County bill would require nonprofits to prove governance rules for grants

A Hawaii County Council committee voted 9-0 on Tuesday to move Bill 156 forward, setting up a full council vote on a measure that would make nonprofits prove they have basic governance rules before they receive county grant money.

If approved, the bill would require organizations applying for county grants to certify under penalty of perjury that they have bylaws and written policies covering nepotism, conflicts of interest, auditing and internal management procedures. The proposal also asks nonprofits to affirm that they have procedures for fiscal controls and oversight, a change aimed at making grant applications more uniform and giving county officials more confidence that public money is being handled responsibly.

The county already distributes nonprofit aid through the Waiwai Grants-in-Aid program, which says it exists to support qualified organizations that provide direct public benefits and public purposes in Hawaii County. County materials say at least $2.5 million is available each year through the program, and recommended FY 2026-2027 appropriations total $2,515,000. Awards range from $2,500 to $50,000, even as the county receives more than 200 applications annually.

The bill comes on top of paperwork the county already requires. Grant materials ask applicants for proof of authorization, bylaws, conflict-of-interest and nepotism policies, IRS documents and annual financial statements. Application instructions also warn that failure to comply can lead to disqualification, repayment of funds and ineligibility for future awards. Chair Holeka Inaba said the new bill is intended to reduce staff time spent reviewing bylaws and policy documents line by line.

Council members were careful to say the push was not driven by a specific scandal. Still, the move lands after months of scrutiny over how the county measures results from outside spending. In February 2025, the county awarded 15 homelessness-related grants totaling $10.1 million to nine organizations through the Homelessness and Housing Fund, created in 2022. Councilwoman Rebecca Villegas said some programs spent up to 90% of their awards on employee salaries, and Councilman Matt Kaneali‘i-Kleinfelder said the county needed to know what had been accomplished after two years and $16 million in homeless and housing-based services.

The council also unanimously passed Bill 21 in April 2025, a nepotism measure for county employees that adopted the state ethics policy on relatives and household members. At that time, Councilmember Heather Kimball said trust in government was at an all-time low. Taken together, the new nonprofit bill and the county’s earlier ethics changes show a steady move toward tighter oversight, with the biggest impact likely on local service providers in housing, food security, youth programs, elder care, cultural work and disaster recovery across Hawaii Island.