In hallways of offices, coffee cafes and soccer fields, conversations are focused on the economy. Our family and friends have been affected by unemployment, underemployment, the loss of their homes or savings; we all know others who teeter on the brink. And we fear that the coming months will be worse.

Our fear is tempered by the hope that this will pass. And while the cyclical nature of our economy suggests that this may be true, somehow this feels different. Somehow, buried in the rubble of financial meltdowns, business layoffs and shuttered services, there lies an opportunity to reinvent ourselves and, in doing so, install the foundation for a new social contract that seeks to provide a better way of life for those who follow us and ensures that we care for those who need our help.

In order to understand the emerging picture, the Hawai'i Community Foundation held a series of meetings over the last several months with nonprofit providers in our community. These organizations represent the third pillar of our society, beyond government and the business sector, where our children learn, kupuna are cared for, families are protected, our culture and the arts are celebrated and our environment is preserved.

In every economic down cycle, the reliance on services provided by these organizations increases. Now, many organizations are facing the prospects of an unprecedented drop in funding. With a more than billion-dollar deficit projected for our state's biennium budget, health and human services providers, in particular, are bracing for significant cutbacks. It is estimated that more than two-thirds of the revenue in the nonprofit sector comes from government sources, largely due to a deliberate effort to transition an increasing spectrum of services from government to the nonprofit sector.

With the down economy and large investment declines in endowments, corporate and foundation support is expected to decrease significantly. And it remains to be seen whether individual giving remains resilient, as it has in past recessions.

No matter what, the nonprofit sector must prepare for an era of fewer funds. Less funds means fewer services as most organizations run pretty lean programs already. And since the vast majority of their operating costs involve staff, fewer funds also means layoffs. It is somewhat ironic that national attention has focused on the preservation of jobs in the automobile industry without any attention to the nonprofit sector when the number of jobs in that sector is larger than the auto and steel industries combined. In Hawai'i, it is estimated that there are more than 65,000 nonprofit jobs representing more than 10 percent of the nonagricultural workforce and accounting for roughly 9 percent of our gross state product. Cuts in the nonprofit sector are a double whammy: loss of jobs with attendant economic decline and loss of vital services to the community.

CLEANING HOUSE

Still, we must enter this era intent not on preserving what we have but using this moment of crisis to forge a different construct on how our values are reflected in how we work. The first principle must be to clean our own house. Government agencies and nonprofit organizations alike must take a hard look at ending programs that are not effective or efficient. While many nonprofit organizations work collaboratively with others, the sector must push hard for new partnerships to share costs, staff, systems, facilities and program services.

The second principle must be to deepen the interdependency between government and the nonprofit sector. Nonprofit organizations must accept the difficult fiscal environment and quit lobbying to preserve the same level of funding. Instead, we need to help decision-makers develop a funding framework that favors effective programs as well as programs that can access matching funds or can show the efficacy of today's costs against tomorrow's savings. Government leaders need to encourage nonprofits to work with them to craft a tapestry of services based on lower funding levels instead of allow a patchwork of services to result from severing programs in a haphazard fashion.

Finally, a new construct must involve the notion of shared sacrifice on all of our parts. No single part of our community can carry an inordinate burden nor can one sector bear the brunt of this recession. Every household must rise to the challenge of helping its neighbors and giving and volunteering as much as they can. Every foundation and business needs to consider, amid substantially lower endowments and revenue, maintaining its level of funding. And public workers will need to decide whether it is a fair tradeoff to forfeit two furlough days when the savings would amount to more than the cost to keep the Healthy Start program for families of at-risk babies and Keiki Care program for children's health insurance in place.

Many experts believe that our economy lags the Mainland and that the economic tsunami that has washed over the Mainland has yet to deluge our shores. Knowing what may happen, coupled with the sense of connectivity that we have as an island people, gives us a profound opportunity to look ahead and begin to reinvent our commitment to each other and to a way of life. Let's not waste it.

Kelvin H. Taketa is president and CEO of the Hawai'i Community Foundation. He wrote this commentary for The Advertiser.