Denise Yamaguchi’s two nonprofits have also gotten more than $1 million in grants from the Legislature in recent years.

The Hawaii Food and Wine Festival might seem like a lot to handle for Denise Yamaguchi, the chief executive of the nonprofit organization that runs the event. Each year, over two weeks on three islands, the festival hosts “150+ global tastemakers — Michelin-starred chefs, celebrated winemakers and master mixologists — to showcase the best of Hawaii’s local ingredients!” 

But for Yamaguchi, who is married to celebrity chef Roy Yamaguchi, the $171,000-a-year job running the Food and Wine Festival for the nonprofit Hawaii Ag and Culinary Alliance is not her only high-level executive job. She has another full-time CEO post earning $145,000 with another nonprofit, the Hawaii Agricultural Foundation, which runs an agricultural park in partnership with a military housing developer and a multinational GMO seed grower. 

Combined, Yamaguchi’s organizations have gotten more than $1 million in state funds over the past several years, including money for employee compensation.

Now, on the eve of the annual food and wine event, which kicks off on the Big Island on Friday, the practice of holding two full-time nonprofit jobs is raising questions among experts in nonprofit law and policy.

The Hawaii Food and Wine Festival kicks off later this week. The chief executive of the nonprofit organization that runs it, will be splitting her time between the festival and another full-time job. (Screenshot)

Rick Cohen, chief communications and operating officer for the National Council of Nonprofits in Washington, D.C., declined to comment specifically about Yamaguchi, but he said generally it’s highly unusual for one person to serve as the full-time chief executive of two public charities at the same time, simply because such jobs are so challenging.

“The job of the executive director is so onerous, demanding, all-consuming that most would not consider having a side hustle,” Cohen said. “I don’t see how any human could run two organizations of that size at the same time.”

Hugh Jones, a former head of the Hawaii Attorney General’s tax and charities division who is now in private practice, declined to comment specifically about Yamaguchi. But generally he said people who regulate nonprofits would be concerned if a chief executive being paid to work full time for two organizations focused on just one of them.

Yamaguchi did not return phone calls seeking comment for this story. Her spokeswoman said Yamaguchi did not have time to address the issue of her holding two highly compensated full-time jobs.

In tax returns, Yamaguchi says she works 35 hours each week for the Ag and Culinary Alliance and 40 hours a week for the Hawaii Agricultural Foundation. 

“If I’m an executive director of a charity and I’m being paid full time to work part time, that means the charity is overpaying me,” Jones said. “And that’s called inurement.”

Each case is unique and highly fact specific, but a nonprofit can lose its tax-exempt status as a penalty for inurement, said Eric Smith, a spokesman for the IRS in Washington, D.C. An organization could also face what regulators call intermediate sanctions, which may include penalties for board mambers.

“It’s a compliance tool,” Smith said of intermediate sanctions. “But it’s less than the death penalty in terms of revocation of the organization’s status.”

Nonprofits Can’t Be Set Up To Benefit Private Parties

Nonprofits differ from for-profit corporations in key ways. According to the IRS, to be tax exempt under section 501(c)(3) of the Internal Revenue Code, a nonprofit must be organized and operated exclusively for one of several purposes: “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.” 

The IRS defines “charitable” broadly to include a range of activities including providing relief for poor and underprivileged people, advancing religion, and defending human and civil rights.

Such nonprofits are generally restricted from engaging in political activities and lobbying. 

The organization also must not be organized for the benefit of private interests, “such as the creator or the creator’s family.” And none of the organization’s net earnings can be given to an individual.

In the case of Yamaguchi’s organizations, they’re set up primarily to promote agriculture, support farmers and educate people about the importance of agriculture. 

Perhaps the most important of the Hawaii Agricultural Foundation’s activities is managing an agriculture park in Kunia. The park is a partnership between Island Palm Communities, a military housing developer; Bayer U.S., which grows seed corn in Kunia; and the foundation, which leases small parcels and provide technical support to farmers.

The foundation spent approximately $698,000 in 2021 on farmer assistance and on educational and information programs promoting the importance of agriculture. Among the foundation's educational programs is a six-lesson curriculum for second graders titled "Where Would We Be Without Seeds," the foundation's website says. The foundation also provided $213,198 in on-the-ground support to farmers, according to the organization’s 2021 tax return.

In addition to organizing the Food and Wine Festival, the Hawaii Ag and Culinary Foundation in 2021 provided educational experiences for Hawaii youth, including exposure to how master chefs use Hawaii agriculture products in their dishes. It awarded grants totaling $70,500.

Yamaguchi is rewarded well for this work. Her salaries, which totaled $317,231 in 2021 according to the latest available tax returns, make Yamaguchi one of Hawaii’s highest paid nonprofit executives. She earned more in 2021 than the CEOs of much larger, well-known charities such as Catholic Charities of Hawaii, the Aloha United Way and the Hawaii Foodbank, which provide far more services to the public.

For example, Yamaguchi earned just over $317,000 for running two nonprofits with combined revenue of $3.1 million. By comparison Catholic Charities Hawaii managed $103.7 million in 2021, and its CEO, Robert Van Tassel, was paid $263,000.

Capitol building.
Denise Yamagiuchi's nonprofits have raked in more than $1 million in grants from the Legislature in the past several years. (Cory Lum/Civil Beat/2022)

Legislative Support

Yamaguchi’s organizations know their way around the Hawaii State Capitol. From 2018 through 2022, the Hawaii Agricultural Foundation had gotten $1.2 million in grants, according to the foundation's 2023 grant request. And taxpayer subsidies continued to roll in this past session. 

The foundation this past session asked the Legislature for $510,670 for operations, including $229,000 for salaries and payroll taxes. It managed to land $250,000.

The foundation also asked for $1.02 million to buy five “controlled environment agriculture” containers that can be used to grow produce even when irrigated farm land isn’t available. Lawmakers handed over $320,000.

The Ag and Culinary Alliance also got significant financial support to fund a venture in partnership with the Wahiawa Value-Added Product Development Center. The center is a pet project of influential Senate Ways and Means Committee Chairman Donovan Dela Cruz. The alliance's idea is to join forces with the center to create a program providing support to entrepreneurs using local produce to create value-added consumer products, which can be exported.

The Ag and Culinary Alliance asked for $174,696 from the Legislature for the endeavor, including $117,000, or 67%, for salaries. Only a third, or $57,000 was for other expenses, including $45,000 for scholarships and the rest for equipment and photography. The Legislature approved $150,000.

Yamaguchi has extended relations with Dela Cruz outside of the capitol. For instance, the agricultural foundation recently featured Dela Cruz in a video series titled “Localicious Heroes,” in which the senator discusses his one-acre farm and tea company, Kilani Brew, which he co-owns with Dane Wicker, a former Senate staffer who is now deputy director for the Hawaii Department of Business, Economic Development and Tourism. 

The Hawaii Agriculture Foundation has honored Sen. Donovan Dela Cruz, chairman of the Senate Ways and Means Committee, as a "Localicious Hero" for his work running a one-acre tea farm in Kunia. (Screenshot)

Still, the question of whether an organization's chief executive should be splitting her focus between two leadership posts remains.

Some board members know she works the two full-time jobs. Her husband is chairman of the Ag and Culinary Alliance board, and Meredith Ching, a senior executive with Alexander & Baldwin, serves on the boards of both nonprofits.

Rick Cohen, the National Council of Nonprofits executive, said the question is not whether each board is comfortable with its chief executive working another full-time job. It's whether the person can do as good a job as others who could devote their undivided attention to each job.

"If someone's time and attention are split, could organization be better off with someone who is fully focused on the mission of the organization?" he said.

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