Aloha United Way, which has been collecting and distributing money to more than 60 nonprofits working on a wide variety of issues, may soon change its rules to focus on nonprofits in just four key areas.

The areas are: family and individual self-sufficiency, early childhood development, homelessness, and crime and drug use.

The Aloha United Way board has scheduled a vote Friday on whether to adopt the change.

At stake is about $14 million that Aloha United Way distributes to nonprofits each year.

Nonprofits outside the four key areas might be excluded from future United Way donations. Charities working on elder care or specific health issues could be among those that lose funding. The money would be phased out over three years, and United Way would help the charity find new funding.

The change could be dramatic for some.

"I think the ones on the chopping block are tiny nonprofits that rely primarily on Aloha United Way for funding," said Brian Schatz, executive director of Helping Hands Hawai'i. "They will likely shut down or merge as a result of the loss of funding, and I think that's tragic."

Schatz said his nonprofit will likely still fall under United Way's umbrella even if the change is made.

The loss of contributions poses a problem for nonprofits because the United Way has a broader reach than most individual nonprofits, as well as access to workplaces that offer employees the ease of designating a portion of each paycheck to charity.

"We can't do payroll deduction," said Janet Eli, president of the Alzheimer's Association Aloha Chapter. "We'd be hard pressed to reach the broad spectrum of people who really want to give."

Aloha United Way is considering the change as part of a shift in national strategy.

The national United Way, which is a collection of 1,300 local organizations and has its headquarters in Alexandria, Va., lets each local organization set its own priorities, but the national trend among its local affiliates has been to narrow their priorities to those where they can see measurable results.

AREAS OF CONCERN

Aloha United Way settled on its own priorities through public opinion polls that showed major areas of concern.

"These are really important issues. We have negative statistics in these areas, and we should do something about it," said Susan Au Doyle, chief executive officer of Aloha United Way. "I think that we anticipate that if it's more focused and if we're able to get some results in these areas, then funding will improve."

Doyle said the goal is to try to shift the agency's energy and dollars to make a significant difference in targeted areas, not to abandon nonprofits.

No agencies will be cut off immediately, and all will remain eligible for donor-designated gifts. When the United Way collects money, it asks donors if they want a portion of their contributions to go to a specific charity. The donations not designated are known as "unrestricted" funds and go to charities selected by the United Way.

Last year the donations that went to agencies specified by donors accounted for more than $2 million — 17 percent — of Aloha United Way's campaign contributions.

The three-year transition would give nonprofits a chance to find new sources of funding.

"They would sort of be weaned off the unrestricted funding over a period of three years," Doyle said. "Of course, we'd be trying to help them however we could so they come out whole in the end."

DIVERSIFIED FUNDING

Small nonprofits might want to take a lesson from larger ones that have diversified their funding so that Aloha United Way is one of many funding streams.

That's how the Hawai'i Centers for Independent Living does it, but executive director Patricia Lockwood suspects that smaller, more narrowly focused groups might have difficulty.

"Groups that maybe provide services to just one type of disability or just one age group, it's going to be harder for them. We've seen so many small nonprofits get into trouble and either fold or have increasing problems," she said.

Her biggest worry is that with the change in priorities, people with disabilities might get lost, despite the fact that they make up a significant part of the homeless population.

"I have faith that Aloha United Way is heading in the right direction, but I'm worried that services to people with disabilities are no longer in vogue and could get lost in the shuffle," she said.

Eli, of the Alzheimer's Association, isn't overly concerned that the chapter will lose much Aloha United Way funding because the majority of it comes from donor designated gifts, and she expects that to continue.

"The people make the ultimate choice, and they have a right to decide where their money goes," she said. "As long as it's clearly communicated to the community, then it shouldn't be a problem."

Reach Treena Shapiro at tshapiro@honoluluadvertiser.com.