Nonprofit leaders told the Hawaii House Committee on Human Services on Nov. 7 that recent federal funding cuts, rising costs and stagnant contract rates threaten vital community services across the islands.

Terry George of the Hawaii Community Foundation told the committee the sector faces ‘‘a perfect storm’’ of historically high demand, inflation, labor shortages and ‘‘unprecedented federal funding cuts.’’ He recounted a family example to underscore the immediate harm: ‘‘Story like stories like hers are heartbreaking,’’ George said, and said HCF has reactivated the Hawaii Resilience Fund and commissioned UHERO to guide a targeted philanthropic response.

The concern was reinforced by Trey Gortner, a policy researcher at UHERO, who said the organization's October policy brief was designed as an early-warning system. ‘‘The purpose of this research is to provide an early warning system to identify grants, nonprofits, and subsectors at risk in advance and allow local leaders to prepare timely responses,’’ Gortner said. Using federal spending and IRS records UHERO identified roughly $126 million in at-risk federal obligations to Hawaii nonprofits and found human services and health-care providers have outsized exposure.

Anh Nguyen, chief operating officer of Catholic Charities Hawaii and a co-lead of the Hawaii True Cost Coalition, told members that many community-based organizations already operate below true service costs. Nguyen cited a 2022 survey finding that 91% of community-based organizations said government contracts did not cover full costs and that ‘‘50% of the community based organizations expect to reduce programs and to serve fewer people.’’ She said the newly launched Hawaii relief program has already drawn substantial interest: ‘‘Since we opened our application portal last week, we had over 34,000 people view the program web page and our hotlines have more than doubled in volume,’’ she said, and reported roughly 11,000 applications in prescreening.

Sean Kanayapuni, president and CEO of Partners in Development Foundation, described the possible effects on early childhood programs if federal funding for the Native Hawaiian Education Program and related grants is eliminated. He said federal reductions account for an estimated $46 million statewide exposure, with about $20 million supporting early childhood services: ‘‘This young woman at the center of my picture here is Lina…Na Pono didn't just nurture my children's early learning, it nurtured me as a parent,’’ Kanayapuni said, illustrating the community-based, multigenerational impacts that could be lost.

Speakers urged the committee to pursue both short-term emergency aid and long-term solutions that reflect the true cost of service delivery. Terry George said philanthropy supports non-reimbursable grants and more strategic partnerships: ‘‘My personal plea based on what I've heard from nonprofits is can we make those dollars not reimbursable? Last year, Hawaii Community Foundation approved and made 2,970 grants. Not 1 of them was reimbursable.’’

Committee members asked presenters to help prioritize who most needs support and where philanthropic and state funds can best fill gaps. Panelists suggested targeted gap analysis (for example, identifying kupuna without children who may be missed by TANF-based interventions), deeper coordination between state and private funders and use of emergency funds to prevent service collapse while longer-term rate and contracting reforms are pursued.

Why it matters: Committee members and providers framed the problem as more than a temporary cash shortfall. Testimony emphasized that nonprofits deliver housing, food security, behavioral health and early-childhood services across rural and urban communities and that losing small, place-based providers would sever access to care for many residents.

What's next: Philanthropy (Hawaii Community Foundation) and researchers (UHERO) offered to support analytic gap assessments to help lawmakers target limited state dollars. Providers urged lawmakers to consider True Cost adjustments to state contracts, expedited reimbursements and investments in workforce and infrastructure to avoid long-term loss of community capacity.