After a decision yesterday by Aloha United Way to narrow its funding to four targeted areas, smaller niche nonprofits are worried they may lose significant portions of their budgets.

The board for Aloha United Way, which currently provides funding for about 63 nonprofits, voted unanimously to target giving toward organizations that focus on economic self-sufficiency, homelessness, early childhood education and crime and drugs.

In addition, Aloha United Way will maintain an emergency and crisis service safety net.

Donors, however, may still designate their funds for particular organizations, even if they don't fit into the targeted categories.

Officials with groups including the Palolo Chinese Home, the Life Foundation and HUGS (Help, Understanding and Group Support), suspect their organizations might not fit into any of Aloha United Way's new priority areas and are already planning how they'll make up for the loss of funding.

"We're not sure where we're going to land," said Donna Witsell, executive director of HUGS. "Basically, it's the niche organizations like ours that don't fit neatly into the impact areas (that are concerned)."

The group provides assistance to families who have seriously ill children, including help with medical bills, peer support groups and respite services for parents.

Representatives with Palolo Chinese Home said if it loses Aloha United Way funds, the money will have to be replaced somehow for the residential care home to maintain its current level of service. The home is a residential facility for the elderly that also provides senior daycare services.

"We're really going to have to look at decreasing expenses, which may mean some changes in programs and services, but we haven't really sat down and analyzed the impact," said administrator Darlene Nakayama.

The plans aren't a surprise. Though approved formally yesterday, they've been in the works for more than a year.

"The establishment of these prioritized areas is a way to allow Aloha United Way to focus on some major community issues in the allocation of unrestricted funds," said Aloha United Way board chairman Dave Thomas.

He said Aloha United Way will continue to fund some emergency crisis services, and donors will still be able to choose to have their donations go to nonprofits that don't have partnerships with the fundraising agency.

The agencies that will lose undesignated funds will have their Aloha United Way monies gradually lowered over three years in hopes of helping them make a smooth transition.

"We are very sensitive to that," Thomas said. "We will be having a lot of communication with those agencies that will be affected."

NO CHANGES YET

None of the changes affect this year's fundraising campaign, which has already begun, and determining which agencies will be funded will take about a year, he said.

"These are changes that will go into place in next year's campaign for 2009," he said. "There is a tremendous amount of work to take place between now and then."

While Aloha United Way figures out which agencies it will fund, some individual nonprofits are preparing in case they don't make the cut.

Officials at HUGS, which received almost $55,000 this year — 15 percent of its annual budget — said they began strategizing a while ago.

"For us, because we have no public relations budget to speak of, (being an Aloha United Way partner) has given us a golden opportunity to give awareness to the community," Witsell said. "It's a vehicle for us to ask for a variety of support from the community ... otherwise they may never hear of your organization."

Melanie Moore, director of communication for the Life Foundation, which provides AIDS services and education, said the $40,000 isn't a huge percentage of the agency's $3 million-a-year operation, but "it's important because it's flexible funding," she said. "A lot of the rest of our funding comes from contracts. It's very regulated."

Aloha United Way funds have allowed the foundation to spend the money where it's most needed.

Moore said the Life Foundation already has started trying to grow its annual AIDS walk fundraiser, as well as trying to increase its donor base.

"We knew this might be happening for a while," she said.

TIME TO PLAN

Nakayama of the Palolo Chinese Home said the three-year phase-in will give it some time to work out a plan. "Hopefully, the community will rally and make up the difference for us," she said.

The home also is looking to other sources of funding, as well as "being creative and working with more agencies and making up the shortfall," she said.

Nakayama, like the other nonprofit leaders, approves of Aloha United Way's new direction, even if it means losing funding.

"They have to focus on areas where they best meet the community's needs, so I fully support what they're planning to do," she said.

Laura Robertson, president of Goodwill Industries of Hawai'i, said she'll wait to see if Aloha United Way's new direction is successful over time, but worries about the short-term impact on the nonprofits that will fall outside AUW's reach.

"It's really going to impact the smaller nonprofits who oftentimes don't have a lot of undesignated funds and a lot of times don't have the capability to do a lot of fundraising," she said.

Reach Treena Shapiro at tshapiro@honoluluadvertiser.com.