[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
Nonprofit Japan Web site
Hi, this is Aki Okabe, a journalist currently based in San Francisco.
This is a post to the near-dead japan-us-foi mailing list. I will
occasionally try to resurrect it.
I am currently building a Nonprofit Japan Web site, which is to inform
people about the nonprofit sector and grassroots activities in Japan.
Telecommunications and government information are some of the focus
issues. Go right to http://www.igc.org/ohdakefoundation/
Last six years, I visited many nonprofit groups and people in the United
States for interviews and grassroots exchanges (with visitors from
Japan). We learned a lot. So now it's time to contribute back. I try to
provide information from Japan, try to be your help when you want to
connect to Japanese nonprofit people and organizations. That is the
purpose of the new Web site. Take a look at it, and give me your
opinions.
The below is one of the pages in the Nonprofit Japan site.
Let's keep in touch.
----------------------------------------------------------
Kazuaki (Aki) Okabe
4640 California St., San Francisco, CA94118, USA
Phone: 415-387-6253, Fax: 415-379-9815
Internet: kokabe@igc.org
kokabe@mri.biglobe.ne.jp
----------------------------------------------------------
Overview of Nonprofit Sector in Japan
Aki Okabe
(http://www.igc.org/ohdakefoundation/npo/npojp.htm)
Japanese Diet (National Parliament) passed a long overdue Nonprofit
Organization Law (Law to Promote Specified Nonprofit Activities) in
March 1998. The Law (English summary, Japanese full text ) enabled small
civic groups to incorporate for the first time in Japanese history. The
Nonprofit Organization (NPO) Law, with associated legislations on the
prefectural level, was implemented in December 1998. First nonprofit
corporations are expected to form in fall 1999. Details of the Law will
be discussed later in this article.
More than 1 million nonprofits
So, there were no nonprofit organizations before the NPO Law - at least
technically speaking. There were, however, many private organizations
doing nonprofit work that were incorporated in different types of
corporations: public benefit corporations (Koeki Hojin), school
corporations (Gakko Hojin), social welfare corporations (Shakai Fukushi
Hojin), readjustment relief corporations (Kosei Hogo Hojin), and
religious corporations (Shukyo Hojin). There are about 230,000 of them.
There are also many unincorporated groups doing nonprofit work. In one
estimate, they number more than 1 million. In 1995, the tax-collecting
agency counted 232,776 incorporated nonprofits and 5,680 unincorporated
associations, alongside with 57,626 cooperatives and 2,369,282 business
corporations. (See Figure I.)
Figure I Corporations in Japan (according to Tax Law) 1995
Tax
Exempt
Public Corporations
Special Corporations (Tokushu Hojin) 67 26
Public Benefit Corporations (Koeki Hojin) 232,776 17,000
Public Benefit Corporations (Koeki Hojin) 25,927 880
(as defined by Civil Law)
Foundation Corporations (Zaidan Hojin) 13,476 819
Association Corporations (Shadan Hojin) 12,451 61
School Corporations (Gakko Hojin) 7,566 1,125
Social Welfare Corporations (Shakai Fukushi Hojin) 14,832 14,842
Readjustment Relief Corporations (Kosei Hogo Hojin) 163 163
Religious Corporations (Shukyo Hojin) 184,288 0
Cooperative Corporations 57,626 0
Consumer Cooperatives (Shohi Seikatsu Kyodo Kumiai) 978 0
Agricultural Cooperatives (Nogyo Kyodo Kumiai) 7,035 0
Fishermen's' Cooperatives (Gyogyo Kyodo Kumiai) 3,259 0
Forestry Cooperatives (Shinrin Kumiai) 4,245 0
Small business Cooperatives (Chusho Kigyo Kyodo Kumiai)24,662 0
Others 17,447 0
Ordinary (Business) Corporations 2,369,282 0
Stock Corporations (Kabushiki Gaisha) 1,123,876 0
Limited Corporations (Yugen Gaisha) 1,183,130 0
Associate Corporations (Gomei Gaisha) 6,823 0
Limited Associate Corporations (Goshi Gaisha) 29,569 0
Medical Corporations (Iryo Hojin) 19,718 0
Others 6,166 0
Unincorporated Associations (Jinkaku naki Shadan) 5,680 0
Foreign Corporations (Gaikoku Hojin) 1,680 0
Total 2,667,111 17,026
Note: Tax exempt corporations are Tokutei Koeki Zoshin Hojin (Specific
Public Interest Promotion Corporation), a tax law designation seperate
from original corporate legal status. This tax exempt status enables
organizations to receive tax deductible contribution from corporations
and individuals.
Source: Yamauchi Naoto, "Nonprofitto Ekonomi 12: NPO no Seido Kaikaku,"
Keizai Semina, March 1997, p.63. Compiled from Okurasho, Tokutei Koeki
Zoshin Hojin Ichiran, Kokuzeicho, Tokei Nenposho, and Kokuzeicho, Kaisha
Hyohon Chosa.
The closest to the general term nonprofit organizations were 25,000
"Public Benefit Corporations" (Koeki Hojin) specified in national Civil
Law. (Note that the civil law-specified public benefit organizations are
different from the tax law-specified public benefit corporations as seen
in Figure I. The latter includes the former.) Though legally being
private nonprofits, Koeki Hojin are criticized to be heavily controlled
by the government. They need permission to incorporate from a government
agency with jurisdiction over the their activity area. It sometimes
takes several years to get the permission. Koeki Hojin are also subject
to minimum asset requirement to incorporate, usually more than 100
million yen. They frequently accept retired government officials as
management personnel (the practice called Amakudari, or "descending from
the heaven" ).
Different laws incorporate other types of organizations. Private School
Corporation Law of 1949 specifies the incorporation of school
corporations, Social Welfare Service Law of 1951 social service
corporations, Religious Corporation Law of 1951 religious corporations,
Medical Service Law medical corporations, etc. They more or less share
the same trait of Koeki Hojin: strict control by the government.
In Japan, the government requires even for-profit corporations to have
minimum amount of assets when incorporated: 10 million yen for Kabushiki
Gaisha (stock companies) and 3 million yen for Yugen Gaisha (limited
companies). For-profit corporations, however, can incorporate almost
automatically if they meet law-specified requirements. Nonprofit
corporations need strict government approval to incorporate beside
required minimum assets..
Unincorporated Associations
Amenomori estimates that there are about 1.1 million unincorporated
Associations in Japan (See Figure II). The most numerous among them are
civic groups, which are all sorts of informal civic activity
organizations including environmental, civil and women's rights, peace,
consumer, international exchange, hobby, mutual help and other groups.
Their number 556,000 is based on the Economic Planning Agency's estimate
in 1983. EPA's recent study, however, sites a more conservative figure
of 85,786 organizations (Shimin Katsudo Kihon Chosa (Civic Activity
Basic Study) of 1997). Among them 96% (82,000) are unincorporated. The
prefectural governments helped provide lists of identifiable civic
activity organizations for the study.
Figure II Unincorporated Associations (Nin'i Dantai)
Civic Groups (Shimin Dantai) 556,000
Children's Associations (Kodomo-kai) 150,000
Seniors' Clubs (Rojin-kai) 130,000
Neighborhood Associations (Jichi-kai/Chonai-kai) 275,000
-------------------------------------------------------------
Total 1,111,000
Source: Takayoshi Amenomori, "Defining Nonprofit Sector: Japan." Working
Papers of the Johns Hopkins Comparative Nonprofit Sector Project, no.
15, edited by L.M. Salamon and H.K. Anheier. Baltimore: The Johns
Hopkins Institute for Policy Studies, 1993
Other categories of unincorporated associations - children's
associations, seniors' clubs, and neighborhood associations - are
traditional, sometimes conservative organizations. For example,
neighborhood associations (Jichi-kai/Chonai-kai) have an origin in
Goningumi ("Group of Five") in the Edo period that was used for mutual
help as well as surveillance of people. Amenori writes, "(I)n most
cases, they (current neighborhood associations) act as a communication
channel between the residents and the local government. Circulation and
distribution of information and official announcements, collaboration
with the national census, or the distribution of insecticides are among
the most common activities" (Takayoshi Amenomori, "Defining Nonprofit
Sector: Japan." Working Papers of the Johns Hopkins Comparative
Nonprofit Sector Project, no. 15, edited by L.M. Salamon and H.K.
Anheier. Baltimore: The Johns Hopkins Institute for Policy Studies,
1993, p.16).
The new NPO Law shed light precisely to this segment of the nonprofit
sector: the unincorporated. In Japan, the nonprofit organization is not
a general term embracing all kinds of private civic organizations. It
legally and primarily refers to small civic organizations that have not
been incorporated by traditional corporation laws.
Economic Scale of Nonprofit Sector in Japan
Japan's nonprofit sector produces 2.3% of GDP and 2.2% of national
output, according to the national Economic Planning Agency (EPA). The
EPA's report in 1998, one of the first of this kind in Japan, showed
that even in Japan the nonprofit sector plays a significant role in
national economy (See Figure III). Another study in 1994 set Japan's
nonprofit sector expenditure at 3.2% of GDP (See Figures IV and V.)
Figure III Added Value and Output of Nonprofits, 1995
Value Added, yen (%) Output
Medical 3,248,700,000 (28%) 6,537,600,000 (31%)
Education 4,199,300,000 (37 ) 5,309,200,000 (26 )
Social Insurance/Service 2,010,100,000 (18 ) 3,529,800,000 (17 )
Religion 828,500,000 ( 7 ) 1,743,600,000 ( 9 )
Civic Activity Groups 28,700,000 - 116,000,000 ( 1 )
Others 1,131,100,000 (10 ) 3,134,800,000 (15 )
-------------------------------------------------------------------
11,446,400,000 20,371,000,000
% of GDP 2.3% 2.2%
Medical Corporations 3,766,900,000 6,895,100,000
(Quasi-for-profit)
-------------------------------------------------------------
Total 15,213,300,000 27,266,100,000
% of GDP 3.1% 2.9%
Source: Economic Planning Agency, Economic Analysis of Private Nonprofit
Activity Organizations, March 1998 (Overview)
Figure IV Civic Activity Groups
Output 116,000,000
Volunteering 652,300,000
--------------------------
Total Output 768,300,000
Figure V Comparison of Nonprofit Sectors in the World
Staff % of Total Annual % of
(fte) Employment Expenditure GDP
U.S. 7,120,000 6.8% $340.9 billion 6.3%
Japan 1,440,000 2.5 94.9 3.2
Germany 1,018,000 3.7 53.7 3.6
U.K. 946,000 4.0 46.6 4.8
France 803,000 4.2 39.9 3.3
Italy 417,000 1.8 21.6 2.0
Hangery 33,000 0.8 3.9 1.2
Source: Lester M. Salamon and Helmut Anheier, The Emerging Sector: The
Nonprofit Sector in Comparative Perspective - An Overview, John Hopkins
University, 1994
Nonprofits Without Tax Benefits
As indicated before, the Diet finally passed in March 1998 the NPO Law
(Law to Promote Specified Nonprofit Activities), which for the first
time in Japanese history enabled small civic groups to incorporate.
A breakthrough? Yes.
But, "what's the benefit?" one of the civic activists visiting from
Japan asked the writer recently. "There is no tax deduction. We might
even have to pay higher tax."
The new NPO Law provides no tax deduction for those contributing to
nonprofits. NPOs have to pay corporate tax (on their revenue-earning
activities) at the same rate as businesses. Small informal groups, which
were previously ignored by tax agencies, may suddenly have to pay fixed
per-head local corporate tax (Kinto-wari Juminzei; minimum 20,000 yen
prefectural and 40,000 yen local taxes) as soon as they are formally
incorporated.
Then what are the benefits of incorporating a nonprofit?
The emphasis of NPO Law Advocates seems focused on the "conceptual" side
of the new legislation, namely the significance of a responsive civic
organization to become formally incorporated, the ability to become a
legal party of contacts, the enhanced freedom of association, etc. To be
sure, the Diet upon the passage of the law made a special resolution
that they will return to considering tax benefits and other support
measures within two years of the implementation of the NPO Law.
Many agree that the law is only the first step in the long process of
developing an NPO infrastructure in Japan. Civic groups worked hard for
passage of the law. Diet members, working with the groups, themselves
introduced the bills, a unique move in the Japanese legislative
environment where bureaucrats usually draft bills for the Diet. A whole
new awareness and movement for nonprofit sector empowerment sprang up,
alongside with the legislative efforts. Nonprofit support organizations
have proliferated and NPO office centers are being built around the
nation. The NPO Law was just an early fruit in this lasting process of
nonprofit infrrastructure building.
Advocates also maintain that incorporation itself has practical
benefits. In the pre-NPO law Japan, if a group rent an office space, the
representative of that organization personally became the legal tenant
of that space, because the incorporated group was unapable to become a
contract party. The representing person also had telephone installed,
opened a bank account, filed law suits, was filed law suits against,
loaned money, and received grants or donations for the group.
Do you want to contribute your sizable money if it technically goes to a
private person? That was a real concern before and there were cases
donors held back because of this awkward situation. Or, what happens if
the representing person dies? What if his/her relatives claim that the
group's office or bank money was his/her personal assets? What happens
to the representing person if the group made a huge debt, or lost a
liability law suit?
The NPO Law solves these problems. It will help nonprofits to have more
stable social status. Making the incorporation easy, the NPO Law
enhanced the freedom of association, a basic right in modern society.
The NPO Law Bacics
The below are the basic features of the NPO Law.
The official name of the NPO Law is the "Law to Promote Specified
Nonprofit Activities." The original name "Civic Activities Promotion
Law" was abandoned in the final session of the Upper House in early
1998. The conservative Liberal Democratic Party (LDP) reportedly opposed
to the term "civic" (shimin), saying it's anti-government, in closed
door negotiations.
The law states its purpose as follows:
"This law aims to contribute to the public interest by promoting the
sound development of specified nonprofit activities as voluntary
activities, such as volunteer activities, performed by citizens to
contribute to society through the incorporation of organizations that
conduct these specified nonprofit of activities." (Chapter 1, I)
The law defines the term "specified nonprofit activities" into the
following 12 categories:
1. Activities to promote health, medical care, or welfare
2. Activities to promote social education
3. Activities to promote community development
4. Activities to promote culture, the arts, or sports
5. Activities to protect the environment
6. Disaster-relief activities
7. Activities to ensure community safety
8. Activities to protect human rights or promote peace
9. International cooperation activities
10. Activities to promote the creation of a gender-equal society
11. Activities to promote the sound nurturing of youth
12. Liaising, advising, or support activities related to the operation
or activities of organizations performing any of the activities listed
above (Chapter 1 II.A. Attachment)
The law specifies that "the main purpose of activities" of the nonprofit
should not be religious or political (Chapter 1, II B 2). Of cause, the
organization can not "make a profit for a certain individual,
corporation, or other organization" (Chapter 2, Section 1, I A), even
though it can "engage in profit-making projects" as long as the "profit"
is used for its nonprofit activities (Chapter 2, Section 1, II). The law
also bans gangsters to incorporate a nonprofit (Chapter 2, Section 2, II
A 3; Chapter 2, Section 3, I).
There is no requirements of minimum asset holding for incorporation.
This is a big difference from the traditional Civil Law incorporation of
public benefit corporations.
The prefectural government serves as the "competent authority" to
certify incorporation of groups that establish office(s) in a
prefecture. The national Economic Planning Agency (EPA) serves as the
competent authority for those with offices in two or more prefectures.
These agencies give "certifying approval" (Ninsho) of incorporating a
group. The traditional civil-law public benefit corporations had to have
"approval" (Ninka) from competent agencies. Ninsho is more light-handed
than Ninka. Without arbitrary discretion, the competent agencies must
give "certifying approval" as long as the applicant legally and
technically meets the law-specified requirements.
When applying for incorporation, the group must provide to the competent
agency 1) the articles of incorporation, 2) a list of officers, 3) a
list of ten or more members, 4) a document to verify the purposes of the
organizations and non-affiliation with criminal (gangsters)
organizations, 5) a prospectus. 6) a list of founders, and 7) minutes of
a meeting that decided incorporation, a list of assets, a document to
state the fiscal year, operating plans and budget estimates for the year
of incorporation and the following year.
The competent authority must certify the incorporation within four
months (Chapter 2, Section 2 II A). This is an improvement from the
traditional Civil Law incorporation, which took several years to get
approval.
Every year, the incorporated nonprofit corporation prepares, keeps, and
submits to the competent agency the documents below. The competent
authority ensures the public access to the information.
(1) an activities report
(2) an inventory of assets
(3) a balance sheet
(4) a statement of revenues and expenditures
(5) a list of officers
(6) a document stating the names of all of those officers on the list of
officers that received remuneration, and
(7) a document stating the names and addresses of ten or more members.