating with other nonprofits to bolster their chances of survival.
“Could we share a bookkeeper, a copier, a website designer? Could we share office space? Could we share staff? These are the informal inquiries that the tiny, grassroots nonprofits are starting to ask,” Maruyama said.
Lanakila Pacific is partnering with Healthy Mothers Healthy Babies Coalition Of Hawaii to deliver meals to pregnant women and single mothers living in poverty.
Dave Moss, executive director of the Hawaii Symphony Orchestra, said he and his counterparts at Ballet Hawaii, Hawaii Opera Theatre and Hawaii Theatre Center are working together to help ensure their mutual survival.
Two weeks ago the orchestra recorded a performance on the Hawaii Theatre’s stage. The recording will soon be streamed on HSO’s website. HSO also recently joined the theatre’s box office.
With ticket sales accounting for $2 million of HSO’s $5 million annual budget, Moss said he has not given up on the possibility of live performances. He is working on a plan to relocate the orchestra’s 18-week season, which begins Sept. 1, from its historic home at the Blaisdell Center to the Waikiki Shell, a safer, outdoor venue.
“Especially in Hawaii, where the access to fundraising is limited, the elbows can sometimes come out,” Moss said. “But I really strongly feel that arts participation begets more arts participation and so what I’m seeing, and what I’m pushing for, is more collaboration and more support.”
Death Of The Fundraising Dinner?
In July, Goodwill Hawaii plugged what might have become another gaping, coronavirus-induced revenue hole when it successfully adapted its top annual fundraising event from a four-day gala to a televised program.
The virtual “Goodwill Goes Glam” event reached more than 32,000 viewers, according to Katy Chen, president and chief executive officer of Goodwill Hawaii. Past events, which have included a fashion show, dinner and shopping experiences, typically attracted about 4,000 attendees.
Goodwill met its fundraising goal, taking in about the same amount of money as it would have if it had hosted the event as planned at the Blaisdell Center, Chen said.
“Dinners that were a very traditional part of the nonprofit business model are no longer there,” said Micah Kane, president and chief executive officer of the Hawaii Community Foundation.
Without those events, donor dollars stretch further. Donors can redirect their funds more strategically, Kane said, because they can give without having to cover the cost to the organization of putting on an event. Staff time that would have been used for party planning can now be deployed toward the mission itself.
Goodwill Hawaii has been dramatically reshaped by the pandemic. The nonprofit furloughed nearly half its staff after the pandemic forced it to temporarily close its chain of thrift stores, which generate about 40% of the organization’s revenue, according to Chen.
Thrift stores have reopened and a PPP loan has allowed Goodwill to bring back nearly all of its staff. But as COVID-19 is expected to forever change retailing, Chen said the organization is ramping up its investment in e-commerce — hoping that it can bring in more revenue by selling higher ticket donations online.
Goodwill also moved its job training classes and day programs for adults with developmental disabilities online.
Demand for career training and job placement services has tripled since the pandemic hit, Chen said. These programs have not only expanded but shifted focus as Hawaii’s unemployment rate went from the lowest in the nation to one of the highest.
“Many folks would come to us looking to advance their credentials and find higher wages,” Chen said. “COVID totally changed that. It became a matter of how can we find them a job, any job, and also how can we help them tap into the benefits that they need, whether it’s unemployment, child care, housing assistance or even assistance on electrical bills.”