Earlier this year, Catholic Charities of the Archdiocese of Chicago made the difficult decision to transition away from 75 government contracts, beginning this past summer. These contracts, which focused on delivering essential social services, represented 12% of the nonprofit’s organizational budget. As a result, the organization was forced to lay off approximately 300 employees.

Why would they take such a significant step during a time when social services are more critical than ever for those who are struggling?

Sally Blount, president and CEO of Catholic Charities of the Archdiocese of Chicago, explained it plainly: “Over the last decade, navigating the government services sector has grown more complex, and funding has not kept up with the high rates of inflation. That means that many contracts no longer cover their direct costs, much less the increasing costs of administering them.”

If this story feels familiar, it should. Nonprofits here in Hawaii and across the nation are grappling with the same financial pressures. While our organizations haven’t been forced to turn down government contracts yet, other nonprofits have reduced operations or even shut down entirely because the funding provided simply doesn’t cover the true costs of delivering programs.

At the heart of the issue is this: government contract rates are often set at or below the actual cost of providing services. That makes delivering critical outcomes unsustainable. For some contracts, rates have remained stagnant for more than a decade, even as the cost of living in Hawaii continues to climb. This growing gap between funding and expenses puts enormous pressure on nonprofits, forcing them to divert resources to cover deficits or, worse, reduce services altogether.

This isn’t just about the survival of nonprofits. It’s about the people who rely on them — families seeking food assistance, youth in need of emergency shelter, individuals looking for mental health or substance abuse support, and so many others. What happens to these individuals when vital services disappear?

The consequences ripple far beyond those directly affected. Ignoring the needs of our most vulnerable neighbors can turn small, solvable issues into larger community-wide challenges. The problems we neglect today can escalate into threats to public safety, stability and well-being tomorrow.

Chicago’s experience should serve as a catalyst for change in Hawaii. We must act now to ensure our nonprofits are not forced into similarly tough decisions.

Fortunately, there are steps we can take to avoid this fate.

By advocating for legislative funding that fully supports essential services and collaborating with government agencies to reform how contracts are structured, we can build stronger partnerships that better serve our communities. Together, we can ensure that government contracts cover the true costs of service delivery, allowing nonprofits to focus on their mission rather than financial survival. We are grateful for the leaders in our community who are already working with us to make this a reality.

This effort requires all of us. With the support of government officials, community-based organizations and the broader public, we can ensure that critical services remain available for those who need them most. By coming together during this legislative session, we can keep Hawaii’s communities safe, healthy and thriving for generations to come.

Tina Andrade is president/CEO of Catholic Charities Hawaii; Rona Fukumoto is president/CEO of Lanakila Pacific.