Lawmakers have introduced several bills to require Hawai'i charities to register with the state and to make more open the process the Legislature uses for handling millions of dollars in grant requests from nonprofits.

The measures were introduced largely in response to recent Advertiser stories that disclosed Hawai'i has one of the weakest charity oversight systems in the country and that the grants-in-aid process lacks transparency and formal guidelines for deciding which nonprofits get the coveted grants each year.

To bolster oversight of charities, several bills, including one that is part of the Senate majority package and a nearly identical one proposed by the Lingle administration, would require the majority of nonprofits that raise money from the public to register annually with the state attorney general's office. Certain organizations, based on size or other factors, would be exempt from the requirement.

Hawai'i is one of only 11 states that do not require charities to register, a gap that allows nonprofits to take in millions of dollars in donations with virtually no regular oversight from regulators.

Watchdog groups and government officials say an effective registration system would give the state important information that can help regulators flag the tiny percentage of charities that abuse their tax-exempt status and use donor dollars for questionable expenses.

The push for more oversight has picked up momentum as Hawai'i's nonprofit community has been hit by periodic controversies. A former Salvation Army executive, for instance, pleaded guilty last year to stealing more than $300,000 in cash and property that elderly donors had intended to give to the charity. More recently, the National Kidney Foundation of Hawai'i acknowledged that it unknowingly had hired a convicted felon while she was still on parole for stealing client funds. The woman had been a former estate planner in New Hampshire.

While Hawai'i's nonprofit industry has opposed efforts in recent years to establish a registration system, that opposition appears to be softening, though key concerns remain.

One concern is that no one has produced evidence to prove that registration actually curbs abuses, nonprofit officials say.

"We're certainly not going to resist this registration effort," said John Flanagan, president of the Hawai'i Alliance of Nonprofit Organizations. But "the failure I see in all these bills is connecting registration with getting rid of problems that have cropped up from time to time."

A key component of the Senate majority and Lingle administration bills stipulates that registration fees paid by nonprofits would be used to fund the personnel needed to provide the increased oversight. The bills appropriate a yet-to-be-determined amount to hire two deputy attorney generals, an auditor and a legal assistant, all of whom would be devoted full-time to charity oversight.

The AG's office now has only one full-time position — a legal assistant job that is currently vacant — devoted exclusively to charity oversight.

"A registration law without people looking at this stuff is not effective charity registration," said Hugh Jones, the deputy attorney general whose current duties include charity enforcement.

A justification sheet attached to the administration's registration bill quotes from a recent Advertiser series in which national experts criticized Hawai'i's lax oversight.

The push to beef up that oversight coincides with efforts to improve the Legislature's widely criticized system for approving grants to nonprofits.

State Sen. Les Ihara, D-9th (Kapahulu, Kaimuki, Palolo), an open-government advocate, introduced a bill that would increase transparency in the process and require more accountability on the part of grant recipients.

Ihara's bill, which has four other sponsors, would require the Legislature to disclose the criteria used in the selection of recipients and make available to the public a list of applicants and the amounts they are seeking.

"We should have as much transparency as possible," Ihara said.

Since an Advertiser series on the grants system was published in December, the House has eliminated its one-person grants subcommittee, which had been headed by State Rep. Michael Magaoay, D-46th (Schofield, Mokule'ia, North Shore), who capitalized on his grants position to raise tens of thousands of dollars from people with links to the nonprofit community.

House Finance chairman Marcus Oshiro, D-39th (Wahiawa), also said yesterday that all grant application will be posted online this session and the House will hold public hearings on all grant requests, even if that means having to conduct marathon sessions.

The grants are the responsibility of the House and Senate money committees.

State Rep. Della Au Belatti, D-25th (Tantalus, Makiki, McCully), a Finance committee member, doesn't believe the changes go far enough.

While making the process more public, the task of deciding which nonprofits would get grants still will be left in the hands of a few legislators, Belatti said. She said she intends to propose that the entire Finance Committee be involved in drafting the House list.

But Oshiro said having the entire committee involved would be impractical, given the time constraints in compiling the state budget bill.

State Sen. Rosalyn Baker, D-5th (W. Maui, S. Maui), head of the Ways & Means Committee, said she would like to improve the process but is unsure how to do that this session, noting that the Senate's system already is transparent. She said she would hold a hearing on Ihara's grants bill, which has been referred to her committee.

Reach Rob Perez at rperez@honoluluadvertiser.com.