A new statewide report found Hawaii nonprofits face rising demand, workforce shortages, and limited financial flexibility as lawmakers finalize state budget priorities and uncertainty continues over federal funding.
Released Tuesday by the Hawaii Alliance of Nonprofit Organizations, “The View From Here: Insights from Hawaii Nonprofits” said Hawaii has 8,037 registered charitable organizations, including 5,982 that are financially active. More than 90% of nonprofits serve rural areas.
Together, nonprofits generate $45.4 billion in economic output, or 11.9% of the state’s gross domestic product, and employ 10.3% of the civilian workforce.
Hawaii’s high cost of living was a major management challenge for 58% of nonprofits, the report said. Only 27% said they could pay all full-time employees a living wage, compared with 42% nationally, while 26% said they could not pay a living wage to any full-time staff. Another 39% reported difficulty recruiting enough workers to meet demand.
“Hawaii’s nonprofits are essential infrastructure,” Melissa Miyashiro, president and CEO of HANO, said in a statement. “They feed families, provide housing and healthcare, support keiki and kupuna, and respond to disasters. But many nonprofits are being asked to do more with less at a time when federal disruption, tight state budgets, and rising costs are putting additional pressure on their staff and the communities they serve.”
The report said 73% of organizations had difficulty raising unrestricted revenue, and only one-quarter received most of their funding in flexible form. More than half reported late government payments, some by more than 90 days. About 1 in 5 had one month or less of cash on hand, and nearly half had no reserve funds beyond operating cash.
About 22% of Hawaii nonprofits reported operating at a deficit in 2024, lower than the national rate, but the report said low reserves and restricted funding pointed to a weaker financial position. It also said 66% of Hawaii nonprofits had annual budgets under $1 million, compared with 45% nationally.
The report said federal grants that support health care, human services, and Native Hawaiian-serving programs were politically vulnerable. It recommended more multiyear and unrestricted funding, better indirect cost reimbursement, simpler grant processes, and more investment in workforce development.