Nonprofits quest for cash

Nonprofits' quest for cash Nearly 20 capital campaigns for Hawaii nonprofits are taking off, pursuing a total of $182 million in funding. They have already secured $94.6 million. See how they’ve raised the money, and how they plan to get to the finish line

By Lorin Eleni Gill – Reporter, Pacific Business News Jan 22, 2016, 1:00am HST Updated Jan 22, 2016, 3:52pm EST Hawaii nonprofits are off to the races on their capital campaigns — there are nearly 20 going on simultaneously across the state. Most projects are to improve or build new facilities. ¶ The timing feels right, as the economy has improved, says Hawaii Community Foundation CEO Kelvin Taketa.

“It’s a reflection of the fact that the economy is so much better,” he said. “Nonprofits are feeling optimistic about their ability to secure capital. Since the recession that preceded it, pent up demand is now coming on board.”

But Hawaii poses a challenge to nonprofits, as there are only so many corporations and high networth individuals living in the Aloha State.

“It’s going to be really difficult,” Taketa said. “Capital campaigns require larger multi-year gifts from businesses, foundations and individuals, and so the capacity of those kinds of givers to support all of the capital needs in Hawaii is probably limited. Most of the major corporations would be hit up for many of these campaigns.”

State and county government dollars have also contributed to nonprofit capital needs, but those funds are limited.

The 17 nonprofits amid capital campaigns are seeking a total of $182.13 million. The organizations have secured a minimum of $94.6 million to date.

PBN spoke with nonprofits at all stages of their campaigns to see what made them ready to take the leap, and how they’ve been able to raise what they have secured so far.

Economy flux The Nonprofit Research Collaborative fundraising survey found 12 percent of its 1,000-plus organizations were conducting capital campaigns in 2011. That figure jumped to 46 percent of

respondents in 2015. Responses were collected from nonprofit organizations in the U.S. and Canada.

The improving economy has more nonprofit executives feeling confident about asking for donations, a big turnaround from a few years ago.

“The recession put a terrible pall of fear and dread in the hearts of many major contributors as well as individuals and corporations,” says Sanae Tokumura, president of the Association of Fundraising Professionals Aloha Chapter and independent consultant and principal at Solid Concepts Inc. “Of course the capital campaign landscape dimmed. It was dark for a few years.”

Still, the economy is not the sole factor that determines a nonprofit’s success in raising funds. In fact, some organizations fared better during difficult economic times, says Lisa Maruyama, president and CEO of the Hawaii Alliance of Nonprofit Organizations, or HANO. “A museum or theater house may be having a completely different experience than a community health center or a provider of services to the homeless,” she said.

Thomas Mundell, senior vice president of philanthropy at Hawaii Pacific Health agreed.

“There are always going to be changes and challenges to overcome in any campaign regardless of the economy,” he said. “An organization needs to be nimble and flexible to reach maximum philanthropic success.”

PBS Hawaii is in the homestretch of its $30 million campaign for a new facility, with $27.1 million raised to date. PBS Hawaii President and CEO Leslie Wilcox reflected on the multi-year campaign and said the improving economy was one of many factors donors consider before they give.

“We didn’t notice a big increase in public confidence in the economy as we went along,” she said. “We certainly saw a willingness to help, alongside continuing uncertainty about the economy and the untold costs of local public infrastructure. Even when people had a bundle of money, they wanted to manage their risks. Many foundations, businesses and individuals made multi-year pledges.”

One thing Wilcox did notice, though, was the significant reduction in contributions from Mainland foundations that “quietly changed their practices and policies over a period of years after the Great Recession,” she said. Securing funds for construction became much more difficult. Because of that, the majority of funds raised for PBS Hawaii’s new campus come from the Islands.

Pluses and minuses Hawaii construction costs are skyrocketing — rising 13 percent in 2014. The annual increase poses a major challenge for nonprofits, as most are looking to renovate or build facilities.

Nevertheless, PBS Hawaii has stayed on track, says Wilcox, thanks to the project’s design and construction professionals.

“Our construction costs with Allied Builders System were locked in and Allied had already lined up subcontractors, before construction prices shot up and the demand for more crews became fierce,” she said.

Even in a healthy economy, there’s another resource in short supply for nonprofits: staff time.

The decision to start a major campaign could take away precious time for fundraising for regular programs.

The National Kidney Foundation of Hawaii President and CEO Glen Hayashida says raising money is always a challenge. Capital campaigns are particularly daunting because they suck up valuable time from gathering financial support for ongoing programming, he said.

Tokumura agreed.

“The capital campaign process requires that people gear up for a very intensive fundraising process that sits on top of their annual campaign,” Tokumura said. “But their annual campaign still has to happen because if not, they can’t get things paid for.”

Another challenge for many nonprofits is raising a certain amount to qualify for funding from private foundations.

Waimanalo Health Center, for example, is nearly halfway to its $13 million goal, but it will need to meet a 75 percent threshold in order for some Hawaii foundations to officially commit to the campaign, according to Piilani Kai, development director.

Securing the diamonds Longtime Diamond Head Theatre Executive Director Deena Dray brings a banker’s perspective from her years at First Hawaiian Bank.

Diamond Head Theatre is entering the first stages of a $22 million campaign to build a new theatre on its campus near Leahi Hospital.

The early phase of a capital campaign revolves around “strategic asks,” rather than “waving a flag,” she said. Big gifts will serve as the kindling for a five-year campaign. For now, it’s in the quiet phase.

“We’re having thoughtful conversations with individuals, corporations and foundations in the community, seeking their support,” she said. “It’s mostly people who can do substantial anchored gifts.”

While the campaign is no secret, and the community has expressed interest, the theatre is focusing on that portion of the population “to ensure we have a thoughtful beginning to our endeavor,” she said.

Sometimes nonprofits have to regroup and change campaign goals or time frames.

Friends of the Falls of Clyde Board President Bruce McEwan says the nonprofit is focusing on a narrower target than it initially planned.

“The original goal we set was $3 million, but we’re more focused on a shorter-term campaign specifically for dry-docking at $1.5 million,” he said. “We’d like to take the ship out of the water, clean its hull, and do repairs.”

The 501c3 is waiting to hear if it is awarded grants from the state’s Maritime Heritage Program, A&B Foundation and the Matson Foundation. If all grants are secured, that could take the campaign up to $800,000, McEwan said.

Calling in the big guns Many local nonprofits conducting capital campaigns rely on help from professional consultants, Maruyama says.

Hale Kipa is one of them. The foster care and youth outreach nonprofit is working with professional fundraisers Myerberg, Shain and Associates to raise the $16 million needed for a new Hale Kipa Services Center, according to its website.

Diamond Head Theatre is another. Its current facility is 90 years old, and most potential donors understand why the nonprofit’s executives are pursuing their dollars. The last time DHT launched a capital campaign was in the 1980s.

DHT has traditionally used in-person contact when fundraising. With just 45 percent of its budget fueled by ticket sales, DHT relies on fundraising for about $850,000 of its $2.3 million budget each year. Much of those funds come from individuals. Any remaining expenses are covered by classes, theatre and costume rentals, according to Dray.

DHT has been working with Chicago-based fundraising consultancy Campbell and Company to devise its strategy, Dray said.

“They don’t come and ask for money here,” she explained. “Their job is to help us learn how to evaluate our system, solicitations and methodologies in the campaign. It’s the board, committee and staff that goes out in the community to make the ask.”

Advice on the small details is valuable. It could be something as simple as working on a pledge form, she said.

For its $30 million campaign, the PBS working board and staff received guidance from Honolulu capital consultant Beth Lum. “Our organization had never mounted a building campaign before,” said Wilcox. “Historically we fundraised for much smaller sums.”

Celebrity spotlight The National Kidney Foundation of Hawaii has raised the first $2 million of the $12 million it needs for its new facility in Kapolei, according to Hayashida.

“I think navigating through the [competitive turf] means trying to be innovative with raising money,” he said.

The foundation has the help of several high-profile figures. Creative fundraising efforts led by celebrity representatives have proven invaluable.

Former U.S. Sen. Daniel Akaka is serving as honorary chair of the campaign. Musician and foundation spokesman Willie K plans to hold a two-day concert on Maui, and the Kemoeatu brothers, former NFL stars and Super Bowl champions, also represent the campaign. Hayashida expects it to take about three years to secure the $10 million.

The nonprofit does not get significant financial help from its national parent, either.

Some donations are funneled to national research efforts. But donations directed to the Hawaii organization always stay in the islands, he said.

The foundation may look to the Mainland for funding — something it has never done before — if times get hard.

“The remaining $10 million we need is what we’re seeing as the big challenge, and it’s exactly because of the competition of other capital campaigns and the fact that we have a very limited donor pool that everyone’s going to,” he said.

Not too far away, the Pacific Aviation Museum Pearl Harbor is gearing up for the 75th anniversary of the attack on Pearl Harbor and has begun a major $47 million national campaign to restore its grounds, hangars and control tower on Ford Island.

It launched a $3.5 million local capital campaign in September.

“The funds we raise with our local campaign is sort of a pace setter and seed money to show the community still supports the initiative,” board President Clint Churchill said. “The bulk of the funds will be for Hangar 79 — it’ll be a conversion from its current condition into museum space. We intend to develop a portion of the aircraft carrier to give visitors a sense of scale and life on a carrier.”

The museum also brought on retired General Motors executive Robert Lutz to chair the national leadership committee. Museum executives hope Lutz, a former U.S. Marine Corps fighter pilot and captain, will bring a much needed spotlight to the project.

The island’s the limit Nonprofit executives were quick to say that the island community is generous, illustrated by the contributions from locally grown companies, volunteer and fundraising efforts on Bishop Street, and committed foundations.

The Kapiolani Medical Center for Women & Children is in the midst of construction of its $160million facility for neonatal and pediatric intensive care.

It was able to exceed its $30 million capital campaign by $5 million, but additional facility needs and expansion plans will necessitate additional fundraising campaigns after the new intensive care building opens this fall, says Martha Smith, Kapiolani Medical Center CEO. The hospital was successful largely because of community buy-in. On the opposite side of the donor spectrum, nonprofits are challenged because of Hawaii’s lack of big industries.

“As far as corporations go, we do not have big industries here like in other larger states, where corporate giving to these campaigns could be tremendous,” says Maruyama. “Many of the home offices of these larger corporations are not here in Hawaii and therefore the decision-making on these kinds of financial commitments is made elsewhere as well.”

The relatively small donor pool in the Islands means there will be crossover of major donors.

“People have told me, ‘I’m still fulfilling pledges to other organizations.’ You forget about that part,” Dray said. “There are people who pledge over a certain period of time and they can’t turn around and send you money while they’re in the middle of that obligation.”

Steady course While running capital campaigns is a large undertaking, there can be some hidden benefits, Dray says. That person-to-person contact is what launches long-term relationships with major donors.

Contributors become invested in the project in more than just a financial way.

The YMCA of Honolulu has just finished a feasibility study and is preparing to launch a campaign, although it hasn’t yet set a goal.

The nonprofit raises $1 million with the help of volunteers during its annual campaign. Those 800-plus volunteers work across Oahu through YMCA branches and will be an invaluable asset during a capital campaign, says Kerri Van Duyne, vice president for development at YMCA of Honolulu.

“We were told by prospective donors during the feasibility study that it’s never a good time [to run a campaign],” Van Duyne said. “There are a lot of nonprofits out there in the middle of a campaign or thinking about launching one as well, but there’s always going to be that in a community like ours.”

Wilcox had the same feeling.

“I don’t view what we’re doing as competing with other capital campaigns,” Wilcox said. “True, there’s only so much money for philanthropic bricks and mortar. But donors are moved by different causes.”

According to the Hawaii Community Foundation’s “Hawaii Giving Study 2015,” giving is growing, especially in the form of volunteerism. Over the last six years, the lowest income earners in Hawaii have more than doubled their donations, and highest income earners have tripled the size of their contributions.

Van Duyne has noticed a significant number of individual participation in philanthropy in Hawaii.

“On the Mainland there are big donors, but here everyone wants to do their part, and they all want to be part of the success whether it’s $25 or $100,000,” she said.

Capital Campaigns The 17 nonprofits listed here are seeking $182.13 million total and have raised about $94.6 million so far.                 

Arc of Hilo Castle Medical Center Diamond Head Theatre Friends of the Falls of Clyde Hale Kipa Hawaii Kidney Foundation Hina Mauka Hoola Na Pua Kapiolani Medical Center Kupu Pacific Aviation Museum Pearl Harbor Pai Foundation Palolo Chinese Home PBS Hawaii Special Olympics Hawaii Surfing the Nations Foundation Waimanalo Health Center

Diamond Head Theatre    

Goal:$22 million Raised to date: Quiet phase Project: New theatre Timeline: Break ground 2018

Special Olympics Hawaii    

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Goal:$11 million Raised to date: NA Project: Sports and wellness center in Kapolei Major contributors: James and Abigail Campbell Family Foundation, James Campbell Co., Bank of Hawaii, First Hawaiian Bank, Hawaii Independent Energy, HMSA Foundation, and Matson, Inc. Timeline: Completion slated for 2017

Palolo Chinese Home   

Goal:$7.5 million Project: One-story, 15,000 square-foot building for skilled nursing complex.

Timeline: Scheduled for completion by 2016

Waimanalo Health Center     

Goal:$13 million Funds raised to date:$6 million Project: Two-story, 17,700 square-foot new health center facility to accommodate the 30 percent increase in patients that the center has seen over the past five years.

Major contributors: Harold K.L. Castle Foundation, federal and state governments, Victoria S. and Bradley L. Geist Foundation.

Timeline: Construction slated to start in February; complete by July 2017

Hale Kipa    

Goal:$16 million Raised to date:$1.4 million Project: Hale Kipa Services Center, residential shelters and school.

Major contributors: Bank of Hawaii, state of Hawaii

Kupu    

Goal:$5 million Funds raised to date: Nearly $2.5 million Project: The Hoahu capital campaign supports the youth and environmental nonprofit, Kupu and its green job training center project in Kakaako.

Timeline: Summer 2016 completion

Pai Foundation

    

Goal:$10,000 Raised to date:$13,795 Project: Ola Ka Ilima & Pa Arts & Culture Center in Kakaako, an affordable artist housing development for both native and non-native artists and their families.

Major contributors: Hawaii Tourism Authority, Kamehameha Schools, Office of Hawaiian Affairs Timeline: Planned opening is spring 2018

Kapiolani Medical Center for Women & Children    

Goal:$30 million Raised to date:$35 million Project: New intensive care building Timeline: Opening by the end of 2016

The National Kidney Foundation of Hawaii    

Goal:$12 million Raised to date:$2 million Project: New 10,000 square-foot Kapolei wellness center targeting 400,000 West Oahu residents.

Timeline: Campaign completion targeted for 2018

Castle Medical Center   

Goal:$10 million Raised to date:$7.7 million Project: Emergency room renovation

Arc of Hilo  

Goal:$120,000 Project: Main administration building re-roofing

Surfing the Nations Foundation  

Goal:$1.5 million Project: Community outreach and training center, a new 4,664 square-foot two-story facility for community outreach

Friends of the Falls of Clyde    

Goal:$3 million Raised to date:$145,000 Project: Restoration projects on the ship after the basic hull work is done.

Timeline: Started in 2014, target completion 2016 for $1.5 million goal

Pacific Aviation Museum Pearl Harbor 

Goal:$47 million - national campaign, $3.5 million - Hawaii campaign

  

Raised to date:$225,000 for Hawaii campaign Project: Restoration of grounds, hangars and control tower on Ford Island, Pearl Harbor, to reopen it for public enjoyment.

Timeline: Local campaign launched in September, targeted three-year completion

PBS Hawaii    



Goal:$30 million Raised to date:$27.1 million Project: Two-story, Clarence T.C. Ching Campus Major contributors: State of Hawaii, City and County of Honolulu, First Hawaiian Bank Foundation, McInerny Foundation, ABC Stores, Alexander and Baldwin, Inc., Matson Foundation, Aloha Petroleum, Ltd., First Insurance Company of Hawaii Foundation, Erdman Family Fund, Clarence T.C. Ching Foundation, Christine Camp, Carol Mon Lee, and others.

View a full list of donors online at www.pbshawaii.org.

Timeline: Construction underway

Investor’s perspective Terri Fujii, audit partner at CW Associates, CPAs, has a seasoned perspective since she serves on several boards — Aloha United Way, Hospice Hawaii, Easter Seals Hawaii, and Goodwill Industries of Hawaii. While Hawaii’s pool of donors is limited, there are other options she says, such as Mainland donors, private foundations, and other types of grant opportunities.

“As the economy improves, will there be more funds out there? Probably,” she said. “As individuals and foundations get a higher return on their investments, they’ll have more resources to be able to contribute to organizations as well. With today’s returns, it takes a large endowment or investment pool to create a return of any significance.”