 Okay, we're back. We're live. It's gee whiz. It's it's 12 o'clock on a given Tuesday the 14th. I'm Jay Fidel. This is Think Tech Community Matters. And we're going to talk with Lisa Maruyama, who is the president and CEO of the Hawaii Affiliate Affiliation of Nonprofit Organizations here, which is part of a larger national organization. And we call it Hano H-A-N-O. Welcome to the show, Lisa. Hi, Jay. Good to see you remotely today. Hope you're doing well. You're looking great remotely. You too. You know, Lisa was the director of Think Tech for many years, and we really appreciate her service. And in fact, I would say go further than that and say, you know, as the CEO of the Hawaii Association of Non-Affiliation of Non-Profit, or you always correct me on that, Hawaii Alliance, nonprofit organizations, she is doing really important work for the community. And it's it's very important. And so I compliment you and thank you for your work to help our community. Because as we talked before the show, you know, nonprofits do more of the burden of taking care of the disadvantaged and handling things that government cannot, will not increasingly does not handle. So what was happening over over time is the pie chart of how much of these functions are performed by the nonprofit sector is increasing and the functions performed by government is decreasing, which is too bad. But that's the reality. That's the way it is. And you're watching that all the time. You see that you see that evolution, don't you? Yeah, I mean, over the last decade, I would say that government has moved from a provider of community based services to an arranger of community based services. So really looking, devolving a lot of their responsibility to the nonprofit sector as an outsourced provider and partner to government. And while that's not bad for the nonprofit sector, certainly we have the expertise. Certainly we want to be good partners to government. I think this COVID crisis actually highlights that partnership and how nonprofits are really in a place, they're agile, they're responsive, they're adaptive to be able to be the immediate frontline responders and provide the rapid community solutions that we need in this time. So that's been it's been an interesting thing to observe. Yeah, so why are they more nimble? What makes them more nimble? What are the social processes, professional processes that make them more nimble? Well, I think they're smaller in nature than these government bureaucracies and the decision making trees or decision making, you know, flow within nonprofit organizations is quicker. I think you have usually have a board of trustees or board of directors that governs the organization, but then you usually have a staff that is very nimble and adaptive. And you know, we're very used to using very limited resources to deliver quality services. And so in these moments of crisis, I think nonprofits are just better able to respond quickly and make the decisions that need to be made. So let's talk about the crisis at hand. You know, you've been dealing with the crisis of disadvantaged sectors of the community for years and years, and that that's enough of a burden and dealing with hundreds if not thousands of nonprofits who are dedicated to try to help them. And that's that's that's a lot of work there, a lot of coordination, a lot of training, a lot of explanation and getting everybody the same page and, you know, helping them help others. But now we have coronavirus and it changes everything. I mean, it's changed everything in our lifetime. It's never happened before. Hopefully it'll never happen. Knockingwood never happened again. But it certainly has changed, you know, the paradigm for our community, for the nonprofits, and for you and Hanno. Can you talk about it? Yeah, I mean, it's unprecedented what we're witnessing right now, right? We're seeing some of the larger organizations, nonprofit organizations, actually struggling more than the smaller organizations largely because they're so leveraged, right? They have large staff. Some of them are statewide. And so they are particularly immune to this crisis, especially if they are not providing what we deem essential services, right? So if they were running a capuna daycare, if they had any kind of day programs that are not deemed essential, those programs have come to a dead halt. And so when you think about the business models of nonprofits and the sort of the diverse basket of revenue that comes in, some of it is for nonprofits that are health and human service providers, they are highly dependent upon government contracts for their services. So if COVID and kind of all of our preoccupations around COVID have slowed down contract payments, nonprofits are actually not getting paid for these services. Or if it is not cost reimbursement, and it is fee for service. And if they are not providing some services, they're not getting paid. And then if you think about the fact that some of them may have individual donors that contribute, some of those donors may not be giving in this time, because they are themselves maybe unemployed laid off for a load, also just being very conservative for the future. And so they're not as feeling comfortable being so charitable in this time. And then for those that have, you know, like, if you think about the arts and cultural groups, the theaters, they're, they've all gone dark, right, this season. So they don't have ticket box, box office revenue coming in, which tends to be their earned income. So for them, they're all, you know, their sources of income have come to a complete halt as well. So this is a perfect storm, I think, for the nonprofit sector. We are trying to press on some of those levers to actually encourage free flow of revenue where possible. But I think this is going to make or break some nonprofits. The highly leveraged ones are having a hard time keeping afloat. Even their business costs related to laying off are high. When you think about unemployment insurance and all of those tips of things that are, you know, on the minds of the larger nonprofit businesses. So there's a lot going on. It's kind of a perfect storm for our sector at the moment. And when you think about it, we are providing the frontline service at the same time. So demand is up for service and revenue is down. And so our business models are very challenged at the moment. Yeah, as you mentioned, to the extent that they require public contributions to continue, people are out of jobs, they're not going to make public contributions. And I imagine the Aloha United Way, which supports nonprofits with a fund of contributions. They don't have the same kind of bucks coming in. And furthermore, I'd say, you know what, we forget that the crisis is not just a healthcare crisis, it's an economic crisis, which will continue after the healthcare crisis is dealt with. And so we're going to have at least a recession, maybe worse, in the state of Hawaii for a while. And during that period, people don't have any money to make contributions to nonprofits. So we're going to be hurting in this area. And how many how many organizations are within your umbrella? Yeah, we have a membership base, and that's, you know, about 300 people 300 members. But really, our engagement is really with the larger sector. We're not kind of unlike the trade association, we don't define ourselves merely by our paying members. We actually that's why we carefully chose the word alliance in our name, because we support nonprofits, whether they're members or not. And so really, if you're asking demographics of our sector, we have over 7000 charitable 7000 tax exempt nonprofits, filing under that 501c kind of status. But then when you look at just charitable organizations, it's about over 6000. And many people don't realize how large our industry is, we actually have 6.6 billion in revenue. This would be for COVID, of course. And we before COVID employed about 56,000 employees, which almost rivals state government. And so I think not many people realize what it does to the economy if nonprofits are hobbled in some way. At the national level, actually, a surprising statistic is actually that our industry is larger than construction, finance, insurance, wholesale and transportation industries combined. That's at the national level. And when you think about our resilience during these times, whether it was the 2008 economic downturn, the economic recession, or even, you know, COVID, we are very resilient. We are very resilient partners. And so it's worth considering how we might keep this industry afloat, not just for the economic driver that we are, but also just for the services that we provide in these times of need. Sure. And the humanity. There's a moral side to all of this, because if the nonprofits are not functioning, I mean, there are hundreds of nonprofits dealing with homelessness, for example, if they're not functioning, gee whiz, the state government and the city government are not going to be able to do much. They wouldn't do much. So, you know, I guess what I'd like to ask you about is what you can do, what we can do to keep them afloat. So one thing, and I'm sure you will agree, one thing is if you have a pocket to dig into, keep on contributing to nonprofits, keep them alive, and especially in these crisis times. And that means most people have at least something. I have to grant you that a lot of people out of work, they have no money and, you know, they can make a contribution. But to the extent that you can, you should continue to do that. What else, what else can we do to keep them afloat? You know, I think giving is a wonderful way the CARES Act that just got enacted at the federal level actually made for loosening up, you know, on top of the standard deduction on your tax form, you can now take the charitable deduction. So they provided for that in the CARES Act. There is an attempt to do a CARES 2.0 modification to the CARES Act. We're hoping our, we haven't, we're an affiliated state association of nonprofits with our national office, the National Council of Nonprofits. And that organization is pushing at the federal level in CARES 2.0 to actually extend the charitable deduction, the charitable incentive further back so that people can take this tax deduction sooner, rather than, you know, the next tax year, so that this could have a direct immediate effect on donating to charities in this near term. So there's some modifications, policy modifications that the average citizen could support that actually sort of grease the wheels, make it easier for federal money, federal relief money to actually flow down to the state level that would actually then flow to nonprofits faster. I guess I would just ask that people track, follow that money. Basically, how is that money flowing down to our state? Are we drawing down all of the money available to us? And, you know, sometimes we walk away, I think, from money on the table here at the state level. So it really takes all of us to vigilantly monitor how that money is flowing out to the community. So you're going to be, as you have in the past, you're going to be trying, I imagine, I recall, big ballrooms full of people from the non-profit sector, and you're up there trying to show them how to, you know, do business and be better at what they do and all that management advice, if you will, and staff advice. I can't do that now because you can't have a gathering. So what can you do in terms of helping them through this, in terms of management decisions, staff decisions, and of course, applying for funding out of the care act? Right. So in the immediate, currently, the kind of training that we are rolling out for non-profits is around the SBA loans. There are various loan mechanisms that are available to non-profits. But as I was saying to you, Jay earlier, it's a little clunky for non-profits because the SBA has not traditionally or historically made loans available for non-profits, but they are now, thankfully, but we're just not used to applying for these types of loans. So it's providing all of the technical assistance to non-profits to be able to do that quickly and efficiently draw down those loans to available to them. Other ways in which they can get really- Good question, Lisa. Good question. These loans, I really don't know the answer. These loans, you know, usually they run through banks. So the bank makes a loan, the SBA, I guess it guarantees the loan or some kind of business approach to that. But are they, these loans going to be required or guaranteed by the principles of the non-profit or are they non-recourse? Some of them don't, yeah. This is what the beauty of some of these loans are. Some of them don't require collateral or any kind of guarantee. We heard as of this morning that some of the banks are preferring to actually go with their existing customers to process those loans. The banks are being so overwhelmed by the applications that it's faster for them to go with their customers because they can access the financial information quicker. So we're hearing that as of this morning. We are still concerned though that not as many non-profits are applying for those loans as could be possible. I would say to the banks, I would say to the banks you should consider new applicants who you don't have in your loan portfolio who have never applied for a loan before. Why would I say that? Because those are the guys that never made a loan. Those are the guys that managed to live on what they earn. Those are better credit risks I think than people who have had to make loans. And so the banks really ought to open this big in a little wider. This might be right. When I say existing customers, I just mean that you have an account with the bank so that the, you know what I mean. So it's not necessarily that they've asked for a loan prior, but that the bank is familiar with this non-profit. The bank has access to their accounts, et cetera, to expedite the application process. So I think that's kind of where they are. I will tell you, Jay, though, that the banks are overwhelmed with these applications. So many people need relief. And so it's been challenging for them. And we really appreciate that they've stepped up quickly to work with the SBA to actually process these applications. But you asked, you know, this is the immediate term we're trying to get as many resources, technical assistance in the hands of nonprofits to be able to survive. In the midterm, we're feeling like recovery. So many people try to see this in tranches, right? Like the surge or the immediate emergency response as well as then the midterm recovery and then the stimulus or, you know, that third phase of stimulating the economy. I don't think those stages are going to be very clear to us. I think we're going to, some are going to ease into the second stage and the third stage faster than others, et cetera. So from where we sit as capacity builders, as trainers, we're actually trying to think about what that middle stage looks like of recovery. And it is going to be nonprofits need to be better at understanding their cash flow situations, understanding, being able to do the financial analysis to know where they are in their strategic directions going forward, but also be able to articulate that to their boards, articulate it to their external constituency. And many of them are ill prepared to do that kind of analysis and articulation. So it's about shoring up those types of resources around financial management, strategic planning, et cetera. And then in the third phase of recovery or stimulus, excuse me, not even sure what that looks like, Jay. I mean, I think we're all trying to get out our crystal balls to really understand what the future holds and what the new realities will be post COVID. I think there still begs the question of what does, is there a post COVID or are we dealing this, dealing with this perennially throughout the year and into 2021 and beyond until we can find a vaccine? So I think there are a lot of questions at hand for people and people don't know how to plan at the moment. Yeah. Well, I nobody ever said that Congress was nimble. Yeah. At the moment, the state legislature. Yeah. I mean, we're worried Congress is actually pushing out dollars rather quickly. I'm worried about the state level. So once those monies come down to us, are there technological mechanisms in place? Are there systems in place to actually move that money quickly out, through SNAP, through Medicaid, through some of these other informal granting mechanisms? Is the state going to be able to do that? Because nonprofits are on the ready to receive that and actually deliver on those services. So. Yeah. I don't know if people realize that it's sort of like these small businesses that nonprofits don't have any reserves. They live from paycheck to paycheck, contribution to contribution. And over a period of time, not very much time, they're going to fail. And I wanted to ask you about that. If you have a nonprofit that has, you know, it doesn't have the sufficient funds to pay fixed expenses and pay the staff, what does that look like? I imagine the board of directors, all of whom are responsible in trying to make the thing work, decide they can't make it work. And one day they have a vote and they close it down. And there is no staff anymore and they close the office and no more nonprofit. I mean, that's very tragic for a nonprofit that has done good work. How does it work? Can you describe? Yeah, that's exactly how it works, how you just described it. I mean, if they don't have the reserves to float these employees in this kind of lockdown mode, they just have to furlough or lay off. And that's what a lot of them are doing. We're hearing that, you know, there's a cohort of them that have already done so. Again, the larger ones have a harder time sustaining all. So you're seeing bigger, more dramatic furloughs and layoffs from the larger ones. And then we're hearing from a lot of them that they are just holding on for their life for a couple, they maybe have reserves for a couple more months to float their staff. But if this issue is protracted, they will not be able to float them. So yeah. And so I will say that on one hand, once a nonprofit kind of comes to a screeching hall, it will be very hard to open sort of open up for business again, to provide the service, right, to kind of build that capacity and the infrastructure back up for that nonprofit. On the other hand, I do want to say that unlike a small business, say, retail operation or a restaurant where you see a physical shuddering of the business, right, and the business has kind of completely stopped nonprofits because of their tax exempt status actually kind of just quietly stopped providing service, but they still maintain the construct of the nonprofit. They still have the tax exempt status. They can retain the board quietly. They stop, maybe they don't, you know, they stop payroll, etc. But the structure of the organization can stay in place as long as they're filing their annual 990 tax return. So there's the responsiveness aspect to this, but there's also, you know, it's very tragic to see these nonprofits stop providing service, especially when it's dire services that they provide to the community. It is going to have a ripple effect into the community when these organizations can provide the service. Yeah, that's a really interesting thought that you could shelve it. You could shelve it for a while. And then when the time is right, when things are better, when there might be more contributions, and there's always going to be a need, there will always be a need, then you start up again. What about consolidation? Is there any consolidation happening where two or three or four who have troubles, financial troubles will come together and work that out as a combination? We haven't heard, we haven't heard a lot of news on that front yet. And that doesn't mean it's not happening in the community just because we haven't heard it. But at the same time, I do think it's a little early for nonprofits to be having those conversations. And for one thing, we do not recommend that people have serious merger conversations in the middle of a crisis. But on the other hand, this crisis is like no other, and it may precipitate or it may facilitate those conversations happening faster or sooner. But I do think that nonprofits are still trying to get a sense of what's happening to them. So still making some of those decisions, still trying to understand financially where they are. And as you know, Jay, there's so many unanswered questions around this crisis that again, it's very hard for nonprofits to plan. Do they engage in a very serious merger conversation if perhaps this might be solved this summer? Or if we go into the fall, then maybe those conversations have to happen. But I think people are having very hard time knowing which metrics to utilize to make some of those strategic decisions at the moment. I think we're all... I think it's absolutely totally true. You know, one of the things that came up recently was that a number of state employees are being paid to be home, not to work in their offices and not to actually work at home either, and being paid full salary. And that's good because they can buy groceries and make contributions to nonprofits, I should add. But then there was this issue with HGEA where I think the governor suggested that maybe these particular state employees could be repurposed into other areas where they could provide other services for other sectors which were in need. And maybe potentially as volunteers for one organization or another. And HGEA said, no, we don't want that to happen. And if we let anybody go into a repurposed job, we want to offer them... we want you to offer them combat pay of, quote, about 25% more override. And I think the state administration said no to that and it stopped right there. But it does raise the whole issue about repurposing volunteers, repurposing people who are out of work or are being paid not to work or who are generally available to become volunteers in a time of crisis. What is happening on that and what do you suggest should happen on that? I would like to see more creative redeployment of our state workforce where there are areas of need in DLIR with regard to the unemployment insurance claims processing, et cetera. I would have hoped to see that kind of rapid creative redeployment. I think the nonprofit sector is also on the ready for those nonprofit employees who have been furloughed or laid off. There's a lot of expertise and talent there as well that could be creatively redeployed to other areas of corporations, government, other nonprofits, et cetera. I'm in favor of just job share. I think after this is all better done, we should sit down and think of these bigger, hairier, audacious goals of how do we become more resilient as a community by actually bringing down the silos of all of our sectors and thinking about creative deployment of resources. So I'm in favor of those bigger conversations. The other thing is that a lot of these nonprofits, especially the ones that deal with the economically socially disadvantaged people in our community, of which there are many. I mean, just knowing a little about the Loja United Way, there are virtually hundreds of these organizations that do things that are really very heartfelt, a lot of heartfelt volunteers out there helping people because they want to. And so some of them are paid, some of them are not paid. But I just wonder, maybe this is going to reshuffle the whole notion of volunteers for nonprofits. We don't have any money, necessity is the mother of invention, and so maybe you get volunteers who don't want to be paid. Maybe get people who have no job right now, but who would like to do something and make themselves useful in a crisis. And I suggest that this may be at least an interim, maybe a long-term model to find volunteers who will work without pay for nonprofits and build the sector on a semi-permanent or permanent basis. That would be a great result and I think would be healthy for us, don't you? I do. I mean, I certainly we welcome all volunteers in all ways to the sector. I also want to acknowledge that I think the notion that the nonprofit sector can be run solely on volunteers because some people still hold those news that, you know, this should be about just an all volunteer run shop. And I will argue with that, that we are providing professional services, quality services that require paid staff. And prior to COVID we actually were concerned that we were having a hard time competing with the corporate and government sectors around job recruitment, retention. We really want to keep the talent pipeline stoked coming into the sector. And we were finding pre-COVID that we couldn't compete because salaries are not competitive, benefits are not competitive. So those were some of the big things, issues we were starting to think about. But of course COVID has turned everything on its ear. And actually I was saying feeling like this post-COVID, this may attract a type of employee who is interested in rapid response, which is what our community is starting to be known for and appreciated for is we are not, our hands are not tied, we are not big bureaucracies. We can turn on a dime to actually solve some community problems. And so I welcome anybody to think about when our sector is whole again, to think about, you know, a job in the nonprofit sector. I just, I do want to say that at the moment, Aloha United Way and some other groups like Kanu Hawaii have actually stood up some platforms for virtual volunteering, for actual, physical volunteering to the extent that it is possible given our social distancing requirements at the moment. But, you know, people are on the front lines volunteering to hand out PPE, to distribute food, to the food insecure, et cetera. So there are currently ways in which you can volunteer. And JFI could give you those websites after. I'd like to, you know, if you could post it, that would be really helpful for anybody who wants to provide service now. Sure, Lisa. Lisa Marriana, the president and CEO of Hano, helping the nonprofit sector in Hawaii and stepping up, stepping up in a time of crisis. Thank you so much, Lisa. Thank you for having me, Jay. And it's been a long time. I'm sorry that we can't, we can only see each other virtually. And let's, when this is all said and done, let's get together in person. But thanks for the time. The same. You take care, Aloha. Take care.