The Voluntary and Non-Profit Sector in Japan (Nissan Institute Routledgecurzon Japanese Studies Series)

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The Voluntary and Non-Profit Sector in Japan

. . .

Can non-profit organizations help solve the crisis in Japanese public services? Can the non-profit sector grow to make a substantial contribution to Japanese society? Is civil society possible in Japan?

This book explores the background to the development of the non-profit sector, the potential roles that it can play in society and the key managerial challenges for the leaders of the sector. As well as offering new ways of delivering public services, it also poses questions about the relationship of the individual to society and about the presence, or otherwise of a ‘civil society’ in Japan. It contains contributions from leading researchers, internationally, as well as from key practitioners from the sector in Japan. The Voluntary and Non-Profit Sector in Japan provides the first study of the Japanese non-profit sector to combine research findings with the real experience of practitioners inside the sector. It will be essential reading for students of Japanese society, or those interested in the development of the voluntary and non-profit sector in Japan. Stephen P. Osborne is Professor of Public Management and Director of Research Degrees at Aston Business School. He also edits the Public Management Review.

The Nissan Institute/RoutledgeCurzon Japanese Studies Series Editorial Board J.A.A. Stockwin, Nissan Professor of Modern Japanese Studies, University of Oxford and Director, Nissan Institute of Japanese Studies; Teigo Yoshida, formerly Professor of the University of Tokyo; Frank Langdon, Professor, Institute of International Relations, University of British Columbia; Alan Rix, Executive Dean, Faculty of Arts, The University of Queensland; Junji Banno, formerly Professor of the University of Tokyo, now Professor, Chiba University; Leonard Schoppa, Associate Professor, Department of Government and Foreign Affairs, and Director of the East Asia Center, University of Virginia. Other titles in the series: The Myth of Japanese Uniqueness Peter Dale The Emperor’s Adviser: Salonji Kinmochi and Pre-war Japanese Politics Lesley Connors A History of Japanese Economic Thought Tessa Morris-Suzuki The Establishment of the Japanese Constitutional System Junji Banno, translated by J.A.A. Stockwin Industrial Relations in Japan: The Peripheral Workforce Norma Chalmers Banking Policy in Japan: American Efforts at Reform During the Occupation William M. Tsutsui Educational Reform in Japan Leonard Schoppa How the Japanese Learn to Work: Second Edition Ronald P. Dore and Mari Sako Japanese Economic Development: Theory and Practice; Second Edition Penelope Francks Japan and Protection: The Growth of Protectionist Sentiment and the Japanese Response Syed Javed Maswood The Soil, by Nagatsuka Takashi: A Portrait of Rural Life in Meiji Japan Translated and with an introduction by Ann Waswo Biotechnology in Japan Malcolm Brock Britain’s Educational Reform: A Comparison with Japan Michael Howarth Language and the Modern State: The Reform of Written Japanese Nanette Twine Industrial Harmony in Modern Japan: The Intervention of a Tradition W. Dean Kinzley Japanese Science Fiction: A View of a Changing Society Robert Matthew The Japanese Numbers Game: The Use and Understanding of Numbers in Modern Japan Thomas Crump

Ideology and Practice in Modern Japan Edited by Roger Goodman and Kirsten Refsing Technology and Industrial Development in Pre-war Japan: Mitsubishi Nagasaki Shipyard, 1884–1934 Yukiko Fukasaku Japan’s Early Parliaments, 1890–1905: Structure, Issues and Trends Andrew Fraser, R.H.P. Mason and Philip Mitchell Japan’s Foreign Aid Challenge: Policy Reform and Aid Leadership Alan Rix Emperor Hirohito and Shoˆwa Japan: A Political Biography Stephen S. Large Japan: Beyond the End of History David Williams Ceremony and Ritual in Japan: Religious Practices in an Industrialized Society Edited by Jan van Bremen and D.P. Martinez Understanding Japanese Society: Second Edition Joy Hendry The Fantastic in Modern Japanese Literature: The Subversion of Modernity Susan J. Napier Militarization and Demilitarization in Contemporary Japan Glenn D. Hook Growing a Japanese Science City: Communication in Scientific Research James W. Dearing Architecture and Authority in Japan William H. Coaldrake Women’s Gidayuˆ and the Japanese Theatre Tradition A. Kimi Coaldrake Democracy in Post-war Japan: Maruyama Masao and the Search for Autonomy Rikki Kersten Treacherous Women of Imperial Japan: Patriarchal Fictions, Patricidal Fantasies He´le`ne Bowen Raddeker Japanese–German Business Relations: Competition and Rivalry in the Inter-war Period Akira Kudoˆ Japan, Race and Equality: The Racial Equality Proposal of 1919 Naoko Shinazu Japan, Internationalism and the UN Ronald Dore Life in a Japanese Women’s College: Learning to be Ladylike Brian J. McVeigh On The Margins of Japanese Society: Volunteers and the Welfare of the Urban Underclass Carolyn S. Stevens The Dynamics of Japan’s Relations with Africa: South Africa, Tanzania and Nigeria Kweku Ampiah The Right to Life in Japan Noel Williams

The Nature of the Japanese State: Rationality and Rituality Brian J. McVeigh Society and the State in Inter-war Japan Edited by Elise K. Tipton Japanese–Soviet/Russian Relations since 1945: A Difficult Peace Kimie Hara Interpreting History in Sino-Japanese Relations: A Case Study in Political Decision Making Caroline Rose Endoˆ Shuˆsaku: A Literature of Reconciliation Mark B. Williams Green Politics in Japan Lam Peng-Er The Japanese High School: Silence and Resistance Shoko Yoneyama Engineers in Japan and Britain: Education, Training and Employment Kevin McCormick The Politics of Agriculture in Japan Aurelia George Mulgan Opposition Politics in Japan: Strategies Under a One-Party Dominant Regime Stephen Johnson The Changing Face of Japanese Retail: Working in a Chain Store Louella Matsunaga Japan and East Asian Regionalism Edited by S. Javed Maswood Globalizing Japan: Ethnography of the Japanese Presence in America, Asia and Europe Edited by Harumi Befu and Sylvie Guichard-Anguis Japan at Play: The Ludic and Logic of Power Edited by Joy Hendry and Massimo Raveri The Making of Urban Japan Cities and Planning from Edo to the Twenty First Century Andre´ Sorensen Public Policy and Economic Competition in Japan Change and Continuity in Antimonopoly Policy, 1973–1995 Michael L. Beeman Modern Japan: A Social and Political History Elise K. Tipton Men and Masculinities in Contemporary Japan Dislocating the Salaryman Doxa Edited by James E. Roberson and Nobue Suzuki The Voluntary and Non-Profit Sector in Japan The Challenge of Change Edited by Stephen P. Osborne Japan’s Security Relations with China From Balancing to Bandwagoning Reinhard Drifte

The Voluntary and Non-Profit Sector in Japan The challenge of change Edited by Stephen P. Osborne

First published 2003 by RoutledgeCurzon 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by RoutledgeCurzon 29 West 35th Street, New York, NY 10001 This edition published in the Taylor & Francis e-Library, 2004.

RoutledgeCurzon is an imprint of the Taylor & Francis Group # 2003 Stephen P. Osborne for selection and editorial matter; individual contributors for their contributions All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data The voluntary and non-profit sector in Japan: the challenge of change/ edited by Stephen P. Osborne. p. cm. Includes bibliographical references and index. 1. Non-profit organizations–Japan. I. Osborne, Stephen P., 1953– HD2769.2.J3 V64 2003 361.7’63’0952–dc21 2002151794 ISBN 0-203-47200-4 Master e-book ISBN

ISBN 0-203-78024-8 (Adobe eReader Format) ISBN 0–415–24970–8 (Print Edition)

For my special son Frank Thomas Stephen

Contents

List of figures and tables List of contributors Series editor’s preface Acknowledgements A note on terminology The voluntary and non-profit sector in Japan: a guide

xi xii xiii xv xvi 1

STEPHEN P. OSBORNE

PART I

Background to the sector 1 The voluntary and non-profit sector in contemporary Japan: emerging roles and organizational challenges in a changing society

5

7

STEPHEN P. OSBORNE

2 The philanthropic roots of the voluntary and nonprofit sector in Japan: the Rockefeller Legacy VICTORIA LYON BESTOR AND REIKO MAEKAWA

3 The voluntary response to the Hanshin Awaji earthquake: a trigger for the development of the voluntary and non-profit sector in Japan

23

40

MAKOTO IMADA

PART II

The changing context of the voluntary and non-profit sector in Japan 4 The politics of regulating the non-profit sector ROBERT PEKKANEN

51 53

x

Contents

5 The legal framework for voluntary and non-profit activity

76

ROBERT PEKKANEN AND KARLA SIMON

6 Businesses and the NPO sector in Japan: development and prospects

102

NOBUKO KAWASHIMA

PART III

Key managerial challenges for the sector 7 The challenges of growing the NPO and voluntary sector in Japan

119 121

ROBERT O. BOTHWELL

8 Strategic management and Japanese non-profits: can it work?

150

¯ JI NISHIZUTSUMI, KIRA RILINGTON AND FEMIDA HANDY YO YOJI

9 The government–non-profit relationship in contemporary Japan: an emerging local government– non-profit partnership in Miyagi

170

DEBORAH A. AUGER

10 The philanthropic tradition and fund raising for the voluntary and non-profit sector in Japan

188

MAKOTO IMADA

PART IV

The voluntary and non-profit sector in action in Japan

197

11 The voluntary and non-profit sector and the community in Japan: making links and responding to needs

199

¯ HWA MIE O OHWA

12 Supporting local groups in responding to social needs: a case study of the Kobe Community Support Project

208

TAKAKO UETO

PART V

Conclusions

219

13 Managing the Japanese voluntary and non-profit sector: an agenda for the future

221

¯ MIYAMOTO STEPHEN P. OSBORNE, KATE M cLAUGHLIN AND TARO

Index

232

Figures and tables

Figures 8.1 8.2 8.3 11.1

Organizational chart (SVA) Organizational chart (ICRSA) Organizational chart (CVA) The structure of Nishisuma Danran

158 161 163 203

Tables 4.1 5.1 5.2 5.3 6.1 6.2 6.3 10.1 10.2

NPO law players Categories of non-profit legal entities in Japan Explanation of legal terms (descending order of discretion) Special public interest promoting corporations (1996) Expenditures of corporate philanthropy programmes per company in the survey Corporate donations by all companies in Japan, 1985–99 Expenditures on corporate philanthropy as percentage of pretax corporate income NGO revenue by source in 1996 NPO grants from gambling

57 79 83 93 106 108 112 190 193

Contributors

Deborah A. Auger is a member of the College of Urban Affairs and Public Policy at the University of Delaware, USA Victoria Lyon Bestor is Research Associate at the Reischauer Institute, Harvard University, USA Robert O. Bothwell is President Emeritus of the National Committee for Responsive Philanthropy, USA Femida Handy is Associate Professor at York University, Canada Makoto Imada is Director of the Civil Society Research Institute in Kobe, Japan Nobuko Kawashima is Associate Professor of Economics at Doshisha University, Japan Kate McLaughlin is Lecturer in Public Management and Local Governance at the University of Birmingham, UK Reiko Maekawa is Associate Professor of International Cultural Studies at Kyoto University, Japan Taro¯ Miyamoto is Professor of Political Science at Hokkaido University, Japan Yo¯ji Nishizutsumi is currently working in the non-profit sector in Japan Stephen P. Osborne is Professor of Public Management at Aston Business School, UK ¯ hwa is Associate Professor in Social Work at Kwansei Gakuin Mie O University, Japan Robert Pekkanen is Assistant Professor of Political Science at Middlebury College, USA Kira Rilington is Assistant Professor in Management at Syracuse University, USA Karla Simon is Professor of Law at the Catholic University of America, USA Takako Ueto is Lecturer in Social Welfare at Kobe Women’s University, Japan

Series editor’s preface

The period of time from the early 1990s to 2002 is now widely known in Japan as the country’s ‘wasted decade’. The phrase was coined by a leading economist to express the frustrating inability of policy makers to rid the banking system of a colossal overhang of bad debt, or to combat persistent deflationary trends. Persuading consumers to spend, and businesses to invest, has proved far harder than anyone had imagined a decade ago. But over the same period it has become increasingly obvious that without fairly radical restructuring of the political economy, the barriers to confidence – and thus to consumption and investment – would persist. To a superficial observer, much of Japan (and in particular the big city landscape) seems prosperous enough. But the economic problems are serious, and could become much worse before they get better. Japan is not Argentina, but complacency may bring its nemesis. Although the issues are economic, much of the problem (as well as its potential solution) lies in politics. For many years, the political system has rested on clientelist relations between powerful politicians, government officials and major interest groups. Ironically, this worked reasonably well when the economy was growing fast, as it was up to the 1980s. But the end result has been a system where efforts to make policy more market-oriented have come up against barriers erected by multifarious veto groups consisting of special interests. A series of attempts have been made to bring about fundamental reform of policy making to induce greater rationality. This began in earnest with the temporary eviction from power of the ruling Liberal Democratic Party in 1993–4. But the LDP was able to claw its way back to power, and marginalize the reformists of the early 1990s. More recently substantial reforms have been effected in the government bureaucracy and in the ruling party. But the old problems persist, and even a charismatic Prime Minister like Koizumi has so far only achieved modest measures of reform. The Nissan Institute/RoutledgeCurzon Japanese Studies Series was begun in 1986 and is approaching its sixtieth volume. It seeks to foster an informed and balanced, but not uncritical, understanding of Japan. One aim of the series is to show the depth and variety of Japanese institutions,

xiv

Series editor’s preface

practices and ideas. Another is, by using comparisons, to see what lessons, positive or negative, can be drawn for other countries. The tendency in commentary on Japan to resort to out-dated, ill-informed or sensational stereotypes still remains, and needs to be combated. In this book, Stephen Osborne and his collaborators address the voluntary and non-profit sector in Japan. Their approach is refreshingly comparative, and grounded in professional experience of the problems and opportunities of the voluntary sector in various countries. They do not portray Japan as fundamentally out of line with patterns elsewhere, but they show that non-profit associations there have been historically rather weak. On the other hand, they show that a great deal is changing and that there is a marked increase in voluntary sector activity. Most interestingly, they demonstrate that the confused and incompetent official response to the Great Hanshin/Awaji Earthquake of January 1995 led to a surge of activity by the voluntary sector. The perception that State organs failed to mount a competent or coordinated response to a major earthquake disaster challenged the assumption of State primacy in matters of care for the disadvantaged. The authors argue that the future of the voluntary sector depends on three basic factors: how successful it is in engaging with the State, to what extent it manages to secure its independence, and how far it is able to nurture and develop links with the local community. In the broader framework of the Japanese political economy, the future of the voluntary sector will be a significant indicator of the capacity of the State to develop partnership roles rather than seeking to devise and impose bureaucratic solutions on hierarchical principles. J.A.A. Stockwin

Acknowledgements

Support from a number of sources has made the production of this book possible. In particular I would acknowledge the support that I have received from the following bodies in the development of this book: . . . . .

the the the the the

British Council, Daiwa Anglo-Japanese Foundation, GB–Sasakawa Foundation, Japan Foundation Endowment Committee, and Great Britain Sasakawa Peace Foundation.

Most of all, thanks to the many advocates and activists in the voluntary and non-profit sector in Japan that I have met and learned from. Needless to say, the views expressed in this book are those of the authors alone and do not necessarily represent those of any of the above. Stephen P. Osborne June 2002

A note on terminology

The terminology of the voluntary and non-profit sector This is a complex area, with a range of terms being employed. In this volume, two core terms are used to denote the sector. The first is voluntary and non-profit organization, which is perhaps most accurate in denoting the links of the sector to voluntarism and civil society. However, the shorter term, non-profit organization is also prevalent in Japan and this term is used also, particularly in relation to the legislative framework where this term abounds. Where specific usages of these terms, or others, are made in any chapter in this volume, this will be denoted in its introduction.

The 1995 Hanshin Awaji earthquake This earthquake and the humanitarian response to it occupy a special place in the recent history of the voluntary and non-profit sector in Japan. As such it is referred to in many of the chapters in this volume, as well as being dealt with in detail by Makoto Imada in Chapter 3. It is worth pointing out that the ‘full title’ of this event is the Great Hanshin Awaji earthquake, though it has also been known as the Kobe earthquake. However, for consistency throughout this volume this earthquake will be denoted as the Hanshin Awaji earthquake.

The voluntary and non-profit sector in Japan A guide Stephen P. Osborne

The voluntary and non-profit sector is an emerging phenomenon in Japan. Other work (such as Amenomori 1997, Deguchi 2001) has begun to document the structure and roles of the sector. This volume is concerned to explore the way in which the sector is developing and growing and how it is responding to the challenge of change in contemporary Japan. It is in five parts. Part I explores the context of the sector. Stephen P. Osborne reviews the current literature on voluntary and non-profit organizations (VNPOs) in Japan and draws a balance sheet of its current contribution to Japanese society, as well as the needs for its future development. Victoria Lyon Bestor and Reiko Maekawa then give an essential historical perspective to our understanding of the sector, by showing the contribution that Rockefeller has made to the development of a philanthropic tradition in Japan. Finally, Makoto Imada explores the way that the Hanshin Awaji earthquake, and the subsequent popular response to it, provided a key trigger for the growth of VNPOs in Japan. The extent to which this response stimulated, or simply reflected, the growing interest in volunteering and voluntary action in Japan, is a core theme of many of the chapters in this book Part II is concerned with the changing context of the sector in contemporary Japan. Robert Pekkanen first charts the changing political context of the sector, before combining with Karla Simon to give a detailed exposition of the complex legal framework for the sector. Nobuko Kawashima then examines the emerging relationship between the business sector and the VNPO sector. Part III of this volume focuses on the managerial challenges that the VNPO sector faces in Japan at present. Robert Bothwell reports significant research about the views of VNPO leaders on the challenges for the sector over the next decade. Yo¯ji Nishizutsumi and his colleagues evaluate the contribution that strategic management techniques can make to the sector, questioning how a managerialist perspective will fit with Japanese VNPOs. Deborah Auger uses a case study to explore the key issue of governmentnonprofit relationships for Japanese VNPOs. Finally, Makoto Imada delves

2

Stephen P. Osborne

into the resource needs of the emerging sector and the patterns of resource acquisition, and needs, that are developing. Part IV of this volume then presents two important case studies of the ¯ wa looks at the work of a VNPO sector in action in Japan. Mie O community organization responding to local needs whilst Ueto looks at the work of CS Kobe in providing essential infrastructure to support the work of the sector in Japan. Finally in Part V, Stephen Osborne and his colleagues draw out the core themes and challenges for the sector that have been highlighted in this book. They use this to develop an ‘agenda for the future’, for the further sustainable development of the sector in Japan. It is as well to emphasize two points at the outset. First, that the societal response that the Hanshin Awaji earthquake elicited in Japan, as noted above, is a recurrent theme in this volume. It would be simplistic, and untrue, to claim that this event was responsible for the development of the non-profit sector in Japan. However it was an important catalyst that both highlighted the development of the voluntary sector in Japan and provided a focus for one of the greatest outpourings of voluntary action in Japanese history. It enabled local communities to grasp the potential that they had to respond to social needs and triggered the development of many important community initiatives. Because of this significance, the response to this earthquake features in several of the chapters in this volume. Thus, for example, Makoto Imada (Chapter 3) provides a factual account of the earthquake and the response to it, Robert Pekkanen (Chapter 4), by contrast, considers the complex policy and legal ramifications of the response to this human tragedy and Takako Ueto (Chapter 12) discusses the practical import of this event for practitioners trying to develop the voluntary and non-profit sector in Japan at that time. Each of these chapters is situated within its own section, to show the links to other developments, rather than grouped together artificially in a separate section on ‘the Hanshin Awaji earthquake and its implications for the voluntary sector’. Second, the enactment of the 1998 NPO Law in Japan has also posed key opportunities and challenges to the sector. Pekkanen and Simon in particular address these opportunities and challenges, as well as the genesis and political context of the 1998 Law, in Chapters 4 and 5. However, this Law has posed profound issues for the sector in a whole range of areas. So, for example, Kawashima explores its impact upon the relationship of the sector to the business sector (Chapter 6) whilst Imada assesses its overall impact on the resource acquisition of the sector in Chapter 10. The voluntary and non-profit sector is an emerging and important element of modern Japanese society. This volume evaluates how it is responding to the challenge of change in this society.

The voluntary and non-profit sector in Japan

3

References Amenomori, T. (1997) ‘Japan’, in L. Salamon and H. Anheier (eds), Defining the Non-Profit Sector. A Cross National Analysis (Manchester University Press, Manchester) pp. 188–214. Deguchi, M. (2001) ‘The distinction between institutionalized and noninstitutionalized NPOs. New policy initiatives and non-profit organizations in Japan’, in J. Kendall and H. Anheier (eds) Third Sector Policy at the Crossroads. An International Nonprofit Analysis (Routledge, London) pp. 153–167.

Part I

Background to the sector

1

The voluntary and non-profit sector in contemporary Japan Emerging roles and organizational challenges in a changing society Stephen P. Osborne

Introduction Over the past decade there has been a global upsurge in interest in the contribution that voluntary and non-profit organizations (VNPOs) can make to society. A classic example of this interest is the seminal Johns Hopkins Comparative Non-Profit Research Project, which seeks to map the extent and activity of VNPOs across the world (Salamon and Anheier 1994, 1997). Three broad strands can be discerned in this interest. Whilst these three strands do clearly overlap, nonetheless each has its own distinctive concerns and challenges. The first strand concerns the pressure to reform and decentralize the state in both the industrialized market economies and in the developing and transitional nations. On the one hand this reflects concerns over the costs and size of government and the extent to which it can provide public services in an efficient and effective way (Pirie, 1988; Osborne and Gaebler, 1992). On the other hand it reflects a longer-term concern to use VNPOs to empower people within society, and to offer them a proactive, rather than purely responsive, role in the provision of public services (Berger and Neuhaus, 1977; Gladstone, 1979). This latter point links into the second strand, which concerns the role of VNPOs as facilitating the development and sustenance of a ‘civil society’ (de Oliveira and Tandon, 1994; Deakin 2001). Whilst the meaning of ‘civil society’ is open to diverse interpretations (Osborne and Kaposvari 1997), nonetheless its achievement is held to be a core component of societal development across the globe and Welzer (1995), and Fukuyama (1995) have further linked its existence to national competitiveness in global markets. The final strand concerns the role of VNPOs as agents of ‘sustainable development’ across the world (Fisher, 1993). It explores their ability to respond to local needs flexibly and in ways which are resource and environmentally efficient. These strands are as evident in Japan as elsewhere – and particularly the first two. As will be seen below, there are both global pressures toward the development of a VNPO sector in Japan and local ones derived from a

8

Stephen P. Osborne

perceived need to reform and re-legitimate the state. This makes the task of understanding this emerging sector of Japanese society particularly timely. This chapter will outline briefly the existing literature about the nature and extent of the VNPO sector in Japan. It will then draw a balance sheet of the strengths and weaknesses of this sector in Japan and discuss their implications for the future development of the VNPO sector in Japan. As will be seen below, whilst there is a limited, though developing, literature which describes the structure of the VNPO sector in Japan, there is not a substantial literature which explores the key managerial challenges for such organizations. This latter concern is the focus of the remainder of this book.

Existing literature on the VNPO sector in Japan Several writers (Lohmann, 1995; Amenomori, 1997) have noted previously that there is comparatively little written about VNPOs in Japan or their role in relation to social policy and public services. Two examples will make this point. A recent social history of contemporary Japan (Thomas, 1996) makes no reference to them at all; nor does an equally recent evaluation of family social policy in Japan (Boling, 1998). This present review will concentrate upon two areas. These are the broader societal background to voluntary activity in Japan and the specific role and activities of VNPOs in relation to public services. Before commencing this review, though, a basic point must be made about the need to differentiate between ‘old’ and ‘new’ style VNPOs. The older, more institutionalized forms of VNPOs are heavily incorporated into the state and act as, for example, mainstream social welfare service providers. They are dependent upon the state for their very existence. The newer, ‘grassroots’ VNPOs are very much the product of local communities and independent (i.e. voluntary) initiatives. Deguchi (2001) uses the term institutionalized non-profit organizations (I/NPOs) to denote the former and non-institutionalized non-profit organizations (N/NPOs) to denote the latter group. This chapter will focus primarily upon the latter group, and the terms N/NPO and VNPO will be used interchangeably. The existence of this group of N/NPOs is especially precarious and problematic, not least because of the difficulties in their securing resources. Until recently, they were not able to have any formal relationship with government, because of their lack of legal status in the Japanese system. This has been rectified in part through the 1998 NPO Law, the roots and implications of which are discussed in further detail in this book. The 2000 Long Term Care Insurance Law also offers possibilities of stable long-term funding for such VNPOs from the state – though this has also raised issues of incorporation of these organizations into the prevailing statist systems (Imada 2001; Kawashima 2001). These points wil be returned to at the end of this chapter, and throughout the book.

The sector in contemporary Japan

9

Voluntary activity, civil society and the VNPO sector in Japan Key analysts on voluntary activity in Japan have argued for the necessity of understanding it within the dominant cultural paradigms of the region. Such writers often highlight Buddhist and Confucian beliefs as the prevailing philosophies within which to understand voluntary action. Lohman (1995) is especially important here. He uses a formulation of civil society as the Commons (Lohman 1992) with which to contrast voluntary action in Western societies with that in the Asia-Pacific region. He argues that nothing precisely like the contemporary non-profit organizations of the Western market economies existed anywhere in Asia prior to the twentieth century. However, this is not the same thing as saying that there were no pre-existing conceptions of voluntary activity and mutuality, which are wider than organizational forms alone. Just as Christianity provided the philosophical breeding ground for ‘voluntaryism’ Osborne 1996 in the West (Collins and Hickman, 1991) so Buddhism provided this breeding ground in Asia through a complex of Buddhist religious beliefs supporting gift exchange [and] associated with the concepts of dharma and dana . . . [T]hese characteristics point to the existence of a traditional Buddhist model of a commons ‘which shares some, but certainly not all, of the characteristics of western models of . . . voluntary action’. (Lohmann 1992: 155) This theme is developed by Amenomori (1997). He argues that the Buddhist roots of the voluntary sector in Japan have meant that, far from being counter-posed to the state, as in the Western formulation of civil society, the voluntary sector has traditionally been vertically integrated, and interdependent, with the state for its existence (the I/NPOs of Deguchi, above). This integrated model of the state and voluntary activity has led others to argue that civil society is a term without meaning in the region. Thranhardt (1992: 280) has argued that the Confucian philosophy which underlies much community action in Japan, negates the principle of voluntaryism, in the Western sense (Etzioni, 1968; Osborne, 1996), because ‘abstinence from communal action would violate the principle of harmony that is at the centre of the classical Confucian world’. Taking this argument to its conclusion, Serrano argues that: Civil society is a concept alien to Asia. It refers to the self-organization of citizens in contrast to the state or government, and is rooted in the Western tradition and political culture. (Serrano 1994: 271)

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Like the above writers, Serrano argues that the Confucian and Buddhist models emphasize this interdependency and integration of the public and the private rather than their separation. Finally, Knight also concurs that there is no such entity as civil society in Japan, which has an independent and voluntary separation from the state. He develops this argument further, by emphasizing the moral hegemony that the state holds in Japan: The [state] is conceived to be a moral entity . . . [it] continues to assume moral leadership in post-war Japan . . . As a result of [the] absence of countervailing institutions, the state continues to dominate the public realm. (Knight 1996: 224) The implication of this for the voluntary principle in Japan is that it is very hard to conceive of voluntary action in independence of, or indeed in counter-position to, the state. Rather, it is dependent upon the state for its legitimacy (Deguchi 2001). This gives local government a key role as the legitimator and regulator of non-profit activity. Moreover, this role, far from being seen as bureaucratic interference in the activity of VNPOs, as it often is in the West, is viewed rather as the positive sanctioning of such activity. Amenomori (1997) calls this model ‘vertical interdependence’. Such a model clearly gives local government a significant role as facilitating the institutional legitimacy (Di Maggio and Powell, 1988) of VNPOs in undertaking public services. This role is turned to next in this chapter. VNPOs and public services in Japan Several studies (Yamamoto, 1992; Yamamoto and Komatsu, 1996) have made the point that there is a tradition of private philanthropy in Japan stretching back to the eighth century, though this has invariably been seen as something entirely separate from the provision of public services (see also the chapter in this book by Imada, on the philanthropic tradition in Japan). Thranhardt (1992) and Amenomori (1997) have also detailed the extent of organizational forms of voluntary activity in contemporary Japan, whilst Amemiya (1997) also provides an excellent treatment of the legal framework for such organizations and groups, though prior to the 1998 NPO Law. On the one hand they emphasize the substantial tradition of volunteering in Japan that derives from the Buddhist and Confucian concepts of community referred to above. This volunteer-based activity includes a volunteering movement (borantia Katsudo¯), often organized through Volunteer Centres, and local community based mutual-aid organizations (the nin’i dantai and jinkaku naki Shadau). An example of this tradition is the work of the Japan Youth Volunteers Association in promoting volunteering among young people as a response to the 1995 Kobe earthquake (Ko¯roki, 1995).


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On the other hand, they detail private non-profit organizations which are invariably vertically integrated into the state in providing local services (I/ NPOs). Such organizations require government approval for their existence and provide social services as an ‘add-on’ to state provision. These organizations include social welfare corporations (shakaifukushi ho¯jin) and special public corporations (tokusha ho¯jin). Interestingly, Palley and Usui (1995) make the point that, even within the Confucian paradigm of the Asia-Pacific region, the Japanese model of social welfare is far more reliant upon government for the planning and provision of social services than are other societies. Korea, by contrast, has developed a model with a greater element of voluntary, family and community involvement. Esping-Anderson (1997) goes even further by arguing that there is ‘hardly anything unique’ (p. 187) in the Japanese welfare system – though this point is contested by others. Nagao (1994) and Kawaguchi (1999) provide an overview of the Japanese social welfare system, whilst the Ministry of Health & Welfare (2000) also provides an excellent summary of recent developments. Finally, Menju and Aoki (1996) have documented the recent growth of non-governmental organizations (NGOs) in Japan, which focus upon issues of civil rights and social need at a regional and international level. In contrast to the Buddhist and Confucian roots of the non-profit sector focused upon Japan itself, Menju and Aoki make the point that many such NGOs take their philosophical basis from Christianity and its concept of public service for individuals. Conclusions from the existing literature It is apparent from the foregoing that Japanese society has neither the tradition of voluntaryism (Osborne, 1996) and civil society (Deakin 2001), as developed in the Western market economies, nor an established role for VNPOs as acting in independence from the state (I/NPOs). Rather a cultural paradigm is dominant which emphasizes the importance of mutual aid as an essential component of society and where the development both of social services and of non-profit organizations is dependent upon the sanction and leadership of local and central government. The public and the group are far more dominant than the individual (Knight, 1996). This paradigmatic hegemony in Japan is now under threat for four reasons. First, Japan is as susceptible to the trends of globalization and convergence as is any nation on the globe (Suganuma, 1995). As organizations such as the World Bank and the International Monetary Fund increase their global significance, so does the hegemony increase of their preferred institutional paradigms. For such global actors, the active role of VNPOs in society is seen as evidence both of the existence of a civil, or ‘free’ society and of the efficient delivery of public services. Whilst many writers (such as Lynn, 1996, and Flynn, 1997) have rightly argued that it is

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wrong to overextend the globalization thesis, nonetheless the impact of such events as the recent economic crisis in the Asia-Pacific region can only strengthen these global pressures. Second, there is an ongoing concern over the latter half of the twentieth century to decentralize Japanese society and to move away from the centralized legacy both of the shogunate and of the military dictatorship of the 1930s and 1940s (Amenomori, 1997; Imada 2001). This reform is not an easy one, however, as the power of the centralized state has proven hard to shift. Aldrich (1999) for example, has argued that whilst government reform has given local government local autonomy in Japan, it remains vertically integrated and controlled by central government. Third, and most recently, there is increasing concern within Japan for administrative reform of the state. Two pressures have driven this forward. The first has been a sustained determination, since the First Provisional Commission for Administrative Reform in 1962, to improve the productivity of the public sector and to limit its cost (Tashiro, 1994). The recent economic crisis in the Asia-Pacific region has made this pressure an even more urgent one. The second pressure has been one for reform because of growing public concern over the corruption and the lack of public responsiveness of public services in Japan (Kaneko, 1997, reported in Flynn, 1998). Finally, there has been a growing recognition that the pre-existing unitary state in Japan is unable to respond to the needs of an increasingly heterogeneous and divergent society, both by giving voice to minority and other disenfranchised groups in Japan (and most notably young people) and by expanding the range of services available to meet emerging social needs, such as the growing elderly population in Japan (Thomas, 1996; Miyamoto 1997). Yamamoto and Komatsu make this case most strongly, in their argument for the growth of the voluntary and non-profit sector in Japan. There is, they argue a lack of clear understanding on the part of business leaders, media and the general public about the importance of private philanthropy, NGOs, voluntaryism and the overall non-profit and non-governmental sector. This again reflects the traditional pattern of public–private interaction in Japan where the private sector tends to rely on the public sector as a guardian and promoter of public interest. [However] it has gradually become clear that government agencies cannot properly deal with the divergent issues facing Japanese society. (Yamamoto and Komatsu 1996: 575) All these concerns have come together to increase significantly interest in the VNPO sector in Japan in general, and in particular in their potential to improve public services, to decentralize decision-making in Japan and to tackle the legitimacy crisis of the Japanese state (Deguchi 2001; Kawashima 2001; Imada 2001).


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Drawing a balance sheet If the VNPO sector is to make one, or all, of these contributions to Japanese society, then it is important to start from a clear understanding of its present strengths and needs. Based upon both the above literature, and my own work in Japan over the past five years, I would draw out the following as key issues. Strengths of the VNPO sector An essential strength of the non-profit sector in Japan is the vigorous tradition of volunteering and volunteer centres which has been described previously and which derives form the Buddhist and Confucian principles of mutuality. This provides an essential bedrock of the ‘voluntary ethic’ upon which to build the sector, as well as a major source both of the experience of self-organizing and of human resources. This spirit was epitomized most strongly in the self-help and self-organization of the survivors of the 1995 Hanshin Awaji earthquake, as well as the volunteer efforts to support them (for example, Ko¯roki 1995). It is also manifested by the growing cooperative movement in Japan (Kawaguchi 1992; Nomura 1993). Second, there is a growing recognition within local government that VNPOs can have an important role to play in developing essential local public services in Japan, and especially in the fields of social care and of the environment. However, this recognition is constrained by a continued belief in hegemony of the state over all things private. Consequently there was little evidence either of a clear voice for the VNPO sector in public service planning or of an appropriate level of resource allocation by local government to VNPOs that provide public services. Third, there is evidence of the existence of key individuals around whom the VNPO sector in Japan is developing and who are taking lead roles in managing non-profit organizations at the local level and in advocating on behalf of the sector at the national level (Makoto Imada is one notable example of such an influential individual). Fourth, it was also clear that key Foundations, such as the Sasakawa Peace Foundation, are committed to growth of an independent and vigorous non-profit sector in Japan and are prepared to invest significant degrees of their resources in this process. These Foundations have the potential to release large-scale resources, dedicated to development of the non-profit sector, both from their own endowments and through their ability to lever in further resources, particularly from the business community. However, these resources have also become somewhat more limited of late, as a result of the economic downturn in the region. A particularly important aspect of the work of these Foundations was their commitment to a global perspective on VNPO activity. A good example of this is the Sasakawa Peace Foundation itself. In its operational

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plan for the period 1994–2000, the Foundation argued that, because of the global economic pressures that are disintegrating national boundaries and eroding local competencies, it is essential to work on a global level in order to build, or maintain a civil society: The foundations of the nation state system are not only crumbling in the turbulent zone but are weakening in the relatively stable zone as well. Even relations between neighbouring states, which have been barely maintained under the existing framework, are beginning to breakdown in many regions. This has given rise to an urgent need to reorganize the framework in which the international community coexists and functions. (Sasakawa Peace Foundation 1993: 5) Because of these pressures, the Foundation argues that it is necessary to view national development of VNPOs in Japan in an international context, in order to clarify the significance of non-profit activities which seek neither power nor control in the larger society. (Ibid.: 20) Needs of the VNPO sector The essential need of the sector in Japan is the development of a clear tradition of voluntary organizations in addition to that of volunteering. This is particularly crucial as they become involved in the provision of social services, which require efficient and effective management as well as the involvement of professionally trained staff. This latter point emphasizes also a need for the development and training of paid staff in VNPOs (Osborne 1999a). They will need both managerial skills (such as business planning, management and support of volunteers), and the management of organizational development and change and governance skills (such as the management of networks of contacts with key politicians and community stake-holders as well as with local government managers). These skills present a significant challenge to the Buddhist and Confucian traditions of mutuality and gift giving, which have dominated the initial development of the VNPO sector in Japan. Second, linked to this, is the pressing need for the development of VNPO sector infra-structure, both for individual organizations, to allow the proper administration and accountability for the use of voluntary and public monies, and for the sector as a whole. This latter need includes the provision of management development support, together with legal and other technical and funding advice, the development of other practical services (such as the availability of photocopying resources and training facilities) and the adoption of a strategic approach to the development of


15

the sector in local communities, including advocating/campaigning upon its behalf with local government and proving a focus for discussion and networking within local non-profit sectors. Experience elsewhere has suggested that such local infrastructure is best provided through local umbrella agencies in the VNPO sector (Osborne 1999b, 2000a; see also the chapters by Imada in this volume). Third, there needs to be the development of meaningful partnerships with local government in the planning and provision of social and other community services, which acknowledges the strengths and roles of both partners. An essential prerequisite to such a partnership is the development of dialogue between the sectors (McLaughlin and Osborne 2000; Osborne and McLaughlin 2002). It also requires a realistic level of resources to be directed toward the non-profit sector by central and local government. This is an especially challenging issue. Inter-organizational collaboration is notoriously difficult to manage (Huxham and Vangen, 2000). When it involves partnership across different sectors of society, such as the local government and VNPO sectors, then it can become complex in the extreme. In the UK context, Osborne (1998; see also Young 2000 for a US perspective) has argued that such ‘partnership’ can undermine the voluntary ethic of VNPOs and, in the extreme, divert them from their mission-critical activity (two decades ago, Pifer (1967) also prefigured this argument in the USA, in his seminal paper on the growth of ‘quangos’). In Japan, the role that local government plays in local networks, as the legitimator of other activity, adds a further dimension to this complexity. Unless VNPOs are to develop simply as service providing agencies of local government, then the traditional roles and relationships of the public and the private in Japanese society will need to be challenged. However, this challenge carries the risk of undermining the spirit of mutuality that is the fundamental cornerstone of social welfare in Japan. This dilemma is indeed a difficult one for VNPOs and their advocates to resolve, and one for which the experience of the Western market economies has little to offer them for guidance. Fourth, in order to achieve the above, the development of clear community profiles is required, which will specify the strengths and needs of local communities. These profiles will also need to move away from the traditional holistic and unitary models of Japanese society and toward ones that embrace and reflect its growing diversity. These profiles will provide the basis for realistic planning to meet social needs in local communities. This profiling needs to be holistic, and to see social and economic needs within the context of the overall strengths and needs of a community rather than in isolation. One very local model for this is that of village appraisals (Osborne and Tricker 2000), though other ones do exist (such as Jenei and Vari 2000; see also the discussion in McLaughlin and Osborne 2000). Finally, at the national level, this requires a strategic vision of the future shape and direction of the VNPO sector in Japan and the development of a

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strategic plan to further this vision. Consideration also needs to be given to two strategic institutional issues. The first is the appropriate legal framework through which to regulate the formation of non-profit organizations, and an examination of the potential legal structures for VNPOs that could facilitate the acquisition of resources from a range of sources (including government and corporate giving, the sale of services and voluntary donations). The present legal structure does not easily recognize the emerging nature of VNPOs and is not conducive to their support and development. The 1998 NPO Law is an important step in the right direction in this context. However, as argued elsewhere in this book, it is a first stage, and an imperfect one at that, rather than a final solution. The second is the need for government to consider ways in which it can fund the work of VNPOs in providing public services but without incorporating them into the state. The recent 2000 Long Term Care Insurance Law is a good example of both of these potential issues (Kawashima 2001).

Discussion Japanese society is changing. A part of this change is a re-evaluation of the relationship between the state and the individual. This is partly a result of the wider ‘globalization’ of national cultures toward convergence of social and economic systems, as a result of isomorphic pressures with the global economy. It is also in part a product of the changing nature of Japanese society itself. This had always prided itself on its homogeneity. Increasingly though, it is becoming more heterogeneous both as a result of being opened up to the global pressures discussed previously (an example of which is the development of diverse youth cultures), and because of significant societal and demographic changes, such as the ageing of the population. This increased diversity in particular is a challenge that the traditional social institutions of Japan are finding hard to respond to. The dominant institutional framework of the hegemony of the state in meeting social needs is one that is being found increasingly to lack the flexibility to respond to this diversity and to meet social needs as they arise. This flexibility is, potentially, a contribution that VNPOs have to offer to Japan. They are being looked to to provide public services responsive to local needs, to offer voice and advocacy for disadvantaged and marginal groups, and to act as an agent of reform of the current decentralized and discredited state. This challenge is not of itself unusual. Berger and Neuhaus (1977) articulated this vision in the USA over two decades ago. What is unusual, however, is that this challenge is now arising within a cultural paradigm which values the public above the private, unlike in the Western market economies, and which views local government as the legitimating force for private, voluntary, action. This is in contrast to developments in the West. Whilst ‘partnership’ is increasingly becoming the watchword of public


17

policy making and implementation in these Western societies, it is because of what private organizations can offer to government, both in terms of legitimacy and resources, rather than vice versa (see the discussion in Osborne (2000b) for a development of this point). If this challenge is to be met therefore, it is essential that in Japan a new relationship between the private and the public, between organized voluntary action and the state, be forged. This evolving ‘civil society’, for this is as appropriate a phrase as any, must legitimate private action as an appropriate response to emerging social needs. In this, local government and VNPOs must both play vital roles. On the one hand, local government must surrender some of its service planning and providing functions and allow voice to be disenfranchised in Japanese society to be heard through VNPOs. However, it needs to use its hegemony in society to legitimate this new role for VNPOs. On the other hand, VNPOs themselves need to be proactive in taking on a role in responding to social needs in local communities (through mapping need and by planning and providing services to meet this need), rather than expecting this to be taken by the state. However, they also need to exercise this function in partnership with, rather than in opposition to, the state. In this respect, the emerging relationship between VNPOs, the state and civil society has less in common with such relationships found in the industrialized economies of the West and more in common with those emerging in the transitional nations of Eastern Europe. In the former societies, VNPOs have invariably been seen as a barometer of societal health and as a product of the existence of a civil society (Hogsbro, 1995; Putnam 2000). By contrast, the transitional nations are, like Japan, struggling to develop from a societal regime that emphasized the hegemony of the state – though in a more totalitarian form than in contemporary Japan. In these nations, it is civil society that is a product of the work of VNPOs, rather than vice versa. That is, rather being a barometer of its existence, VNPOs are a precursor to civil society and an essential element of its creation. ( Koleva, 1995; Marada, 1996). Whilst the communist version of the hegemony of the state in these transitional nations was one based on totalitarian rule rather than mutuality and consensus, nonetheless there are four significant lessons to be learned. First, VNPOs are an essential but not a sufficient element for the creation of civil society. Because of the dominating cultural paradigm of public hegemony, but with increasing suspicion of it within society, a partnership between VNPOs and local government is essential. They can offer legitimacy to each other. VNPOs offer a legitimate response to social diversity for local government, and an ally to it in its struggle to free itself from the dominance of central government (Nakamura 2002), whilst local government offers VNPOs institutional legitimacy, through the hegemony of the state, in providing local public services. Such a partnership between

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the VNPO sector and local government is essential if civil society is to be established in Japan. Inevitably, though it carries the seeds of its own destruction in its own potential for isomorphic pressures upon VNPOs and their incorporation into the state (see McLaughlin and Osborne 2000 for a discussion of this in the context of the UK). This is perhaps the dominant lesson from the transitional nations of Eastern Europe. The rhetoric of civil society as an opposition to the totalitarian communist regimes of this latter region emphasized the separateness of it from the state, of ‘living with one’s back to the state’, as many political activists in these nations, such as Konrad in Hungary, called it. The post-communist reality is that symbiosis is required whereby the state offers legitimacy to the work of VNPOs and VNPOs legitimacy to the state as a part of civil society. (Osborne and Kaposvari, 1997, 1998). This inter-dependency is an essential prerequisite for success. Second, whilst VNPOs and local government are essential components of this vision of a civil society, this latter entity is wider than these two elements alone. Individual volunteering and civic associations based on mutuality, of which we know already that there is a strong tradition of both in Japan, are also essential elements. They must not be crowded out by the growth of organizational forms of voluntary action and public–private partnership. Third, voluntary action, by itself, is no normative good. It has its own ‘dark side’ (Van Til, 1988). It is important, therefore, to concentrate upon societal roles rather then upon organizational forms alone. Finally, the success of such an endeavour is by no means given. As with communism in Eastern Europe, there is no ‘historical inevitability’ about the development of the VNPO sector. Rather it requires new relationships between the public and the private in Japan to be forged. These need to bridge the existing cultural paradigm of communality and mutuality with an emerging one of diversity and private endeavour.

Conclusions In conclusion, it is argued here that the VNPO sector has much to offer to Japan as it moves away from its recent heritage of a centralist state and mono-culture society. In order to achieve this, it will need to establish its own legitimacy independent of the state whilst also being able to work in partnership with the state. The sector needs to develop local infrastructure and infrastructure organizations that will nurture and support emergent VNPOs and provide them with ways in which to acquire the necessary managerial and governance skills. Finally, government needs to provide institutional structures to legitimate the existence of such organizations and to provide avenues for their stable funding. The 1998 NPO Law and the 2000 Long Term Care


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Insurance Law are a step in this direction. They now need to be followed by further reform to recognize and legitimate the sector, whilst still protecting its independent existence and contribution to Japanese society.

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Kaneko, Y. (1997) Administrative Reform Efforts in the Government of Japan: Her Experiences and Current Progress, Paper to the IIAS Round Table, Quebec City, Canada. Kawaguchi, K. (1992) A Development Model of the Cooperative Movement – Japan Style, paper to the 1992 Tokyo Forum on Cooperative Research [mimeo]. Kawaguchi, K. (1999) Reconstructing Communities Through NPO Activities: a New Welfare Policy in Japan, Ritsumeikan University, Kyoto [mimeo]. Kawashima, N. (2001) ‘The emerging non-profit sector in Japan: recent changes and prospects’, Nonprofit Review, 1, 1, pp. 5–14. Knight, J. (1996) ‘Making citizens in postwar Japan: national and local perspectives’ in C. Hann and E. Dunn (eds), Civil Society. Challenging Western Models, Routledge, London, pp. 222–241. Koleva, G. (1995) Private Enterprise and the State: the Establishment of Civil Society under Post Totalitarian Conditions. The Bulgarian Case, Paper to the European Sociological Association Conference, Budapest. Ko¯roki, H. (1995) Towards a New Volunteer Era. Japanese Youth and the ‘Volunteer Society’, Paper produced upon behalf of the Japan Youth Volunteer Association, Kobe [mimeo]. Lohmann, R. (1992) The Commons, Jossey Bass, San Francisco. Lohmann, R. (1995) ‘Buddhist commons and the question of third sector in Asia’, Voluntas, 6, 2, pp. 140–158. Lynn, L. (1996) New Public Management as an International Phenomenon. A Sceptical View, Paper to the ‘New Public Management in International Perspective’ Conference, St. Gallen, Switzerland. McLaughlin, K. and S. Osborne (2000) ‘A one-way street or two-way traffic? Can public–private partnerships impact on the policy-making process?’, in S. Osborne (ed.), op. cit. pp. 324–338. Marada, R. (1996) Civil Society: Adventures of the Concept Before and After 1989, Masaryk University, Brno [mimeo]. Menju, T. and T. Aoki (1996) ‘The evolution of Japanese NGOs in the Asia Pacific context’ in T. Yamamoto (ed.), Emerging Civil Society in the Asian Pacific Community, Institute of South East Asian Studies, Singapore, pp. 143–160. Ministry of Health & Welfare (2000) Annual Report on Health and Welfare 1999–2000, JICWELS, Tokyo. Miyamoto, T. (1997) Government–Nonprofit Relations in the Japanese Welfare State: the Case of Elderly Care, Ritsumeikan University, Kyoto [mimeo]. Nagao, R. (1994) Overview of Social Welfare Services in Japan, Japanese National Council of Social Welfare, Tokyo. Nakamura, A. (2002) ‘A paradigm shift in Japan’s inter-governmental relationships: reform of government and decentralization of central power’, in (eds) pp. 169–182. Nomura, H. (ed.) (1993) A Comprehensive Analysis of Consumer Cooperatives in Japan, OTSUKI, Tokyo. de Oliveira, M. and R. Tandon (1994) Citizens, Strengthening Global Civil Society CIVICUS, Washington DC. Osborne, D. and D. Gaebler (1992) Reinventing Government, Plume, New York. Osborne, S. (1996) ‘What is “voluntary” about voluntary organizations?’, in S. Osborne (ed.), Managing in the Voluntary Sector, International Thomson Business Press, London, pp. 5–12.


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Osborne, S. (1998) ‘Partnership: a bridge too far for the voluntary sector?’, Local Economy, 12, 4, pp. 290–295. Osborne, S. (1999a) Managing in the Voluntary Sector [Japanese translation by Japan UNI Agency], Thomson International Business Press, London. Osborne, S. (1999b) Promoting Local Voluntary and Community Action, YPS, York. Osborne, S. (2000a) ‘Reformulating Wolfenden? The roles and impact of Local Development Agencies in supporting voluntary and community action in the UK’, in Local Government Studies, 26, 4, pp. 23–48. Osborne, S. (ed.) (2000b) Public–Private Partnerships. Theory and Practice in International Perspective, Routledge, London. Osborne, S. and A. Kaposvari (1997) ‘Toward civil society?’, Journal of European Social Policy, 7, 3, pp. 209–222. Osborne, S. and A. Kaposvari (1998) ‘Non governmental organizations and the development of social services. Meeting social needs in local communities in post-communist Hungary’, Public Administration and Development, 18, 4, pp. 365–380. Osborne, S. and K. McLaughlin (2002) ‘Structuring government–voluntary sector relationships: emerging trends and issues in the implementation of local “Voluntary Sector Compacts” in England’, Public Money & Management, 22, 1, pp. 51–63. Osborne, S. and M. Tricker (2000) ‘Village appraisals’, Local Economy, 14, 4, pp. 346–356. Palley, H. and C. Usui (1995) ‘Social policies for the elderly in the Republic of Korea and Japan’, Social Policy and Administration, 29, 3, pp. 241–257. Pifer, A. (1967) Quasi Non Governmental Organizations, Carnegie Corporation, New York. Pirie, M. (1988) Privatisation, Wildwood House, Aldershot. Putnam, R. (2000) Bowling Alone. Democracy in America at the End of the Twentieth Century, Simon & Schuster, New York. Salamon, L. and H. Anheier (1994) The Emerging Sector, Johns Hopkins University, Baltimore. Salamon, L. and H. Anheier (1997) Defining the Non Profit Sector: A Cross National Analysis, Manchester University Press, Manchester. Sasakawa Peace Foundation (1993) Operational Guidelines for the Second Mid Program of the Sasakawa Peace Foundation, 1994–2000. SPF’s Initiative in Response to a Global Society in Global Society in Transition, Sasakawa Peace Foundation, Tokyo. Serrano, I. (1994). ‘Civil Society in the Asia-Pacific Region’, in M. de Oliveira and R. Tandon (eds), Citizens, Strengthening Global Civil Society, CIVICUS, Washington, DC, pp. 271–318. Suganuma, U. (1995) ‘The state of structure nexus between Japan and China: are these ‘unique’ mystical systems?’, Asian Journal of Public Administration, 17, 2. Tashiro, K. (1994) ‘The implications of small public services to national economic development: a case study of the Japanese government’, in J. Burns (ed.), Asian Civil Service Systems. Improving Efficiency and Productivity, Times Academic Press, Singapore. Thomas, J. (1996) Modern Japan. A Social History Since 1868, Longman, London.

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Thranhardt, A. (1992) ‘Changing concepts of voluntarism in Japan’, in K. McCarthy, V. Hodgkinson, R. Sumariwalla and Associates (eds), The Non Profit Sector in the Global Community, Jossey Bass, San Francisco, pp. 278–289. Van Til, J. (1988) Mapping the Voluntary Sector, Foundation Center, New York. Welzer, M. (1995) Toward a Global Civil Society, Berghahn Books, Providence. Wilson, D. and R. Butler (1985) ‘Corporatism in the British voluntary sector’, in W. Streeck and P. Schmitter (eds), Private Interest Government. Beyond Market and State, Sage, London. Yamamoto, T. (1992) ‘Private philanthropy as a necessity in our interdependent world: a Japanese perspective’, in K. McCarthy, V. Hodgkinson, R. Sumariwalla and Associates (eds), The Non Profit Sector in the Global Community, Jossey Bass, San Francisco, pp. 126–144. Yamamoto, T. (1996) Emerging Civil Society, Institute of South East Asian Studies, Singapore. Yamamoto, T. and H. Komatsu (1996) ‘Japan’s philanthropic development in an Asia-Pacific context’, in T. Yamamoto (ed.), Emerging Civil Society, Institute of South East Asian Studies, Singapore, pp. 561–582. Young, D. (2000) ‘Alternative models of government–nonprofit sector relations: theoretical and international perspectives’, in Nonprofit and Voluntary Sector Quarterly, 29, 1, pp. 149–172.

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The philanthropic roots of the voluntary and non-profit sector in Japan The Rockefeller Legacy1 Victoria Lyon Bestor and Reiko Maekawa

The philanthropic activities of the Rockefeller family and the foundations they established have had a significant if often behind-the-scenes impact on the evolution of Japan’s voluntary and non-profit sector over the last century. That impact has been felt through direct Rockefeller philanthropic initiatives in Japan, both individual and institutional, and through the example provided by Rockefeller philosophies of philanthropy and social responsibility that continue to have influence today. The principal architect of Rockefeller philanthropy in Japan was John D. Rockefeller 3rd (1906–1978). However, JDR 3rd was not the first Rockefeller to show an interest in Japan, nor was he the first to have an impact on the shape of philanthropic institutions in Japan.

A brief history of pre-war Rockefeller philanthropy in Japan Initial Rockefeller contacts with Japan were made via Christian mission agencies supported by JDR Jr. ‘Outside of Peking Union Medical College, the Foundation’s chief interest in nursing education in the Orient was centered at St. Luke’s Hospital in Tokyo. Application for aid to this institution was first presented to Mr. Rockefeller, Jr. in May of 1913, the year of the Foundation’s incorporation.’2 However St. Luke’s itself was never a major recipient of Rockefeller Foundation support because of its connections to the Episcopal Church in the USA, which foundation trustees regarded as a large and wealthy organization that could and should take care of the hospital itself. A Rockefeller Foundation grant to Japan was made the following year, in 1914, to support disaster relief after a volcanic eruption in southern Japan and flooding in the To¯hoku region of northern Japan. Mindful that ‘after the San Francisco earthquake and fire Japan had given in relief more than half as much as all other nations together,’3 the Rockefellers were very generous with relief and reconstruction gifts again following the great Kanto¯ Earthquake of 1923.4 Post-earthquake support included JDR Jr.’s very substantial pledge of ¥4,000,000 for rebuilding the University of Tokyo’s Library (then the Imperial University). Before making that gift, Mr.

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Victoria Lyon Bestor and Reiko Maekawa

Rockefeller and his aids went to great pains to be sure his gift would be positively received by the Japanese people. Additionally as the project was being constructed pains were taken by the Japanese to confirm that Mr. Rockefeller’s Christian sensibilities would not be offended by their conducting traditional Shinto rituals upon the laying of the foundation and the completion of the new library building. One of the major pre-war projects of the Rockefeller Foundation was the creation of the Tokyo Institute of Public Health, completed in 1938. Between 1932 when the Foundation’s commitment was finally made after years of discussion, and 1938 when the project was completed, the Rockefeller Foundation pumped more than $1 million into the Institute. It formally opened as an instructional unit in April 1939 conforming to the Japanese academic year. On the first official Rockefeller Foundation visit following the opening of the Institute only one year later, Dr M.C. Balfour of the Rockefeller-established Chinese Medical Board under which supervision of the Institute fell, noted: The use of the Tokyo Institute for training personnel of Northern China and Manchukuo may be noted. These are Chinese who are said to speak Japanese, and are probably associated with the puppet regimes. Although this situation can hardly be viewed as in harmony with the spirit of P.U.M.C. [the Rockefeller supported Peking Union Medical College] or the National Government of China, I assume that there is no choice than to refrain from comment . . .5 Shortly thereafter the Institute was completely taken over by the Japanese Imperial Army, which held it for the duration of the war, leaving it stripped of fixtures down to the radiators that heated the rooms.6 Virtually all this pre-war support in Japan came about initially through connections with various Christian groups in Japan, beginning with early gifts to the Japan Red Cross by John D. Rockefeller, Jr. and the Laura Spelman Rockefeller Memorial, the rebuilding of the University of Tokyo Library, and the Institute of Public Health. Simultaneously, the proliferation of Christian voluntary groups in Japan, particularly those that provided doctors and nursing care for the poor, followed the then dominant Rockefeller family pattern of philanthropy, whether intentionally or not. Quite clearly however, Rockefeller philanthropy had an early influence on the formation of large-scale philanthropic institutions in Japan, as noted by Masayuki Deguchi, one of Japan’s leading scholars of philanthropy (Deguchi, 2000). The Mitsui Ho¯onkai, which literally meant the Mitsui Association to Repay the Obligation (to the Nation), was founded in 1934. The Mitsui Group’s experience shortly prior to the founding of its huge zaibatsu7-linked philanthropic society distinctly resembled that of the Rockefellers in the years before the founding of the General Education

The philanthropic roots of the sector

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Board, the Rockefeller Foundation, and other Rockefeller philanthropies. At the time the Mitsui Ho¯onkai was created, Japan was becoming increasingly militaristic and the Mitsui Group was heavily criticized for obliviously pursuing their private self interests at a time of growing national crisis. Their alleged involvement in speculation on the US dollar in anticipation of the imposition of the gold embargo led to the assassination of the head of Mitsui in 1932 (Yamamoto and Amenomori 1989). The creation of the Mitsui Ho¯onkai was clearly an attempt to placate critics by aiding the national effort through support of public works and social welfare. During this period of ultra-nationalist fervour, Mitsui was not alone in creating large foundations that simultaneously refurbished corporate images and aided the national goal of building up Japan’s industry and technological skills. JDR 3rd’s arrival in Japan JDR 3rd’s personal relationship with Japan began in 1929 when he attended the Institute of Pacific Relations Conference in Kyoto as part of a world tour following his graduation from Princeton. In Kyoto he served as an assistant to members of the American delegation, functioning as a rapporteur. His visit to and participation in the IPR conference were very important to his long-term interests in Japan, cultural relations, and international exchanges. At the IPR conference JDR 3rd met a number of senior Japanese who would be important to him and to postwar US–Japan relations. The conference must have also been a fascinating early glimpse for JDR 3rd into the growing political storm in Japan. Officially the Emperor was the host of the conference and he sent his aid Baron Sakatani to be his personal representative and to welcome delegates. The Japanese delegation was headed by empire builder Yosuke Matsuoka, then Chairman of the South Manchurian Railroad and later Foreign Minister. The delegation thus was caught between empire builders like Matsuoka and the internationalist elder statesmen who were to re-emerge following the war. The 1929 IPR Conference was also where JDR 3rd met Shigeharu Matsumoto, with whom he served as a rapporteur. Matsumoto was to become his lifelong friend and the head of the International House of Japan, one of JDR 3rd’s major efforts in early postwar Japan. The relationship that grew between John and Shige, as they called one another, included close family ties. Matsumoto’s sons Hiroshi and Ken visited JRD 3rd and Blanchette at Fieldwood Farm, their home near Tarrytown, New York on numerous occasions during their studies in the USA and Misao Matsumoto and Sandra Ferry Rockefeller were room-mates at Vassar. The importance of such close personal relationships was crucial to deepening Rockefeller contacts in many parts of the world, a factor that has been observed by a number of scholars who have studied the Rockefellers.8 Japan was no

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exception, and indeed some of the connections John made on his first trip were critical to his postwar affinity for Japan. The 1929 conference also came at an early stage in the Rockefeller Foundation’s relationship with the Institute for Pacific Relations. John’s participation in that conference, along with other ‘Rockefeller men’ such as John McDonald, President of the Foreign Policy Association, helped to deepen the relationship – and undoubtedly the pockets – upon which the Institute for Pacific Relations would draw over the next two decades. The Institute for Pacific Relations conference held in Kyoto in 1929 was the third conference since its founding in 1925, and the first held in Japan. By 1929, the IPR had already received significant Rockefeller funding, including annual gifts of $20,000 from John D. Rockefeller Jr., gifts from the Laura Spelman Rockefeller Memorial, and IPR was beginning to get support from the Rockefeller Foundation. By the early 1950s the Rockefeller Foundation alone had contributed nearly $2 million in over 100 separate grants to the Institute for Pacific Relations.9 The faith Rockefeller institutions placed in the IPR was not to last beyond the early years of the postwar period. Following the war, just when the USA needed Asia-Pacific specialists the most, Senator Joseph McCarthy accused the IPR and individuals closely associated with it of being Communist sympathizers, if not active party members. At the same time that the Rockefeller Foundation, the family and other Rockefeller interests were re-examining their past relationship with the IPR and cautiously re-evaluating ties with a range of organizations and individuals in the USA, old friends in Japan formerly connected with the IPR were quickly moving to the forefront of Rockefeller planning for Japan’s future. Those Rockefeller efforts were strongly anti-Communist in tone, in keeping with American foreign policy, and JDR 3rd’s pre-war Japanese contacts were principally through the IPR. Yet former Japanese members of the IPR were not tarred with the same brush as their American counterparts. There are a couple of important reasons for this. The history of Communism – and in general of liberal and leftist movements in Japan – had been very different from its history in much of the rest of the world. As the right-wing militarists tightened their hold on Japan’s domestic and international activities in the 1920s and 1930s, left-wing groups were effectively suppressed through the promulgation and manipulation of the Peace Preservation Law of 1925, and its more stringent version enacted in early 1941. As Japan’s aggression in Asia intensified during the 1930s, participation in international organizations like the Institute for Pacific Relations was greatly restricted. The Japanese Council of the IPR struggled to keep dialogue open following the Japanese invasion of Manchuria in 1931, but increasingly its financial support in Japan was cut and its participation in international IPR conferences hampered. And in 1935 the Japan Council of IPR was forced to merge with the Japanese League of Nations Association and it ceased functioning until after the war.10


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The suppression of Communism in pre-war Japan had been so thorough as to essentially prevent the stain of ‘contamination’ from within Japan, after the war. The Japan Council’s withdrawal from the IPR after the mid1930s largely removed suspicion of contact with Communist influences within the IPR’s international councils, thus inoculating former Japanese members who were Rockefeller contacts in Japan from the suspected taint of being Communists which haunted their American counterparts. Nonetheless, a considerable number of those Japanese individuals had been in responsible positions in the fields of government, business, and the media during the Second World War, and as such were on the initial list of those to be purged from future leadership roles by the Occupation. 11 Ironically, having been isolated from presumed leftist international influences by Japanese militarists in the 1930s, they were now purged for their presumed associations with right-wing Japanese militarists. That list included Shigeharu Matsumoto, because he had been a journalist in China during part of the war. Fortunately for many Japanese, and for future Rockefeller plans in Japan, Occupation policies precipitated by the fall of China to the Communists in 1949 and the onset of the Korean War overwhelmingly emphasized the economic reinvigoration of Japan over the political reforms envisioned in the early years of the Occupation. Successful economic revitalization depended on the expertise of many former purgees who were quickly rehabilitated. At the point when JDR 3rd returned to Japan as a member of the Dulles Peace Mission in 1951, the ‘rehabilitation’ of the purged was just beginning. During the following years, former members of the Japan Council of the IPR and their extended networks of peers and followers became central to Rockefeller-supported institutions that have been pivotal to building postwar US–Japan relations. Among the de-purged were a number of former IPR members who became central to Rockefeller initiatives after the war.

The Occupation and early postwar period At the end of the Second World War, JDR 3rd was already in his early 40s, but he had yet to establish a firm and independent identity for himself. Japan and JDR 3rd were ripe for one another. He found a new mission in life through his philanthropic activities in Japan, where his self-effacing demeanour, obviously without overt political ambition, appealed to the Japanese. Within the Japanese context his non-aggressive style and lack of self-assurance could be interpreted as a sign of strength and of the confidence that accompanies wealth and success. In Japan he was no longer the obscure oldest son, less ambitious and outspoken than his brash younger brothers, but was rather the assured ‘cho¯nan’, comfortable in the solid status of being the eldest son. As a matter of style and demeanour, JDR 3rd was extraordinarily well suited to be respected and revered by the

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Japanese. In Japan JDR 3rd finally came into his own as the quiet man with the towering presence, the scion of a fabulously wealthy American family, who was seen by the Japanese as a staunch defender of democracy and enemy of Communism. Ironically, the man who had previously been overshadowed by his powerful father and brothers truly began to shine against the darkened background of the defeated country. His seeming lack of overt political ambition and non-aggressive manner, which had previously made him rather an obscure member of the famed family, appealed to the Japanese people who were hungry for a gentler gesture of kindness and respect than that offered by General Douglas MacArthur. Rockefeller was the right man at the right time and place. He found his aristocratic birth and his sense of noblesse oblige appreciated by the status-conscious Japanese, and his advice sought after by Japanese intellectuals and politicians looking for ways to be accepted by the international community. While the Japanese felt grateful to Rockefeller for his concern for the defeated country and its people, it is apparent that he believed that Japan could serve as an avenue through which he could establish his own identity as a worthwhile philanthropist and as an expert on Asian – especially Japanese – affairs. For much of the period after the signing of the peace treaty, the Rockefeller Foundation was headed by JDR 3rd who became chair in 1952 succeeding John Foster Dulles, who was appointed Dwight Eisenhower’s Secretary of State. Joining JDR 3rd in 1952 as Foundation President was Dean Rusk who had served as Assistant Secretary of State working closely with John Foster Dulles on the peace settlement with Japan. The task Rockefeller was assigned as a member of the Dulles Mission was to explore the possibilities of cultural exchanges between the USA and Japan within the cold war consensus. JDR 3rd had been strongly influenced by George Kennan. In Kennan’s April 1951 Foreign Affairs article, he stated that the most important influence the United States can bring to bear upon internal developments in Russia will continue to be the influence of example: the influence of what it [the USA] is, and not only what it is to others but what it is to itself. (Quoted in Kennan 1984a: 153) Rockefeller adopted Kennan’s ‘influence of example’ approach as he wrote his recommendation for Dulles. While JDR 3rd’s initial postwar involvement may have been shaped by his links to John Foster Dulles, clearly supporting the geo-political aims of American foreign policy at that time, it is clear that to characterize early postwar Rockefeller interests as simply geo-political is too narrow. The breadth of Rockefeller interests and the range of Japanese institutions supported demonstrate the cultural and social vision of the Rockefeller


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family. The programmes thus supported suggest that the Rockefellers were interested in creating a two-way dialogue between Japanese and American culture and society, rather than simply exporting a Eurocentric vision of modern society, in contrast to some assertions that Rockefeller philanthropy simply fostered American hegemony.12 Our belief is that international organizations, as well as larger Rockefeller networks in Japan, have interpreted and articulated Rockefeller philosophies of philanthropy and social responsibility through their own initiatives, and in doing so had and still have a major impact on the evolution of the nonprofit sector in Japan. After Shigeharu Matsumoto was depurged in 1950 he began contemplating ways to promote closer USA–Japan relations. In those efforts, he called upon the ideas of his Yale mentor Charles Beard and his network of pre-war internationalist colleagues of liberal thinkers, university professors and business leaders. Many of those were the same internationalists who had been part of the Japan Council of the IPR and whom JDR 3rd met in 1929. When John (as Matsumoto called him) returned to Japan in early 1951 as part of the Dulles Peace Mission, Shige (as JDR 3rd called him) was still trying to determine his future plans and he was ripe for resuming the friendship with Rockefeller begun in Kyoto in 1929. According to Matsumoto’s memoirs, the idea of International House which would serve as a centre for scholars and opinion-makers, emerged from his discussion with Rockefeller about possible cultural exchanges between the USA and Japan (Matsumoto 1992: 185). Certainly the blueprint for I-House was outlined in Rockefeller’s ‘Report to Ambassador Dulles’ and it became John and Shige’s major life-long collaboration.13 To a large extent, Rockefeller’s later activities in the Far East in the fields of cultural exchanges, agriculture and population were extensions of some of his ideas and preoccupations expressed in his Dulles report. For example, the Intellectual Interchange Program that he sponsored at Columbia University reflects his emphasis on intellectual leadership. It subsequently brought to International House such leaders and intellectuals as Eleanor Roosevelt, Robert Oppenheimer, George Kennan and David Reisman. In New York, the revived Japan Society and the new Asia Society, on the other hand, served as vehicles through which the high artistic achievements of Japan and other Asian countries were introduced to the American audience. The bilateral and international cultural exchanges he envisioned in the Dulles report were implemented through these institutions. Although American cultural policy and Rockefeller’s involvement in it could never be separated from politics in a larger context, his postwar activities in Japan centred on the ‘cultural sphere’ in its narrower and less politically charged sense; his efforts to promote intellectual and artistic exchanges seem most significant in retrospect. Yet, JDR 3rd himself was not fully satisfied with the prospect of limiting his activities to purely aesthetic and intellectual concerns seemingly remote from realities of the world.

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He had a moment of reflection on his past activities as revealed in his 1953 memorandum entitled ‘Objective and Focus of My Asian Interest’ in which he wrote: To date my relationship [to Japan] has been mainly on the cultural side because of my assignment for Mr. Dulles. However, increasingly it becomes evident that it would be undesirable to have any one individual become too active in this area; hence I have been giving consideration to opportunities in the economic field having in mind particularly agriculture. His concern for the apparent weakness of the Japanese economy after the war led him to the idea of regional integration, or the strengthening of the working relationship between Japan and the countries of ‘Southern Asia.’14 As an independent philanthropist as well as chairman of the Rockefeller Foundation, JDR 3rd became a tactful player in the international game played at the intersection of politics and philanthropy. American politicians who tried to strengthen the USA–Japan alliance and the US presence in Asia during the Cold War found Rockefeller useful in enhancing pro-American sentiments because of his financial resources and popularity in this region. For JDR 3rd’s part, he made the best use of his personal connections with the American foreign policy establishment and national leaders in Asia in order to fulfil his sense of mission as a planner and engineer of global affairs including population, food, and cultural communications. From 1951, when he returned to Japan as a member of the Dulles Peace Mission, until his death in 1978, JDR 3rd made almost yearly visits to Japan, often in the company of his wife Banchette. Together John and Blanchette developed an extensive set of ties and interests in Japan and together they amassed an extensive collection of Japanese art, much of which they later donated to The Asia Society, an organization founded by JDR 3rd in 1956. Together John and Blanchette supported many Japanese artists and intellectuals through The JDR 3rd Fund (founded in 1963). After JDR 3rd’s death in 1978 that fund became the Asian Cultural Council (ACC) in which Mrs. Rockefeller remained active until the final illness which led to her death in 1992. ‘The number of artists who were given fellowships from both foundations exceeded 350 in Japan alone, and they now play an active role in a wide range or areas both in Japan and abroad.’15 JDR 3rd and Blanchette’s children all grew up visiting Japan and knowing many Japanese. Their son Jay studied for several years at International Christian University in Tokyo and their eldest daughter Sandra shared a room with Matsumoto’s daughter Misao for four years at Vassar.


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JDR 3rd and Japan’s nascent non-profit sector When Japan was struggling to achieve a place of respectability in the international community in the decade after the war, its psychological need for acceptance and sympathy was as acute as its material need. The relation between JDR 3rd and Japan was both subtle and pragmatic as it included the issue of psychic affinity and sympathetic understanding as well as the hard reality of international politics. In the seemingly happy episode of American philanthropy in postwar Japan, it is difficult to tell which side, the giver or the recipient, was the master of the game. Certainly both played it well, amicably and yet circumspectly. Japanese politicians, businessmen and intellectuals who sought Rockefeller’s advice as well as his philanthropy were far from being innocent and naive. In fact, some of them tried to use Rockefeller’s prestige and influence in order to advance what they considered Japan’s national interest or their own ambitions. They instinctively felt that closer USA– Japan relations were crucial to Japan’s survival in the postwar world. Their own survival in their respective careers, in turn, partly depended on their ability to perform as influential actors who could promote better bilateral relations. Maintaining close personal connections with such a prominent American as Rockefeller was certainly considered an important asset in advancing their future careers both inside and beyond the national border. Against the background of the Cold War, Japanese conservative politicians, in particular, emphasized alternately the helplessness of the defeated country and its new strategic importance as a super domino in Asia. By so doing, they tried to get two things – cash and sympathy. Though what private philanthropy could do in terms of financial assistance was naturally limited, JDR 3rd was regarded as valuable in another respect. He was not only a spokesman for better USA–Japan relations but also one of a handful of Americans sympathetic to the Japanese situation and willing to enlighten American policy makers in regard to Japan’s perspectives. As John’s circle of contacts and interests broadened and deepened, and as he and his Japanese friends and colleagues gained seniority, John’s stature continued to increase. He had many opportunities to discuss his philanthropic activities and views of America’s evolving civil sector with Japanese leaders and in the media. Even though the Japanese media focused on Rockefeller as a celebrity and made their share of misinterpretations as to his motivations, the organizations that he worked most closely with paid careful attention to Rockefeller interests and followed JDR 3rd’s speeches and published works. It was not only the conscious impact of Rockefeller philanthropy and the individual philosophies of philanthropy and social responsibility of family members, but in fact JDR 3rd and later David Rockefeller were influential on the Japanese not simply for what they actually said, but equally, for the importance of who they were.

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Increasingly he saw public affairs and public service as key to the maintenance of the successful US system of democracy, and he wanted to encourage the Japanese to follow that path. Behind the scenes, JDR 3rd’s personal philosophy was absorbed and incorporated into the fundamental mission of organizations he helped establish. Such Japanese organizations took notice of JDR 3rd’s The Second American Revolution (1973), the impact of which was likely greater in Japan than in the USA. The influence of these organizations and programmes in creating bilateral ties and evolving notions of civil society has been enormous. Of particular importance are the roles of a number of American institutions with a focus on US–Japan relations (or Asian issues more broadly) that were greatly influenced by the Rockefellers. These include the Japan Society in New York (reinvigorated by JDR 3rd after the war) which has existed since 1907 as a key cross-roads of US–Japan dialogue in New York City; the Trilateral Commission (a major interest of David Rockefeller’s) which has promoted dialogue among the USA, Western Europe and Japan at the level of top business and political leaders; the Asia Society, a creation of JDR 3rd’s that addresses Asian issues broadly, including cultural exchange, the arts, and public education; and the Asian Cultural Council, which grew out of the JDR 3rd Fund and has supported hundreds of Japanese artists and writers who have studied in the USA. Added to these are key organizations in Japan: The International House of Japan, led until his death in 1989 by John’s old friend Shigeharu Matsumoto; and the Japan Center for International Exchange (JCIE), founded in 1971 by Tadashi Yamamoto, which has also served as the Japan secretariat of the Trilateral Commission. The Rockefeller vision of interdependent institutions in a civil society also shaped the development of these Japanese institutions. Over the years, they have expanded the scope of their activities from an initial focus on US–Japan relations to include support for the growing non-governmental spheres of Japanese public life and the expanding Japanese involvement with other societies in East and Southeast Asia, and worldwide. As Japan prospered, JDR 3rd was quick to encourage the institutions he founded to envision a Japanese non-profit sector. In 1971 he spoke to Japanese leaders in Tokyo saying perhaps the time has come for Japan to develop more alternatives for action, greater flexibility within the private sector for meeting the problems and opportunities of today – in particular, creating the conditions that would allow the institution of philanthropy to develop further. (Rockefeller 1971) In that same speech JDR cautioned that Japan was in danger of creating the impression of its ‘overpresence’ by focusing too much on political and


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economic aspects of its international relations without greater consideration of cultural and interpersonal exchange.16 In that speech JDR 3rd anticipated the image Japan was developing as an ‘economic animal’ and simultaneously proposed one of the principal strategies Japan would choose in order to change that image, international philanthropy. It was not merely JDR 3rd’s suggestion of philanthropy as a strategy to Japanese leaders; in fact, a number of Rockefeller-associated organizations soon took the lead in studying philanthropy in North America. Together, Keidanren (the Federation of Economic Organizations), the Japan Society in New York, International House of Japan, and especially the Japan Center for International Exchange (JCIE), became involved in efforts to study various aspects of philanthropy. With the guidance of close Rockefeller associate Datus Smith, JCIE established a programme known as the ‘International Philanthropy Project’,17 That project coordinated the first Japanese study mission on philanthropy to the US and Canada in 1974. Datus Smith facilitated connections with North American foundations and non-profit associations, and Yoichi Maeda, Executive Director of International House of Japan, headed the Japanese Mission. David Rockefeller topped the list of ‘leading figures in private foundations and corporations’ with whom the group met. Throughout the next several years the International Philanthropy Project coordinated a number of conferences, study missions, and publications, each involving Rockefeller associates and Rockefeller funding. These included an international symposium held in 1976 on the impact of the Commission on Public Philanthropy and the Private Need, known as the Filer Commission,18 an international symposium in Japan on the role of philanthropy in advanced societies, and a seminar series on overseas philanthropy. JCIE’s publication International Philanthropy Project of the Japan Center for International Exchange (JCIE): a Case Study, summarizes their interest in the Filer Commission as follows: The Japanese foundation and corporate officers and staff observing American philanthropy were interested in this active debate on the relevance and legitimacy of the voluntary sector in the United States. They were also impressed by the initiative JDR 3rd took in organizing research and study on private philanthropy in the changing social environment through the Commission on Private Philanthropy and Public Needs. (Filer Commission, Yamamoto et al. 1991) Working closely with JCIE has also been Keidanren (the Japanese Federations of Economic Organizations), greatly influenced by David Rockefeller’s close friend, the late Akio Morita (founder of Sony), and by other leaders close to David and/or the Trilateral Commission. Keidanren has promoted major efforts to expand Japanese corporate philanthropy, to

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encourage better corporate citizenship abroad, to increase expected levels of corporate giving, and to expand voluntary action in Japan. JCIE also served as secretariat of a number of so called ‘Wisemen’s Groups’ that played major roles in evolving networks of business and public leaders and was often central to the convening of major conferences that involved US, Japanese and other world leaders (Yamamoto 1995). More recently JCIE has been a leader in defining and professionalizing Japan’s non-profit sector,19 and in 1997 it took a considerable role in organizing that community to support a new non-profit corporations law (the NPO Law, 1998) through the Japanese Diet. Given JCIE’s close ties with established politicians and their intimate knowledge of the players and the process of Japanese politics, they were extremely well placed to work with Keidanren, non-profit colleagues, and Diet members to pass that legislation. The legislation was groundbreaking less for the immediate impact of the law itself, than for the private sector initiative through which that law was passed. And JCIE’s role, however important it was, was behind-the-scenes. It would be easy to regard philanthropic initiatives such as these Rockefeller-inspired developments as simply an outward spread of American influence. Rather we think they should be interpreted as a long-term collaboration that has evolved between a group of closely interrelated bilateral organizations and Rockefeller interests, a collaboration that has been intensely reflective in nature. Rockefeller ideas – those articulated by JDR 3rd in his 1951 ‘Report to Ambassador Dulles,’ including his views of a non-profit sector suggested in 1971, and embodied in his commitment to truly two-way artistic and cultural exchange – have been central to the formation of key organizations that articulate and mediate bilateral relations as they have evolved since the war. Once the Japanese economy took off, Rockefeller models guided Japan’s growing international role, and helped to define Japan’s evolving non-profit sector. If this sector is only recently beginning to define a societal space and roles for itself, nevertheless, Rockefeller-inspired organizations continue to facilitate that process – and their impact has become more multilateral, as Japanese institutions have increasingly focused their attentions globally. It is equally important to recognize that the longer-term success and impact of the institutions created or reinvigorated by the Rockefellers depended as much on the perspectives and agenda of Japanese cultural leaders and intellectuals who had varying, if at times converging, views of the bilateral institutions that would restore Japan to a secure position in the postwar world order. These institutions and their changing mandates serve as a lens through which to examine the impact of Rockefeller philanthropy, their notions of social responsibility and the non-profit sector continue to help define the evolution of those concepts in Japan in the twenty-first century.


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Notes 1 This chapter began as two presentations in a panel at the 28th Annual Conference of ARNOVA, November 4, 1999 in Washington, DC. The majority of this chapter is based on Victoria Lyon Bestor’s presentation and her ongoing work on a book entitled The Rockefeller Legacy in Japan. Much of the middle portion of the chapter is based on Reiko Maekawa’s ARNOVA paper which was subsequently published in Kyoto University’s journal as ‘Philanthropy and Politics at the Crossroads: John D. Rockefeller 3rd’s Japanese Experience,’ The Integrated Human Studies, #7 (2000): pp. 67–82. 2 Rockefeller Foundation History, Series 1, vol. 10, p. 2526, Rockefeller Archive Collection. 3 In American Philanthropy Abroad: A History, Merle Curti (Rutgers Press, 1963) quotes the Red Cross Courier II – September 12, 1923 – only twelve days after the Great Kanto¯ Earthquake on September 1, 1923. ‘Overshadowing all else was the reminder that after the San Francisco earthquake and fire Japan had given in relief more than half as much as all other nations together.’ Curti further notes that following the Japanese quake the USA was particularly generous in support at the government, corporate, non-profit and individual levels. JDR Jr.’s gift was the largest single individual gift. 4 RAC, Rockefeller Foundation, RG 1.1, series, 609, box 1, folder 1. 5 Rockefeller Foundation History, vol. 1, p. 15; summarizes the foundation’s activities during its first 16 years of operation, notes that between 1913 and 1928 the Foundation had given over $144 million to support medical efforts abroad. Of those the largest, over $30.5 million went to China to support the Peking Union Medical College and other Chinese medical institutions. In the following year, the Laura Spelman Rockefeller Memorial Fund was folded into the Foundation broadening the scope of the Foundation beyond its earlier principal focus of public health. In other reorganizations that accompanied that merger, the Chinese Medical Board was established as a separate entity with its own board, facilities, endowment, and annual budget of appropriations. RAC. 6 Rockefeller Foundation History, vol. 12, p. 3090. RAC. 7 Zaibatsu are described in the Encyclopedia of Japan by Eleanor Hadley (Hadley, 1983) as ‘Industrial and financial combines of a conglomerate type that grew to great size and attained a dominant position in the Japanese economy between the Meiji period (1868–1912) the Second World War. Although the holding companies of those combines were officially dissolved during the post-World War II Occupation period, the new corporate groupings (keiretsu) that appeared after the war are often regarded as their direct successors and have become the subject of lively controversy.’ 8 In addition to the many published accounts of the collaboration between Rockefeller family members and their associates, the 1998 ARNOVA conference included a panel focusing on Rockefeller support in Canada, South America, and the rural South, which focused on such personal networks. 9 RAC, Rockefeller Foundation, RG 1.1, series 200, box 358, folder 4251, 9/10/ 51 memo. 10 RAC, RF, 1.1, series 200, IPR files from 1935 to 1944.

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11 The Occupation forces known as SCAP (Supreme Commander of Allied Powers) began the Occupation with a rigorous plan to purge all those who had lead Japan’s military-industrial complex before and during the Second World War. However, following the take-over of China by the Communists in 1949 and the onset of the Korean War, Allied policy with regard to Japan shifted to a focus of economic reinvigoration which depended upon the skills, connections, and ties of many business leaders who had previously been on the list of those to be purged. 12 A recent example of this genre is An Occupation Without Troops: Wall Street’s Half-Century Domination of Japanese Politics by Glenn Davis and John G. Roberts, 1996, Tokyo, Zen Books. 13 From the Autobiography of Matsumoto Shigeharu, 1992 as edited by Hiroko Kako. 14 From John D. Rockefeller 3rd’s 1953 memo ‘Objective and Focus of My Asian Interest,’ (Rockefeller Archive Center, JDR 3rd papers, RG 3, series 2). 15 Exhibition for Benefit Auction for Blanchette H. Rockefeller Fellowship Fund, 1995, published by the Blanchette H. Rockefeller Fellowship Fund-Raising Steering Committee, Tokyo. The Blanchette H. Rockefeller Fellowship Fund was established in Japan in order to support the activities of the Asian Cultural Council, formerly the JDR 3rd Fund. 16 ‘The Challenge of the Quality of Life,’ a speech delivered by John D. Rockefeller 3rd at the International House of Japan on May 14, 1971. 17 RAC, Rockefeller Brothers Fund (hereafter RBF), series 4 – JCIE files, grants, various boxes and folders. 18 The Commission on Private Philanthropy and Public Need, known as the Filer Commission, was an initiative of JDR 3rd’s to study the importance of private philanthropy in the changing social environment of the USA. JCIE in collaboration with other Rockefeller-related groups and individuals organized the February 23, 1976 conference in Tokyo. 19 JCIE’s Hideko Katsumata is a key member of the GAP Group Kokusai Ko¯dan Katsudo¯ Kenkyu¯kai which has published including the Kokusai Puroguramu Ofisa¯ – The International Program Officer

References Arnove, Robert F. (ed.) (1982) Philanthropy and Cultural Imperialism: The Foundations at Home and Abroad. Bloomington, University of Indiana Press. Bestor, Victoria Lyon (1998a) ‘Shimin shakai to wa nani ka: Is Civil Society a Transnational Phenomena or a Translational Dilemma in Japan?’, unpublished paper presented at the Kansai Forum on US–Japan Relations, Osaka American Center, Osaka. Bestor, Victoria Lyon (1998b) ‘The Rockefeller Legacy: Cultural Diplomacy, Area Studies and the Growth of American Studies in Japan and Japanese Studies in the United States’, an unpublished paper presented at the Center for American Studies, Do¯shisha University, Kyoto. Bestor, Victoria Lyon (Spring 1999a) ‘Reimaging Civil Society in Japan’, in Civil Society in Japan and the US: A Special Issue, of Washington-Japan Journal, Washington DC, Japan America Society of Washington DC.


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Bestor, Victoria Lyon (1999b) ‘The Rockefeller Legacy in Japan: Philanthropy, Politics, and the Molding of Japan’s Nonprofit Sector,’ a paper presented at the Annual Conference of ARNOVA, November 4, 1999, Washington DC. Bestor, Victoria Lyon, The Rockefeller Legacy in Japan, unpublished manuscript in preparation. Collier, Peter and David Horowitz (1976) The Rockefellers: An American Dynasty, New York, Holt, Rinehart and Winston. Curti, Merle (1963) American Philanthropy Abroad: A History, Rutgers University Press, New Brunswick. Davis, Glen and John G. Roberts (1996) An Occupation without Troops: Wall Street’s Half-Century Domination of Japanese Politics, Tokyo, Zen Books. Deguchi, Masayuki (1993) Firansoropı¯: kigyo to hito no shakai ko¯ken (Philanthropy: The Social Contributions of Corporations and Individuals) Tokyo, Maruzen Library. Deguchi, Masayuki (January 2000) ‘Not for Profit: A brief history of Japanese nonprofit organizations’, Look Japan, Tokyo, Look Japan, Ltd. Eto, Shun (ed.) (1995) Exhibition for Benefit Auction for Blanchette H. Rockefeller Fellowship Fund, Tokyo. GAP Group (1997) Kokusai puroguramu ofisa¯ – The International Program Officer, Tokyo, Kokusai Ko¯dan Katsudo¯ Kenkyu¯kai. Garon, Sheldon (1997) Molding Japanese Minds: The State in Everyday Life, Princeton, Princeton University Press. Hadley, Eleanor M. (1983) ‘Zaibatsu’, Encyclopedia of Japan, Tokyo, Kodansha Ltd. # 8, p. 361. Harr, John Ensor and Peter Johnson (1988) The Rockefeller Century, New York, Charles Scribner’s Sons. Harr, John Ensor and Peter Johnson (1991) The Rockefeller Conscience: An American Family in Public and Private, New York, Charles Scribner’s Sons. Hayashi, Yu¯jiro¯ (1980) Nihon no zaidan (The Japanese Foundation), Tokyo: Chuokoron Shinsho. Hayashi, Yu¯jiro¯ and Yamaoka Yoshinori (1993) Firansoropı¯ to shakai (Philanthropy and Society). Tokyo: Daiyamondosha. Japan Center for International Exchange (JCIE), 1989. Japan Center for International Exchange, 1995. Kennan, George F. (1951) ‘America and the Russian Future’, Foreign Affairs, 29, 1–4 (1950–51), p. 351. Kennan, George F. (1984a) American Diplomacy, Chicago, University of Chicago Press. Kennan, George F. (1984b) The Fateful Alliance: France, Russia and the Coming of World War I, New York, Pantheon. London, Nancy R. (1991) Japanese Corporate Philanthropy, New York, Oxford University Press. Maekawa, Reiko (1997) ‘The Allied Occupation, The Cold War, and American Philanthropy: The Rockefeller Foundation in Postwar Japan’, in Hewa, Soma and Philo Hove, (eds), Philanthropy and Cultural Context, Landham, MD, University Press of America. Maekawa, Reiko (2000) ‘Philanthropy and politics at the Crossroads: John D. Rockefeller 3rd’s Japanese Experience’, The Integrated Human Studies, # 7, pp. 67–82, Kyoto, University of Kyoto (a paper presented at the Annual Conference of ARNOVA, November 4, 1999, Washington DC).

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Marcus, George E. with Peter Dobkin Hall, (1992) Lives in Trust: The Fortunes of Dynastic Families in Late Twentieth Century America, Boulder, CO, Westview Press Matsumoto, Shigeharu, (as compiled by Hiroko Kako) (1992) Waga kokoro no jijoden, (The Autobiography of My Heart), Tokyo, International House of Japan. Nagai, Michio (ed.) (1990) Tsuiso¯ Matsumoto Shigeharu, (A Remembrance of Matsumoto Shigeharu), Tokyo, International House of Japan. Ninkovich, Frank (1984) ‘The Rockefeller Foundation, China, and Cultural Change’, The Journal of American History, vol. 70, no. 4, pp. 799–820. Pekkanen, Robert (2000) ‘Japan’s New Politics: The Case of the NPO Law’, Journal of Japanese Studies, 26, 1, pp. 111–148. Perry, John Curtis (1984) ‘Private Philanthropy and Foreign Affairs: The Case of John D. Rockefeller 3rd and Japan’, Asian Perspectives, 8, 2, pp. 268–284. Reischauer, Edwin O. (1982) Japan Society 1907–1982: 75 Years of Partnership Across the Pacific, New York, The Japan Society. Rockefeller, John D. 3rd (1951) ‘United States–Japan Cultural Relations: Report to Ambassador Dulles’, Rockefeller Archive Center, (files of JDR 3rd), R.G. 5, Series 1, box 14, Dulles report folder. Rockefeller, John D. 3rd (1953) ‘Objective and Focus of My Asian Interests’, Rockefeller Family Archive, R.G. 5, (JDR 3rd papers), Series 1, box 35, folder 32. Rockefeller, John D. 3rd (1971) ‘The Challenge of the Quality of Life’, a speech delivered in Tokyo at International House of Japan, May 14, 1971. Rockefeller Archive Center, R.G. 5 (papers of JDR 3rd), Series 3, box 95, folder 776. Rockefeller, John D. 3rd (1973) The Second American Revolution, New York, Harper and Row. Rockefeller, John D. 3rd and Shigeharu Matsumoto (1976) ‘Dialogues on Cultural Exchange (a series of 15)’, Mainichi Daily News, Tokyo. Yamamoto, Tadashi, with Hiroshi Peter Kamura and Hideko Katsumata (1991) International Philanthropy Project of the Japan Center for International Exchange (JCIE), JCIE, Tokyo. Yamamoto, Tadashi and Takayoshi Amenomori (1989) Japanese Private Philanthropy in an Interdependent World, JCIE Papers, Tokyo. Yamamoto, Tadashi (1978) Philanthropy in Japan, Tokyo, Japan Center for International Exchange.

Background note The Rockefeller Archive Center has been the source of an enormous amount of materials that has been central to this research. A number of sources, not directly cited here have been most useful, including the Rockefeller Foundation History, volumes 1 and 12; the papers of JDR 3rd; the papers of the Rockefeller Brothers Fund, and the Laura Spelman Rockefeller Memorial Fund; as well as those of International House of Japan, JCIE, the Japan Society, the Social Science Research Council, the Intellectual Interchange Program, and the Institute for Pacific Relations. Full citations are contained in the footnotes of this chapter for works cited. Many members of the RAC staff have been enormously helpful in our research particularly Darwin Stapleton, Director, Ken Rose, Assistant to the Director, and archivists Thomas Rosenbaum and Michele Hiltzik. The Rockefeller Archive


39

Center, Pocantico Hills, Sleepy Hollow, New York can be reached at online ([email protected]). Victoria Bestor’s research for this paper was made possible by a Fulbright Senior Research Fellowship during 1997–98 and two subsequent travel grants from the Rockefeller Archive Center, during 1998 and 1999. This chapter and other related work will be part of a book, tentatively titled The Rockefeller Legacy in Japan: Philanthropy, Social Responsibility, and the Evolving US–Japan Relationship. Reiko Maekawa’s work has also been supported by a travel grant from the Rockefeller Archive Center, during 1994.

3

The voluntary response to the Hanshin Awaji earthquake A trigger for the development of the voluntary and non-profit sector in Japan Makoto Imada

Introduction An earthquake of the magnitude of 7.2 took place on 17 January 1995 on Awaji Island. This earthquake, now known as the Hanshin Awaji 1 earthquake, killed more than 6,430 people. Over 100,000 houses and buildings were destroyed and a further 500,000 were damaged. Physical infrastructure, such as the water supply, electricity, gas, railways and roads, were heavily damaged. The city of Kobe was most profoundly affected by this earthquake and became the focus for much of the response to it. Despite the scale of this tragedy, this earthquake also had a great positive impact on Japanese society. It demonstrated the potential and actual significance of the voluntary and non-profit sector for Japanese society. Because local government offices were destroyed, and many local government officials were also victims of the Earthquake, local government could not provide enough services to rescue the victims. Many victims were therefore rescued and taken care of by neighbourhood residents and by volunteers from all over Japan. This voluntary effort made the Japanese people as a whole aware of the importance of community activities and voluntary action. I want to introduce and analyse voluntary non-profit organizations active in the Hanshin Awaji area hit by the earthquake and analyse the impact that these organizations had on Japanese society. I will also point out some future difficulties foreseen and propose some policies and action plans to meet these.

Citizens’ voluntary action before the earthquake Sometimes the volunteer activities after the earthquake are referred to as a ‘volunteer revolution’ that took place in Japan. However, this is to overstate the case. Volunteering, along with the citizens’ movement and philanthropy, probably began in the late 1980s. At this earlier time, many volunteer activities were developing in Japan, in various fields, such as care for the elderly and handicapped, community development, international coopera-

Voluntary response to the Hanshin Awaji earthquake

41

tion, and environment protection. The first Japan Networkers Conference (JNC) was held in 1989. This was the first nationwide conference of citizens’ organizations endeavouring to ‘make a difference’ through volunteer activity. Moreover, in the late 1980s, the corporate citizenship movement became more prominent. Before then, Japanese business leaders were usually reluctant to have contact with community leaders or consumers. However, after the Plaza Accord of 1985, which brought a rapid appreciation of the Yen, many Japanese companies constructed factories in the USA. Through contact with community leaders and volunteers in America, Japanese business leaders became interested in the concept of corporate citizenship. They believed that the strength of American society was rooted in its ‘civil society’ and began to feel that this was lacking from Japanese social structure. In September 1988, Keidanren (the Federation of Economic Organizations) sent a study team to America to study corporate citizenship. In April 1990, a ‘One Percent Club’ was established within the Keidanren. This is a voluntary association composed both of companies donating 1 per cent of their earnings, and of individuals who donate 1 per cent of their disposable income or time, for the benefit of society. This club was taken directly from the Percent Clubs movement in America. As of April 2001, individual membership in this club, mainly executives of big businesses, stood at 1,475, while corporate membership stood at 276 companies. Its secretariat acts as a clearinghouse to provide information on citizens and voluntary organizations that might be suitable recipients for donations. In Japan, this task is rather difficult, because most of these organizations do not have incorporated status and there is no registration system for them. However the 1998 Non-Profit Organizations (NPO) law, which has enabled small voluntary organizations to be incorporated, may improve this situation. Other recent developments have also taken place. In November 1990, for example, Osaka Chamber of Commerce and Industry published a research report on community foundations in America. One year later, the Osaka Community Foundation was established, as an initiative of the Chamber of Commerce and Industry in Osaka. Thus 1990 is often called ‘the first year of Japanese philanthropy’. I argue, however, that we should rather call it the ‘year of philanthropy renaissance’, because Japan had remarkable examples of philanthropy as long ago as the early twentieth century (see Chapter 2). The early 1990s saw other significant examples of the burgeoning voluntary and non-profit sector in Japan: .

in 1993, the Philanthropy Link-Up Forum was launched in Osaka. This Forum organizes meeting of corporate staff in charge of corporate citizenship every two months, to share information and ideas;

42 .

.

.

.

Makoto Imada in 1993, also, scholars and practitioners of grant making foundations in Osaka founded the NPO Research Forum – this was the first research network on non-profit organizations (NPOs) in Japan; in 1994 NIRA (the National Institute for Research and Advancement) published a research report on the infrastructure of NPO activities, and proposed the enactment of a new law to give corporate status to grassroots citizens’ groups as well as tax benefits for them; in November 1994, the Coalition for Legislation to support Citizens’ Organizations (C’s) was established with the intention of achieving legal and tax benefits for citizens’ organizations. C’s is generally agreed to be the first lobbying agency for citizens’ organizations in Japan. The first objective was realized as the ‘Law to Promote Specified Nonprofit Activities’ or NPO Law, was enacted in 1998, after the earthquake and owing to the efforts of C’s; and in November 1996, the Japan NPO Center was established after the earthquake. This was the realization of the infrastructure support organization recommended by the NIRA report (above).

The earthquake: rescue and relief activities by volunteers and voluntary organizations Much voluntary activity was thus taking place before the earthquake. However, this tragedy brought it to the attention of society as a whole. After the earthquake, more than one million volunteers came to Kobe and to other victim areas, in order to help. Most of them did not have any experience of disaster relief. Although there were some volunteer bureaus in Kobe and other cities hit by the earthquake, most of the offices were destroyed and coordinators themselves were often victims. Hence, it was urgent to establish new volunteer coordination bodies. This coordination came from several sources. Experienced NGOs In the early stage of rescue and relief, action from Japanese NPOs having experience abroad was important. Among them were: AMDA JAPAN (Association of Medical Doctors for Asia, Japan), CYR (Caring for Young Refugee), SVA (So¯to¯shu¯ Volunteer Association) and Doctors Without Borders Japan. The Peace Boat brought container houses by ship to Nagata Ward in Kobe City, which had been burnt out by the fires that followed the earthquake. It also printed and distributed a hand written information paper (‘Daily Needs’), which was very important when newspapers were not available. While most of these NPOs finished their activities in a few months, SVA staff stayed in Kobe until April 1997. They helped the establishment of new voluntary organizations in Nagata Ward. These are small but innovative


43

and effective organizations. They include: Harukazekai, a grass-roots volunteer group serving community residents; Himawari no kai, a voluntary organization providing literacy classes, and Machi Communication, a community development organization. The Citizens’ Group to encourage and support the citizens who have suffered from the Great Hanshin/Awaji earthquake This group, with such a long and cumbersome name, was an ad hoc consortium composed of local voluntary organizations – the Osaka Voluntary Action Association, Osaka YMCA, Keidanren One Percent Club and the Osaka Industrial Association. This Citizens’ Group organized a volunteer action coordination centre. In this coalition, Osaka Voluntary Action Association, which had more than thirty years’ experience of volunteer coordination, took the lead. In doing this its previous links to corporate philanthropy were vital. This group linked together volunteers from all over Japan to meet the various needs in a wide area affected by the earthquake After over 400 days of coordinating activity, this group ended its work in February 1996. The volunteer network of citizens and labour union In April 1995, Rengo¯, one of the national centres of labour unions, in collaboration with Sawayaka Welfare Foundation,2 established a network to support volunteer groups providing care services to those people made homeless by the earthquake and now living in prefabricated houses. This network supported seven groups active in Kobe and other cities. Although the network was closed in April 1997, some groups it supported are still active, including the Nishinomiya Mutual Help Network (Nishinomita City), the Mutual Help Center (Suma Ward, Kobe City), the Happy Volunteer (Nada Ward, Kobe City), and Higashi Nada Mutual Help Center (Higashi Nada Ward, Kobe City). Council of community based NGOs In addition to support from existing organizations from outside the region affected by the earthquake, many volunteer groups were also newly born in the devastated area. These organizations established their own council and more than one hundred groups joined it. It became known as the Council of Community based NGOs. Members included Kobe Support Center for Foreigners, the NGO Cooperation Center, and the Kobe Empowerment Center.

44

Makoto Imada

From disaster relief to daily activities As the immediate phase of the earthquake passed, NPOs found new tasks in supporting those affected by this tragedy. Those who had lost their homes, for example, needed help to find somewhere to live. Immediately after the earthquake, over 200,000 people lived in refugee camps. These camps were closed in August 1995 and most of the refugees moved to prefabricated houses offered by the local government. Many volunteer groups helped to support and care for these people as they moved. These volunteer groups transformed themselves into innovative voluntary NPOs and are now still active in promoting civil society across Japan. In the directory of voluntary organizations edited by Kobe Empowerment Center, 437 organizations are currently listed. Most of them provide human services to the elderly or to handicapped people – though they are active in other fields also. Let me introduce some of these innovative organizations. Local NPO centers In order to sustain this growing voluntary sector in Japan, it is vital to develop and support infrastructure organizations for the sector (Osborne 2000). One example of such an organization is the Community Support Center Kobe (CS Kobe). Junko Nakamura established this in October 1996. She had been the leader of Higashi Nada Mutual Help Center. CS Kobe continues to support the incubation of NPOs by local residents, provides advice for NPOs in the community, and offers training courses for NPO executives and staff. Other community based support centres active in the area can be found in Nishinomiya, Takarazuka, Itami and Amagasaki. However, there are very few to be found elsewhere in Japan. Finally, there are also support centres that focus on the needs of special groups. These include the NGO Support Network for Foreigners and the Center for Handicapped People in the Victim Area. Community development organizations After the earthquake, residents and tenants set up community development organizations. They cooperated together to build new communities. An example of these is CDC Kobe Corporation (Hyo¯go¯ Ward, Kobe). CDC is named after the Community Development Corporation in America. However its function is different. It is not able to provide affordable housing, as American CDCs do. Rather, it provides a security system service for the residents. Another community development corporation is Manokko Corporation (Mano district, Nagata Ward, Kobe). It runs a collective home for elderly earthquake victims and also provides community care services. A final example is Machi Communication. This is a community development


45

organization that supports and coordinates the residents of Nagata Ward, one of the areas most heavily damaged by the earthquake. It focuses on helping residents to develop community rebuilding plans. Community FM radio station Many foreigners live in Kobe – and many suffered in the earthquake. A particular problem for these people was their isolation in the community. This led to the establishment of a community FM radio station using eight languages, as one way to combat this isolation. Research and advocacy activities Research and advocacy are very important for the NPO sector in Japan. After the earthquake, Kobe City Authority proposed a Kobe City Restoration Plan, which would include not only urban planning but also plans of medical care, social welfare, education, cultural activities, international exchange and many other things. However, this plan was severely criticized by many citizens and groups, because it was made without the participation of local citizens. Recognizing the importance of such participation, a local community group of professionals, including NPO leaders, urban planners, journalists, doctors, and nurses established an ad hoc research project team, to make a community rehabilitation plan focused on community needs. In August 1998, three and a half years after the earthquake, this project team published its ‘Alternative Rebuilding Plan Conceived by Citizens’. Key concepts in this plan are an environmentally conscious way of living, the importance of a multicultural society and pluralism, and the need to build a civil society. This group is now considering how to extend this community focused planning process to Japan as a whole.

The role of local government in supporting the NPO sector Since the enactment of the 1998 NPO law, local government in many areas has begun to employ policies to support NPOs. Some have even established their own NPO support centres. Hyo¯go¯ Prefecture, the region in which the earthquake occurred, has stipulated a by-law to enhance voluntary action in the Prefecture. It is planning to establish an institution to support voluntary action. This institution will provide infrastructure for local voluntary groups, as discussed above. It will also develop research about the sector. Kobe itself is finding it hard to recover from the earthquake, and is further handicapped by the current economic depression. The unemployment rate is higher than average in Japan. In order to try and create job opportunities, therefore, Hyo¯go¯ Prefecture is trying to enhance community

46

Makoto Imada

businesses in Kobe and to encourage NPOs to launch such businesses. However, the origin of the community business concept was in Europe and it is necessary to modify it for Japanese society. Hyo¯go¯ Prefecture has therefore asked the Kobe Empowerment Center to develop a model for Japan. Through this project, which I led, we found that, while many people are eager to engage in community businesses, Japanese society lacks the necessary infrastructure to promote community business. Key needs include coordination, to match job seekers and employers; training programmes, especially in ‘social entrepreneurship’; financial subsidies from local government for start-up costs; and a micro-credit system for community business. As a result of this project, Hyo¯go¯ Prefecture began providing financial assistance to non-profit voluntary organizations trying to launch community businesses in 1999 and also provided a community business training programme. In late 2000, Hyo¯go¯ Prefecture launched a support centre for community businesses, to tackle the infrastructure issues highlighted above. Management of this centre is assigned to Community Support Center Kobe (CS Kobe). This centre is discussed further in Chapter 12 of this volume. Community businesses are a rather new concept in Japan and, at the time of writing, Hyo¯go¯ Prefecture is the only local authority to provide a budget for them. However, it is likely that these organizations will grow significantly in the near future. Finally, in 1998, Kobe City Council set up a section to support voluntary action. This offers council-owned facilities, currently not in use, to the NPO sector. These include old elementary school buildings and public halls.

Future prospects and challenges Much has been achieved in the development of the NPO sector in Japan since 1995. However, there is still much to do and there are various obstacles to the growth of the NPO sector in Japan. Let me conclude by highlighting these, drawing on the experiences of the Hanshin/Awaji area. Lack of funds Immediately after the earthquake, the Nippon Foundation reacted very quickly and supported many emergency relief volunteer activities. In June 1996, the Nippon Foundation established a temporary special fund to support community restoration activities for three years. This was the Hanshin/Awaji Community Fund.3 Other such initiatives included the Hanshin/Awaji Renaissance (HAR) Fund, the Kobe Art and Culture Restoration Fund, and the Coop Twilight Volunteer Foundation. Although useful, once these temporary funds were exhausted, it became very difficult for NPOs to raise further funds. Other, more permanent sources of funding are needed therefore – especially as there is not a strong tradition


47

of individual charitable giving in Japan. One such fund is the Citizens’ Fund Kobe (CFK), established in 1999, and incorporated under the NPO law in January 2000. This fund was conceived by Masakiyo Murai, leader of the NGO Cooperation Center, with the cooperation of many NPOs in Kobe. The Hanshin/Awaji Community Fund (HACF) provided thirty million yen to this fund at its outset, to act as an endowment fund. The CFK is planned to act as a community foundation. However, with current low interest rates, it cannot expect to yield a great deal from its endowment. Hence it has tried to raise further funds, so that it can make grants to NPOs each year. Under the current economic circumstances, however, the Fund is finding great difficulty in collecting such contributions. Business corporations in Kobe, heavily damaged by the earthquake, cannot afford donations to the Fund. In such circumstances, therefore, it is necessary to institutionalize systems to enable individual citizens to make effective donations to the Fund. It is vital, for example, to set up a tax exemption system, which is very limited in Japan, to encourage individual donations to NPOs. Shortage of human resources Needless to say, human resources are very important for NPOs. Whilst many people are willing to volunteer, many do not as yet have the skills that new NPOs need, especially in their management. After the earthquake, therefore, Hyo¯go¯ Prefecture launched an NPO Management School, with the collaboration of Community Support Centre Kobe and HACF. It is essential that many kinds of such training organizations are developed. Government support and NPOs’ independence The most effective support that local government can give the sector is finance. However, because local government is not accustomed to collaboration with this voluntary sector, it tends to be paternalistic rather than to act as an equal partner. There is also a constitutional difficulty. NPOs cannot be independent if they receive government subsidies because of Article 89 of the Constitution. This states: No pubic money or other property shall be expended or appropriated for the use, benefit or maintenance of any religious institutions or associations, or for any charitable, educational or benevolent enterprises not under the control of public authority. It is essential that we develop systems for local government to provide subsidies to the sector, whilst also safeguarding the independence of NPOs. This will almost certainly require both constitutional reform and a change of attitudes within local government.

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Makoto Imada

Networking For NPOs, networking is very important, in order to share information, learn from each other and to gain strength from collective action. However there is presently no umbrella organization or council of voluntary organizations in the Hanshin/Awaji area. Newly born organizations do not know each other and cannot cooperate. In Japan, there is a Shakai Fukushi Kyo¯gikai (Social Welfare Council) in every prefecture, city and town. It is supposed to be a coordination body of local NPOs. But, since Shakai Fukushi Kyo¯gikai are established under the older Social Welfare Service Law, they are regulated and controlled by central and local governments and have only limited independence. It is therefore rather difficult for them to act with flexibility. If the sector is to grow, it is vital to form new independent networks of NPOs, community organizations and cooperatives. Again, though, the funding of such networks remains problematic. Weak corporate citizenship Although corporate citizenship in Japan has an established history, as outlined earlier, it is not consistent across the whole of Japan. There are, of course, some business corporations or businessmen supporting voluntary organizations or volunteers. In Kobe examples include the FELISSIMO Company, the Kobe Community Development Rokko¯ Island Trust and the Kiguchi Hyo¯go¯ Community Care Fund. Greater consistency is needed across Japan.

Developing civil society Recently the NPO sector has begun to talk about the establishment or realization of civil society. However this concept and its meaning are not always clear. It is important to say that the concept of civil society has been much discussed recently in Japan. Many scholars and activists have advocated the development of civil society and many citizens have participated in civil activities – such as anti-pollution or consumer protection. However, because it has been seen as a radical and ideological concept, as the discussion in Chapter 1 made clear, it has not had widespread acceptance in Japan. In the context of the development of the NPO sector in Japan I would define civil society as ‘a society where citizens themselves decide upon and carry out their own course(s) of action’. The citizen is ‘an independent, autonomous individual who has political and social rights and obligations and who has a public consciousness’. Some Japanese commentators argue that the last decade of the twentieth century was a lost decade in Japan. It was the era of the ‘burst bubble economy’. I would argue that the last


49

decade, rather, is the beginning of a paradigmatic shift of economic structure in Japan, towards human scale sustainable communities. To realize this new paradigm, we have to realize civil society. For civil society, the five decades from 1940 to 1990 were indeed the ‘lost five decades’. In 1938, the National Mobilization Law was enacted and all physical and human resources were mobilized to undertake the war. It meant that Japan became a centralized, planned economy country. After the Second World War, Japan was supposed to become a democratic country. However, in reality, the centralized bureaucratic government system was preserved. Bureaucrats did not change themselves into public servants. Today this is still a problem and a key issue in the loss of legitimacy that government has suffered in the eyes of the Japanese people. Successive postwar Japanese governments concentrated their policies on economic growth. Tremendous economic growth was indeed realized by the ‘iron triangle’ – of politicians, government officials and big business leaders. Ordinary Japanese people were satisfied with this situation, so long as their income increased and their wellbeing was secured. This is no longer guaranteed to be the case. If Japan is to move away from the centralized government and economy that can no longer meet the challenges of a modern global society, then the development of civil society is essential.

Conclusions: the impact of voluntary action on Japanese society As argued above, the last decade of the twentieth century was the decade of the beginning of a moderate civil revolution. In the late 1980s, citizens dissatisfied with the rigid social structure governed by the ‘iron triangle’ began to act within self-organized groups, not dependent on the government. They began to form mutual help groups and volunteer groups to meet social needs. The voluntary action necessitated by the earthquake gave this activity a greater impetus and import for Japanese society. It did not create but rather accelerated the moderate civil revolution discussed above. In 1998, this movement accelerated somewhat with the enactment of the Law to Promote Specified Nonprofit Activities (NPO Law) and the Law to Support Victims of Disaster. The process of enactment of these two laws was the first experience of interactive dialogue among citizens’ lobbying groups, political parties and the government, to change society. Many volunteer groups active in the rescue and relief of earthquake victims in 1995–1997 became transformed by this law into voluntary NPOs. These organizations are the seedbed of civil society in Japan. They are still very small and fragile. They require the development of infrastructure to support them and of genuine partnership with local government. This will be difficult, but essential. However, they are playing a key role in developing civil society in Japan. They are an essential part of a future, civil, Japanese society in the twenty-first century.

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Notes 1 Hanshin is the eastern part of Hyo¯go¯ Prefecture. The largest city in the Hanshin region is Kobe. Awaji is an island located south of Kobe. ‘The Great Hanshin/ Awaji Earthquake’ is the official denomination of the earthquake. 2 Sawayaka Welfare Foundation provides information, and researches on the welfare of the aged. It also provides training courses for managers of voluntary organizations engaging in human services for the elderly. 3 The Hanshin/Awaji Community Fund (HACF) was established in May 1996, endowed through the proceeds of motorboat races held especially to generate funds for the earthquake relief efforts. The Initial fund of HACF was 800 million yen. It was closed in May 1999 having disbursed all its funds in grant aid.

Reference Osborne, S. (2000) ‘Reformulating Wolfenden? The roles and impact of Local Development Agencies in supporting voluntary and community action’, Local Government Studies, 26, 4.

Part II

The changing context of the voluntary and non-profit sector in Japan

4

The politics of regulating the non-profit sector 1

Robert Pekkanen

The Japanese regulatory framework for civil society is discussed in detail in Chapter 5. This framework is the result of political contestation. The outcome of that contestation is important, since the regulatory framework plays a powerful role in shaping the development of the non-profit sector. This chapter investigates the nature of the political struggle over regulating the non-profit sector in Japan, illuminating the actors and their interests through a detailed case study of the passage of the 1998 NPO (‘non-profit organization’) Law. On 17 January 1995, the Hanshin Awaji earthquake struck Japan with a magnitude of 7.2. The effects of this earthquake and its impact on the development of the voluntary and non-profit sector in Japan have already been outlined by Makoto Imada in Chapter 3. The present chapter explores how this voluntary response required the Japanese state to regulate both society and the voluntary and non-profit sector. It traces that curious process and what it reveals about the changes in the Japanese political landscape after 1993 – the year that the ruling Liberal Democratic Party (LDP) lost power for the first time since its formation in 1955, ushering in a new electoral system. Since 1896, civil society groups in Japan had faced one of the most antagonistic regulatory frameworks among industrialized democracies. The earthquake gave impetus to a movement to redefine state–civil society relations in Japan, and led to the promulgation in 1998 of a new Specified Non-Profit Activities Law, commonly known as the NPO Law. This NPO Law deserves our attention for two reasons. First, the NPO Law is in itself a major change in the way Japan regulates the voluntary and non-profit sector in three respects. The law will allow thousands of new such groups to participate more actively in Japanese life. Moreover, it aims to grant these groups unprecedented freedom from the heavy-handed bureaucratic supervision that has plagued voluntary and non-profit organizations (VNPOs) in a nation often characterized as ‘strong state’. Perhaps most importantly, the law legitimates a new kind of social group and, by implication, a shift in state–society power balance. The NPO Law also deserves our attention because it represents the early fruit of the important changes in Japanese electoral institutions in 1994.

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These changes in electoral institutions led to altered incentives facing political actors, which in turn helped bring about this change in the rules for civil society organizations. The NPO Law came about through an unprecedented series of MP’s Bills, legislation proposed by members of Japan’s Diet or parliament. It is customary for bureaucrats to draft most legislation in Japan’s parliamentary system. In striking contrast, all the political parties in Japan submitted or amended NPO legislation between 1995 and 1998. Bills promoting NPOs were submitted by the New Frontier Party (NFP), the Sun Party and Heisei Party, the Japan Communist Party (JCP), and by the ruling Liberal Democratic Party (LDP), working with the Social Democratic Party (SDP), Sakigake Party and the Democratic Party of Japan (DPJ). Politicians responding to new electoral incentives pointedly excluded bureaucrats from the process. Citizens’ groups participated actively in the making of the law, and their lobbying altered the law’s content. This law could herald a new politics of state–society relations. That possibility is revisited in the conclusion to this chapter. Before that, however, I provide some background on the Hanshin Awaji earthquake, which provided the impetus for this new legislation, and then discuss the political contestation behind the new regulations for non-profit organizations in Japan.

The Hanshin Awaji earthquake In the aftermath of this earthquake, as Makoto Imada has previously shown, Japan’s vertically divided administration was conspicuous by its inability to respond.2 Japan’s strong ministries jealously guard their bailiwicks, and this sectionalism can inhibit cooperation or effective action in a crisis. Government relief efforts were paralysed and jurisdictional disputes prevented effective crisis management. In striking contrast, volunteer groups moved quickly to disaster relief. Within two months, over 1.2 million volunteers had gone to the area, and a stunning $1.6 billion (160 billion yen) in donations eventually flowed to the ravaged districts.3 The magnitude of this outpouring gives the lie to conventional wisdom contention that Japan lacks a cultural tradition conducive to volunteerism. It also provides corroborating evidence that the paltry number of public interest legal persons in Japan is in large measure an artefact of the legal system, and not purely a product of Japanese cultural aversion to volunteerism or NPO activities.4 This realization demands a renewed focus on the role of the Japanese legal system in shaping the VNPO sector, and thereby highlights the importance of the NPO Law. The media quickly took up the dramatic contrast of the government’s ineptitude and the volunteers’ selfless and speedy activism. The year 1995 was celebrated as ‘The Year of the Volunteer’.5 Most of the groups were not the public interest legal persons (PIPs), which, as creatures of the supervising bureaucracies, were often hamstrung by the same kind of

The politics of regulating the sector

55

vertical divisions as the ministries themselves faced.6 Public and media pressure mounted on the government to provide legislative assistance to these volunteer groups. As a result of the regulatory straightjacket described below, most of the groups active in the relief efforts had no legal status. This meant, for example, that the volunteers were not covered by any kind of work insurance should they be injured or killed in their relief activities; they were considered to be individuals engaged in hazardous behaviour. The insurance angle was played up in many media reports, and used as a hook to demand legislative change. Hinging as it does on the legal status denied volunteer activist groups, and smacking of ungrateful treatment of the volunteers, the insurance issue resonated powerfully in the media. Reports marvelled at the fresh-faced altruists who rushed to the stricken region. This image spurred first anger at bureaucratic ineptitude, then calls for a revision of the regulation on civil society to harness the energy of the volunteers. Very early on, the media criticized the government not only for its inadequate response to the disaster, but also for failing to have the foresight to have supported volunteer groups in the years leading up to the earthquake. These calls easily blended into demands for support for a new volunteer or NPO Law. Even the initial press coverage often included demands for legislative action. In addition, it called for a more independent role for the volunteer groups, without the plague of heavy-handed government supervision. This was not a simple matter, however, and the process took three years of intense lobbying, politicking and compromise. In the end, it was not a ‘volunteer law’, but an ‘NPO Law’ that emerged.

Rewriting state–VNPO relations: the legislative tussle As discussed in Chapter 5 of this volume, the regulatory framework for VNPOs in Japan is very restrictive in many respects. The press cried out for new legislation. The legislative process leading to the passage of the NPO Law took three years. The central issues were: 1) the number and type of groups which would be covered by the law, and thus able to gain legal status; 2) tax benefits for these groups; and 3) the power of bureaucrats to supervise and sanction these groups. These issues were contested first by legislators against bureaucrats, and then by conservative parties against progressive parties (inside and later outside the coalition government). Outside actors, such as citizens’ groups, the big business peak organization (Keidanren), and labour unions also played roles. Stage 1: legislators vs. bureaucrats In the aftermath of the earthquake, the legislative wrangle began almost immediately. The first ten months saw a contest between legislators and bureaucrats over who would frame the law, ending in November with the legislators victorious. At the time, the LDP ruled in a coalition that included

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their long-time liberal opponents, the Social Democratic Party (SDP) of Japan. While the LDP held many more seats, the SDP’s Murayama held the Prime Ministership. The largest opposition party was the New Frontier Party (NFP), a conservative grouping. The political parties had an incentive to pass a law in response to the overwhelming positive media outcry and public perception of the volunteers. Bureaucrats were generally unsympathetic, but unable to oppose the law publicly for those reasons. The Economic Planning Agency led the Interagency Group that was formed on 3 February, 1995.7 The ruling coalition formed a group to spearhead study of NPOs, called the Coalition NPO Team (NPO Purojekuto Chı¯mu) 15 February. The New Frontier Party (NFP) presented a Volunteer Basic Law to the Diet on 8 March. The lines were drawn, but the struggle would continue until 1998. As befits a significant change in policy, there were many players involved: bureaucrats, party politicians and citizen lobby groups (see Table 4.1). A brief chronological overview of the main events of the political tussle behind the drafting of the NPO Law will make the later exposition of the key issues clearer. The catalysing event, the Hanshin Awaji earthquake, occurred on 17 January 1995. Within days, Chief Cabinet Secretary Igarashi declared in the Diet that the government would draft legislation to support the volunteers, including possibly favourable tax treatment and allowing volunteer groups to become PIPs.8 The Prime Minister himself stated in the Diet, ‘We must think about a system to make it easier for them [volunteers] to operate . . .’9 The ruling coalition at the time comprised the LDP, SDP and Sakigake. The three parties formed an ‘NPO Project Team’ on 15 February 1995 to investigate and propose legislation on volunteer groups. Each party fielded one Dietman to the Coalition NPO Team.10 The LDP Representative, Kumashiro¯ Akihiko, initially held a very conservative position on the law. He did not even see a strong need for an MP’s Bill (giin rippo¯).11 Yet, as discussed below, a combination of factors shifted him into a more progressive view of the NPO Law. Indeed, reviewing his testimony in the Diet in support of the NPO Law, he comes across as a fervent defender of NPOs. Sakigake’s Domoto was initially disposed to a strong NPO Law. SDP’s Goto¯ also preferred a progressive piece of legislation, representing his party’s preferences, but was not himself strongly motivated. He was later replaced by the more active Tsujimoto who was as, if not more, favourable to progressive legislation as Domoto. As a new party, Sakigake in particular looked to establish its electoral base with the NPOs, for reasons discussed in greater depth in the conclusion. Briefly, dim prospects in future single seat districts necessitated for them a strategy aiming at proportional representation (PR) seats, for which these NPOs could mobilize votes effectively. This accounts for the great attention Sakigake devoted to the NPO issue. There was a great deal of policy sympathy in Sakigake for this issue, but the importance attached


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Table 4.1 NPO law players The players Political parties Coalition NPO team

Of which: Sakigake

Their positions and role for the NPO Law From its formation in February 1995, save for a period from June– September 1996 when decisions were made at the party leadership level, the NPO Project Team was the locus of the three governing parties debate on the NPO Law. Key players were Kumashiro¯ Akihiko (LDP), Domoto Akiko (Sakigake), and Tsujimoto Kiyomi (SDP).

Position: many groups should be able to form under an NPO Law, with minimal bureaucratic supervision. A very small party in the governing coalition (13 members 1993–96), Sakigake saw NPOs as an important part of their political base. The Sakigake effort on the NPO Law was spearheaded by Domoto Akiko. Social Democratic Position: many groups should be able to form under an NPO Law, with minimal bureaucratic supervision. Party of Japan A junior partner in the LDP–SDP–Sakigake alliance, the SDP had (SDP) been the socialist opposition during the LDP’s 38 year monopoly on power (1955–93). The Hanshin earthquake occurred while SDP held the Prime Ministership, and comments in the Diet by PM Murayama and Chief Cabinet Secretary Igarashi committed the government to NPO legislation. Position: favoured heavy bureaucratic supervisory powers, opposed Liberal Democratic Party tax beneifts, and wanted most new groups to be volunteer-based. Unenthusiastic about a new law. (LDP) By far the largest party in the Diet, but short of a majority during backbenchers the coalition period with SDP and Sakigake. Most LDP members saw NPOs as threats, or as ‘anti-government’ or ‘anti-LDP’ groups. Although eventually futile, LDP backbenchers forced Kumashiro¯ to recant his liberalization in April 1996. LDP: Kumashiro¯ Position: initially very conservative, becomes moderate-progressive Akihiko by end of 1995. LDP Leadership: Position: moderate. Mostly interested in brokering a compromise, as Kato¯ Koichi and these two support the current governing coalition. Yamazaki Taku Position: favoured heavy bureaucratic supervisory powers, opposed LDP: PARC tax benefits, and wanted most new groups to be volunteer-based. Commerce and Industry Division Unenthusiastic about a new law. Governing Parties Not interested in the NPO Law per se, so much as in maintaining the coalition. To that end, brokered compromises between LDP and the Coordinating coalition partners. The latter was both much more interested in Council passing an NPO Law and in a liberal law. LDP House of Position: conservative. Dislike term ‘citizens’ groups’. Also Councillors concerned with being taken for granted by House of Representatives (the lower and more powerful house). Democratic Party Position: similar to SDP and Sakigake. of Japan (DPJ) A liberal party born before the 1996 elections. By 1998, the second largest party. In early 1997, DPJ received liberalizing revisions of the Governing Parties draft, in return for legislative support on other issues.

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The players

Their positions and role for the NPO Law

New Frontier Party (NFP)

Position: moderate. NFP was the largest opposition party until it splintered into several smaller parties in 1997. Submitted Dietman’s Legislation on a new NPO Law to the Diet several times. NFP was also marginalized in the NPO Law making process. Rather than being an important policy plank for NFP, the interest in the NPO Law comes mostly from an individual Dietman, Kawamura Takashi. Japan Communist Position: wanted almost any group to be able to form, with tax Party (JCP) benefits and free from bureaucratic supervision. A small opposition party. Sent to the Diet repeatedly draft law to establish a new category of Non-Profit Legal Persons. However, JCP was marginalized in the NPO Law-making process. Liberal Party One of the splinter groups formed after the breakup of the NFP. Mostly concerned with eliminating restrictions on political activities of NPOs. Ko¯mei One of the splinter groups formed after the breakup of the NFP. Ko¯mei is associated with So¯ka Gakkai, a vast lay Buddhist organization. Komei was mostly concerned with eliminating restrictions on religious activities of NPOs. Bureaucracy Economic Planning Agency (EPA)

Position: limited number of groups should qualify under an NPO Law, primarily volunteer groups. No tax benefits should be given. Bureaucratic supervision should be maintained. Took the early lead on NPO legislation among the bureaucracy, but EPA’s influence was dealt a severe blow by shelving of its November 1995 report, and the decision by the parties to pursue the NPO Law Dietman’s Legislation. Interagency Group Position: similar to EPA’s which dominated the IAG. Published an ‘Related Ministries interim report in November, 1995. Soon thereafter this committee Interagency Group was ousted from the NPO Law-making process by the actions of for the Volunteer legislators and the Chief Cabinet Secretary Igarashi. Issue’ Prefectural Varied from quite liberal (Kanagawa and Ko¯chi) to conservative. governments Mostly passive, waiting for National Legislature to pass a law. MOF Position: very conservative. However, mostly concerned to see that any new groups that are formed are not accorded any tax privileges. MOF was able to prevent any tax privileges being accorded. Interest groups Citizens’ Groups: C’s Keidanren Media Media: Nikkei Shimbun Media: Asahi Shimbun Media: other

Position: Ideally, wanted as many groups to be able to form as possible, with tax benefits, and free from bureaucratic supervision. Spearheaded lobbying efforts of citizens’ groups. Position: liberal. Social Affairs Bureau of Keidanren actively pushed for a liberal law.

Position: liberal. Pushed for an NPO Law as part of administrative reform. Position: very liberal. Pushed for an NPO Law as part of strengthening citizen participation. Position: liberal.


59

to it also shows the party responding to the new incentives of the altered electoral system. Reflecting this, their second policy booklet was devoted entirely to the NPO Law issue.12 Promotion of NPOs (and their international counterparts, NGOs) also fit with SDP policy. Even with Kumashiro¯, the Coalition NPO Team represented at the least a rival, and at worst a peril, to the bureaucratic stewardship of the NPO Law process. This touched off a contest between bureaucrats and legislators over the future direction of the NPO Law. The rivalry continued until November 1995, when the bureaucrats were routed and to a great extent banished from the NPO Law-making process. In February, March and April, the Governing Parties, New Frontier Party, and the Interagency Group (IAG – 18 bureaucratic ministries and agencies, led by the Economic Planning Agency or EPA) respectively held public hearings about an NPO Law. On 7 November 1995, the New Frontier Party submitted to the Diet their Draft Law regarding the Granting of Legal Person Status to Groups Performing Citizens Public Interest Activities. Immediately, the bureaucrats responded. The following day, the IAG released their interim report to the Chief Cabinet Secretary. The Coalition NPO Team recognized a threat when they saw one, and quickly persuaded Igarashi to shelve the report and declare that the NPO Law would be an MP’s Bill.13 Even the big business peak organization, the Federation of Economic Organizations (Keidanren), lobbied for the law to be an MP’s Bill.14 This was clearly a message to the EPA to keep their hands off. The bureaucrats may have been holding public hearings with the citizens’ groups, but apparently, they were not listening. All of the citizens’ groups that prepared NPO Draft Laws themselves had certain consistencies in their preferred law.15 Yet, the EPA plan disappointed on almost every count. The four main points of the interim report were that: the NPO Law would be a Special Law attached to the Civil Code; the groups targeted by the law would be those which ‘engaged mainly in volunteer activities . . . and contributed to the public interest’; the prefectural governments would give permission for the groups to form (‘ninka’), supervise the groups, and be empowered to dissolve them (groups active in two or more prefectures would be considered separately); and tax treatment would be considered separately from legal status. Essentially, this was a proposal for the status quo. Stage 2: legislative politics: SDP and Sakigake vs. LDP vs. PARC With the shelving of the EPA-led 18 Ministry and Agency interim report, the bureaucrats had been handed a decisive defeat. This is quite unusual in Japan, which most analysts describe as being dominated by the bureaucracy. It did not mean, however, that the EPA gave up on trying to influence the eventual legislation. The next several weeks saw a renewal of struggle over control of writing the law – this time among the coalition’s junior

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partners and groups within the LDP. It ended when the NPO Coalition Team produced a draft law. At this stage, the bureaucrats had to work indirectly, via the LDP’s Policy Affairs Research Committee (PARC). The Coalition NPO Team was beset by significant policy differences. The vision of the NPO Law held by the three parties was different in several important respects. Most important was government supervision. The LDP assumed the need for bureaucratic supervision of the new NPOs as a matter of course. In contrast, the SDP and Sakigake favoured the free formation and operation of NPOs.16 The LDP vision turned on the bureaucratic licensing of NPOs, followed by an obligation for the NPOs to file yearly reports to the bureaucrats, and with the bureaucrats retaining the right to revoke the permits for the NPOs’ operations. The SDP favoured a ‘notification’ (todokede, meaning automatic approval, see Pekkanen and Simon Table 5.1 this volume) system for gaining legal person status, minimal supervision by bureaucrats, and with the power for dissolution of the NPOs being held by the courts.17 These visions were clearly opposed. However, some time after the shelving of the 18 Ministry and Agency plan, the LDP Project Team softened its position as a result of high-level party leaders pushing forward policy coordination among the three parties of the governing coalition. Now, the NPO Law rested firmly in the hands of the Coalition NPO Team. The relevant divisions became those among the three coalition partners. The visions of Sakigake and SDP on the one hand, and the LDP Coalition NPO Team on the other, still diverged considerably. Yet, an agreement, Citizens Activities Promotion Law (provisional name) Draft Law Outline, was worked out and signed on 14 December 1995. The LDP’s policy zig zag – to the left By signing these documents, the LDP had made a significant liberalization in its position. The Citizens Activities Promotion Law (provisional name) Draft Law Outline as a document bears many similarities to the eventual NPO Draft Law submitted to the Diet by the three parties more than a year later, and to the NPO Law which passed in March 1998. For example, it includes the phrase ‘beginning with volunteers’ and a list of example categories for citizens’ groups, and excludes political organizations. It also requires that they ‘contribute to the public interest’ and that membership be open to all. It is also a very progressive document. There were at least three important differences from the previous system. First, many new groups, including those in the old legal blind spot, would be allowed to form. The second important difference was the limiting of the screening power the bureaucrats had held under the Civil Code. Technically, three items were left pending from the agreement. These were the definition of ‘public interest’ and of ‘volunteer’ and the issue of ‘ninsho’ or ‘permission’, which boiled down to what would be the gatekeeping standard. These items were


61

resolved formally in a document issued 1 February 1996, the Governing Parties NPO Project Confirmed Matters.18 The 1 February document gave a liberal interpretation of ninsho that thereby curtailed the screening powers of the bureaucrats. The third improvement was a provision for favourable tax treatment of contributions for groups which ‘notably contribute to the public interest’.19 Moreover, the Coalition NPO Team announced on 8 February their intention to have a draft law ready by 15 March. In addition the ‘Three Parties Policy Agreement’ of 8 January 1996 pledged to ‘complete a draft [law] quickly, and aim at its passage as an MP’s Bill in the next Ordinary Diet Session’.20 Taken together, these agreements represent significant concessions by the LDP from their earlier positions. This major shift is explained by the changes in Kumashiro¯’s position. Kumashiro¯ was the sole LDP representative to the NPO Project. He was fairly well left alone to do his work with the other coalition members of the team. The December and February agreements represent his changed stance. What could explain this? In essence, Kumashiro¯ was successfully lobbied by the citizens’ groups through a skilful and coordinated effort.21 Matsubara Akira, head of the citizens’ group C’s, spearheaded the lobbying effort. He describes Kumashiro¯’s metamorphosis in this way: Kumashiro¯ used to be fairly anti-NPO, or at least not have a very sympathetic understanding. He used to say that the government had the responsibility to supervise (kantoku). It took a long time to convince him. It went in stages. At the first stage, he used to think that these kinds of group were all anti-government. At stage two, he saw how volunteers were active in Kobe, Rwanda, etc., then changed his mind so that he thought that there were good groups and bad groups. He still felt that bad groups must be filtered by the government. At stage three, he realized that the government can’t filter. The most important aspect in lobbying Kumashiro¯ was that AMDA [Asian Medical Doctors Association, a kind of Asian version of Doctors Without Frontiers], which is a very active and influential NPO, is based in Okayama. It is the NPO pride of Okayama. AMDA also has great relations with MOFA. The most important thing was votes. Also, we showed him that groups which were pillars of the LDP support, were also supportive of changes in the law. For example, we showed him how Keidanren [the Federation of Economic Organizations] supported it. We also showed him that Seinen Kaigisho (Youth Meeting Place) which is a regional big business group, also supported the NPO plan. C’s is very close to Keidanren. Keidanren always moved indirectly. They moved through C’s. I would speak at their conferences, or introduce them to the Dietmen. Keidanren has a section of people pushing for NPOs, almost a guerilla outfit inside Keidanren.22

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Matsubara identifies as important: (1) the votes from a prominent group in his constituency; (2) presentation of NPOs as important social actors; and (3) showing that groups that support LDP also support the legal change. It may seem surprising that Keidanren – a big business peak association, after all – lobbied for the NPO Law. In fact, the ‘guerilla outfit’ identified above is the Social Contribution Group of the Social Affairs Bureau. Keidanren’s interest in NPOs grew out of the late 1980s. With increased Japanese direct investment in the USA, Japanese corporations were often faced with requests for donations or other support from American NGOs. The corporations were often not sure at first how to deal with these kinds of group, which were not nearly so active in Japan. Keidanren set up a study group on the NGOs, then formed the 1 Percent Club (for donations) in early 1990. Keidanren went on to found its Social Contribution Promotion Committee in May 1990. Then, in April 1991, the Social Contribution Group was formed. In the aftermath of the Hanshin Awaji earthquake, it was this group that was active in coordinating relief donations of money and material from corporations, and channelling them to NPO and volunteer groups. The group, somewhat isolated and working closely with NGOs, became an advocate for the views of the NGOs within Keidanren. They also had wide scope for this advocacy, as they were the acknowledged experts on a subject that had hitherto attracted little attention within Keidanren. While the claims of the group, along the lines of ‘NPOs are necessary in order to change Japanese society’, may seem at first blush out of character with Keidanren, in fact, they bear witness to the changes in Japanese society that made change in the laws regulating NPOs inevitable.23 Kumashiro¯ may also have been influenced by Kato¯ Koichi’s views about providing more volunteers for welfare services. In addition, Kumashiro¯ may have been motivated individually to concede in order to get a law bearing his name! He had certainly already invested a great deal of time on the Coalition NPO Team. In sum, though, the LDP’s dramatic policy change of winter 1995–96 reflects Kumashiro¯’s changed views more than anything else. An alternative explanation of this policy concession might be the fact that the New Frontier Party’s draft NPO law, Draft Law regarding the Granting of Legal Person Status to Groups Performing Citizens Public Interest Activities, had already been submitted to the Diet on 7 November 1995, and spurred an LDP desire to come to agreement even at a high cost. A third possibility is the LDP desire to preserve the coalition by conceding on an important issue to their allies. However, none of these alternative explanations can solve the puzzle of why the LDP backtracked so drastically in spring 1996. Especially in the light of Kumashiro¯’s testimony in the Diet in May and June 1996, a far more plausible explanation lies in Kumashiro¯’s changed views of NPOs. Kumashiro¯ came around to a more liberal position on the NPO Law. However, many other members of the LDP did not share his opinion.


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The LDP’s policy zig zag – to the right When, in February 1996, Kumashiro¯ took over the chairmanship of the Coalition NPO Team, he still faced divided opinions and ambivalence about the NPO Law within the LDP. As Kumashiro¯ himself puts it, ‘Other LDP Dietmen criticized me, saying, your law would even let Greenpeace form in Japan! What kind of a law is that? Greenpeace is an antigovernmental group!’24 Because of this resistance, the LDP took some time in preparing revisions to Sakigake’s draft law, eventually presenting them on 11 April 1996. And, the revisions took a conservative bent. The LDP proposed revisions from the December 1995 agreement that significantly watered down the progressive nature of that draft. While more progressive than the EPA plan of November 1995, the LDP revisions represented a very conservative approach to the LDP Law. The five main revisions were to remove any mention of favourable tax treatment, permit investigations of the NPOs at any time, strengthen central bureaucratic jurisdiction over the NPOs, limit political activities of the NPOs and tie the definition of public interest to a strict non-profit definition prohibiting revenues above costs.25 By in essence overruling Kumashiro¯’s December 1995 agreement, the LDP had moved back towards its earlier position. These revisions proved unacceptable to Sakigake and SDP, and a stalemate ensued. Stage 3: electoral politics The rise of the Democratic Party of Japan Policy preferences among the parties still diverged considerably. But, if the LDP had zagged back towards a more conservative law, it was to zig again towards a more liberal NPO Law. The reasons have everything to do with coalition and electoral politics. On 11 April 1996, the Coalition NPO Team convened again and the SDP and Sakigake representatives expressed their rejection of the LDP amendments. They had come to deadlock and there seemed no way for the Coalition NPO Team alone to solve it. After a 24 May meeting, the Governing Parties Coordination Council decided not to submit an NPO Draft Law to the Diet during the brief remainder of the session. The Nikkei Shimbun roundly criticized this decision on 27 May 1996, under the headline ‘Irresponsible Politics Exposed by the NPO Draft Law’. On 31 May the New Frontier Party submitted to the Diet Draft Law to Amend One Part of Legal Person Tax Law. LDP Secretary General Kato¯ Koichi had been active before in attempting to push forward an agreement on the NPO Law. Besides his interest in increasing the supply of volunteers for welfare services, Kato was also a prominent proponent of the LDP–SDP– Sakigake alliance. He headed the LDP’s Policy Coordination Council.

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In addition, he was the chairman of the LDP’s Kobe Recovery Headquarters. It is difficult to say which of these factors pushed the Coordination Council to act, but some analysts give most weight to the media coverage. Media coverage had been extensive and heavily in favour of a progressive NPO Law since the Hanshin earthquake. Nor had the coverage wilted away after 1995. In 1995–96, Asahi Shimbun had 4071 articles mentioning volunteers, while Yomiuri Shimbun had 1165, Mainichi Shimbun 4074, and Sankei Shimbun 766.26 While it is not possible to review the coverage in its entirety, a brief survey will be attempted here. Perhaps unlikely allies, the conservative Nikkei Shimbun, sometimes called Japan’s Wall Street Journal, and the liberal Asahi Shimbun had been the most aggressive in calling for a progressive NPO Law. At this point, the Governing Parties Coordination Council decided to take over the debate on the NPO Draft Law from the Project Team to resolve the stalemate by kicking it up to the top decision-making level of the coalition. However, this was a mixed blessing initially, as the Coordination Council still faced a backlog of work and decided not to submit an NPO Draft Law during the Diet session (which ended 19 June). The LDP’s policy zig zag – to the left, again During the summer months, it became clear that the Diet would be dissolved in the fall and elections called. In fact, the Diet was dissolved on its opening day, 27 September 1996. The Coordination Council was busy with the discussion of the break up of the Ministry of Finance, the Aged Care Law, and the Okinawa US bases issue, and did not discuss the NPO Law until September. When the Coordination Council turned its attention back to the NPO Law, however, there were dramatic results. Quickly, the LDP reversed its earlier objections, and broadly accepted SDP and Sakigake’s position. With some resistance, the LDP conceded on definitions of ‘public-interest’ and removing limitation on political activities of the new NPOs. The final sticking point for the LDP was a definition of the new NPOs. The LDP wanted to limit the new groups to those that would provide service at cost (i.e. no profit margin in service provision). The reasons for this will be discussed below. With the rise of the DPJ, however, Sakigake stuck to its guns, and this last point, too, was soon conceded. On 19 September 1996, the Coordination Council issued Agreement on the Citizens Activities Promotion Draft Law (NPO Draft Law). As the Sakigake news release of the same date rejoices, ‘The ruling parties have reached an Agreement, in a form in which our party’s claims have been accepted in every aspect.’27 Why did the LDP concede so much to SDP and Sakigake? The reasons are for policy, coalition, and election. One consideration was the Aged Care Law. In order to meet the growing demands on state resources this law


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created, the LDP wanted to provide a larger number of low-cost volunteers. The LDP was accustomed to viewing Welfare Legal Persons in this manner as cheap subcontractors for welfare services. Kato¯ Koichi was among those legislators most concerned with welfare (zoku giin) who saw that the new NPO Law might usefully increase the number of welfare volunteers.28 While this reason is of less than central importance, Kato¯ Koichi had other reasons for pushing forward an agreement with SDP and Sakigake. As mentioned above, Kato¯ was a central proponent of the LDP–SDP–Sakigake coalition. This coalition had been tarred from the start with calls that it was an ‘unholy alliance’, and a cynical grab for power. Kato¯ was determined to get one major new policy initiative agreed upon by the coalition before the next election was called. This would also serve as an incentive for SDP and Sakigake to rejoin a post-election coalition with the LDP, which would need coalition help in the House of Councillors, at the least. The effort to preserve the coalition was central to the LDP’s compromise. In addition, a third set of reasons had to do with the rise of the Democratic Party of Japan (DPJ). In a tried-and-true tradition of the LDP, a major policy initiative of the opposition party was co-opted. The DPJ was a staunch proponent of a new NPO Law. Indeed, after Domoto Akiko, the most active advocate of the NPO Law in Sakigake was Yanase Susumu, who left Sakigake for DPJ.29 So, the LDP had a chance to take some wind out of its sails by coming to a progressive agreement on the NPO Law. Rather than oppose the NPO Law and lose voters, it may have seemed to LDP conservatives better to work towards a law where LDP input would be substantial. Perhaps also this early concession might make it easier to work with DPJ after the election, should that prove necessary. After the 9 September 1996 agreement, the parties still had to hammer out a draft. The issues to be refined were the definition of the NPO groups, reporting duties, limitations of political activities, investigations by the administration, and revoking of legal person status. By now, these were old ground, and accord was quickly reached. The LDP pushed hardest to have the law submitted quickly, at the urging of the LDP leadership, Kato¯ Koichi and Yamazaki Taku. Almost within two weeks, on 16 December, 1996, the governing parties submitted the NPO Draft Law. The Democratic Party of Japan (DPJ) convened hearings with citizens’ groups on 5 February 1997 about the NPO Law. These hearings were by no means pro forma. In fact, because the NPO Law was an MP’s Bill, media and citizens’ groups played an active role throughout the process. The media has already been discussed, but citizens’ groups were also prominent throughout the process. They courted the media and lobbied the politicians. They mobilized members to fax their representatives about the NPO Law. They held numerous study groups about the NPO Law, both for mobilization, and to educate the legislators about their positions. In reviewing the evolution of the various governing party law drafts, and comparing this with the citizen group demands stated in the public hearing,

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it is possible to see the inclusion of specific citizen group positions. Besides expressing the opinion that, after progressive DPJ revisions, the NPO Law had finally corrected its faults and should pass, the Nikkei Shimbun went so far as to say, ‘[T]he joint amendments by the governing parties and the DPJ reflect the results of discussions with citizens’ groups, and this method of doing things should be highly valued.’30 An Asahi Shimbun headline called it ‘a model of collaboration between citizens and Dietmen’. The accompanying article extolled how citizens lobbied both bureaucrats and politicians: ‘The governing parties at the start had a wide gap from citizens’ views [on the NPO Law], but have gradually come closer to the citizens’ contentions, because of the frequent exchange of opinions between the two and the almost monthly citizens’ groups symposia which the Dietmen attended. . . . Looking back at the process, the role played by citizens’ efforts is large.’31 The following day, 6 February 1997, the DPJ Policy Coordinating Committee approved the DPJ Thinking on the (Governing Parties) NPO Draft Law submitted by the DPJ NPO Issue Project Team. This document is very progressive, but not extreme. The DPJ document frequently expounds the necessity of a vital, independent NPO sector, but the details of the law remain a liberal modification of the governing parties’ draft; it seems to have been tailored to ensure the possibility of compromise with the governing parties.32 The DPJ presented the document to the governing parties eight days later. Following this, the LDP leadership had a policy meeting with the DPJ to discuss the NPO Law. The LDP wanted DPJ support to pass the law in the House of Councillors, and so agreed to further concessions on the Draft Law. Party leaders signed a Confirmation document on 22 May agreeing to submit the NPO bill to the Diet with nine amendments proposed by the DPJ. All liberalizations, the most significant of these amendments eliminated the need for the EPA to seek opinions of other ministers for multi-ministry jurisdiction NPOs, eliminated the requirement of submitting a list of unpaid employees, and created a new category of NPOs for coordinating groups. On 22 May the amended NPO Draft Law was submitted to the Diet. Debate quickly started in the Cabinet Committee, on 28 May. In this discussion, Kumashiro¯ spoke out for the proposed law in surprisingly strong terms. He clearly stated that the law was intended to limit bureaucratic discretion and the ability of bureaucrats to discriminate among applications, and to promote many groups getting legal status. The testimony is important also because it is specifically intended to serve as guidance for the bureaucrats in applying the NPO Law. 33 The draft law was approved by the Cabinet Committee on 5 June and passed the House of Representatives (lower, but more powerful house) on 6 June 1997. It was sent to the House of Councillors (the upper house), but the Secretary General of the Members of the House of Councillors Murakami Masakuni chose not to debate the bill before the Diet session ended on 18 June. As a


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proponent of a conservative coalition, Murakami is an opponent of the LDP’s alliance with the SDP and Sakigake. However, there are probably two reasons the bill passed the House of Representatives, but did not clear the House of Councillors. First, the New Frontier Party engaged in immoderate stalling measures from late May to early June, which did not leave enough time for the NPO Law to pass the House of Councillors. Second, the House of Councillors was displaying its independence; many upper house members complained they were tired of simply rubber-stamping the lower house bills. Stage 4: final passage The fall of the Diet: final resistance When the Diet reconvened on 29 September 1997, the consideration of the NPO bill was delayed for three reasons. First was the controversy swirling around convicted felon Sato¯ Koko’s entry into Hashimoto’s cabinet, which delayed Diet business in general. Second was the delaying tactics of the Heiseikai, a group of former Clean Government Party Dietmen in the House of Councillors. Third was the continuing friction between the House of Councillors and the House of Representatives. Rumours also circulated that the fate of the NPO Law had been tied to a bill to introduce a lottery based on winning teams in Japan’s professional soccer league. Still, hopes were high for passage of the NPO Law in this fall’s Diet session, which ended on 12 December 1997. On 28 November the Parliamentary Strategy Committee of the LDP’s House of Councillors changed the name of the House of Representatives Bill that had passed in June 1997 to the ‘Law for Promotion of Specified Non Profit Activities’, with the new legal persons to be called ‘Specified Non Profit Legal Persons’. This struck out the previous bill’s ‘citizen’ terminology. For many conservative politicians, the term ‘citizens’ group’ recalls the anti-LDP citizens movements of the 1970s, so while this was a purely cosmetic change it had symbolic value to conservative politicians. Citizens’ groups themselves were not unhappy with the change, viewing the new terms as more inclusive. The bill then received the active promotion of the SDP and Sakigake, and even the LDP leadership strongly supported it, with a view to maintaining the three party alliance.34 On 1 December, in the Diet, Kato¯ Koichi testified to the LDP’s determination to pass the law in the fall session.35 Citizens’ groups organized a letter writing campaign that produced 1500 letters to Dietmen.36 The giant Japanese federation of unions, Rengo¯, also pushed for the NPO Law. Rengo¯ co-sponsored in October 1997 in Tokyo, Fukuoka, Osaka ‘Citizens’ Hearings’ and called the writers of the three NPO bills. Rengo¯ also directly lobbied the parties, especially DPJ.37 Rengo¯’s surprising bedfellow, Keidanren, also continued its lobbying for the bill. Keidanren

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lobbied the NPO Law sponsors individually for the law. On 29 October Keidanren also published ‘A Call for the Quick Passage this Diet Session of the Citizens’ Activities Promotion Bill (NPO Bill)’. The head of Keidanren, Toyota, also asked Hashimoto to pass the bill while Keidanren’s Social Contribution Committee and 1 Percent Club directly lobbied LDP Upper House leadership.38 December articles in Mainichi Shimbun, Nikkei Shimbun, Yomiuri Shimbun and Asahi Shimbun called for the passage. The Yomiuri Shimbun article of 10 December also explicitly linked the NPO Law to the ‘current trend towards deregulation and decentralization.’ However, Heiseikai and the Sun Party submitted their own version of an NPO bill, the Citizens Public Interest Activities Legal Person Bill (outline) on 5 December 1997, which while bereft of a hope of passage, slowed the ruling coalition’s bill. The parties also slowed discussion of the bill by resorting to boycott. In the end, Heiseikai and NFP resistance proved insurmountable in the remaining days before the end of the session and the ruling parties prioritized instead a revision in the laws about depositor insurance.39 The Spring Diet: final passage The Diet reconvened on 12 January 1998. Three NPO bills had been continued from the previous, 141st, Diet. They were the JCP bill, the Heiseikai and Sun Party bill, and the ruling party bill amended by the DPJ. Hopes were again high for passage of an NPO Law, although citizens’ groups by now seemed almost wary rather than optimistic. The NPO bills were explained on 22 January and discussion took place on 27 January, 3 and 5 February. The Executive Discussion Group of the Labor and Social Policy Committee of the Upper House made revisions on 5 February. The various parties made final revision requests on 10 February to the Committee, and discussions were held on 12, 17, 19, and 24 February. The revised bill was named the Law for Promotion of Specified Non Profit Activities, and was co-sponsored by the LDP, SDP, Komei and Sakigake.40 After some minor tinkering, the bill passed the Labor and Social Policy Committee by unanimous vote on 3 March and the House of Councillors as a whole by 217 for and 2 against on the following day. Even the Liberal Party and JCP decided not to oppose the law. On 19 March 1998, the NPO Law passed the House of Representatives by a unanimous vote.

The 2001 tax reforms After the passage of the NPO Law, non-profits in Japan wanted two changes in tax laws. First, they wanted deductibility of contributions to NPO Legal Persons. This change did occur, but not for all NPO Legal Persons. Instead, only a subset of NPO Legal Persons will be able to receive contributions that can be deducted from the income tax of individuals or


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corporations (‘tax-deductible status’), after being certified by the Commissioner of the National Tax Agency in a process described below, as detailed in Chapter Five. In the second change, non-profits wanted NPO Legal Persons to be taxed at a lower rate (they are currently taxed at the same rate as corporations). This was not a provision of the legislation. However, the three parties of the governing coalition (the Liberal Democratic Party, Ko¯mei, and the Conservative Party) issued a statement on 14 December 2000 stating that this change would be considered ‘soon’. This is significant. The 2001 tax changes came about in part because provisions in the 1998 NPO Law called for a review of the tax system two years after enactment. Opposition from the Ministry of Finance and elements of the Liberal Democratic Party blocked any changes in taxation at that time, but those in favour were able to call for a later review in the law. This review led to the Fiscal Year 2001 Tax Reform provisions for tax-deductibility for NPO Legal Persons. Of the provisions of the 2001 tax changes, it is the public support test that observers see as the most problematic.41 One newspaper headlined the story with ‘Tax Benefits for 10%?’ and reported a survey of 150 NPO Legal Persons showing only four qualifying for Tax-Deductible status.42 There are serious concerns over how many non-profits will be able to obtain these benefits. Furthermore, the reporting requirements, including listing of contributors, are also burdensome. The lowering of the tax rate on nonprofits, for certain groups even more important than tax-deductibility, has not even been proposed. Although the provisions are less than ideal from the perspective of the VNPO community, there are several grounds for optimism. Japan is in a decade-long economic slump. Besides a decrepit financial system, the country faces a potential fiscal crisis as a result of pump priming by the Obuchi and Mori administrations. Japan’s national debt as a percentage of GDP has skyrocketed. The Ministry of Finance strongly opposed tax benefits for non-profits. In the current economic climate, any reduction of tax burdens on non-profits is a significant achievement. The large numbers of Diet (Japan’s parliament) members belonging to the ‘NPO Caucus’ (NPO giin renmei) reinforce this impression of political strength. Moreover, of the 238 members, 112 are from the Liberal Democratic Party. This gives added weight to the ruling coalition statement of 14 December 2000.

Summary Is the NPO Law a fluke? In other words, is it merely the consequence of a catastrophic accident? The answer is no. In fact, even had the Hanshin Awaji earthquake not occurred, many critics claim that an NPO Law would have been passed within a decade anyway.43 The response to the earthquake was key, though, in hastening and highlighting these changes. The visibility of the volunteers accelerated significantly a process already underway.

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A fundamental reason was the growth of the NPO sector itself. In fact, citizens’ groups formed an advocacy group called ‘C’s’ to spearhead a lobbying campaign for an NPO law in November 1994, months before the Hanshin Awaji earthquake. NIRA had begun comprehensive surveys of the VNPO sector and its legal system. Significantly, politicians had also turned their interest to VNPOs. There were study groups in several parties, and Sakigake had even published a report, Report of the Non-profit Sector Study Group in December 1994. The political key to the success of the NPO bill lay in the altered political circumstances after 1994, including the changed electoral institutions that had altered the incentives facing politicians to promote group formation. For Sakigake and to a lesser extent SDP, the urgency of the NPO Law came to some extent from the electoral changes of 1994. Japan’s previous Single Non Transferable Vote (SNTV) system of electoral districts was replaced by a hybrid system of 300 single member districts and 200 party list or PR seats. For small parties like Sakigake and SDP, it is unlikely they will display much strength in the single member districts. Their hope for survival rests more on the PR seats.44 Organized groups such as the NPOs are an excellent mechanism for coordinating votes for these smaller parties in the PR voting. The value of groups well-disposed to Sakigake and SDP increased under the new electoral system, and thus provided an incentive for these smaller parties to trade their participation in the coalition for LDP support for the NPO Law. The other side of the equation was that the LDP was willing to compromise with the SDP and Sakigake. In part, the LDP was following its tried-and-tested formula of co-opting opposition party policies. The change in electoral institutions played a part in changing the mind of the LDP, too. In the new electoral system, new kinds of groups will be more useful for the party to win single member districts. Moreover, the LDP concessions on the NPO Law were prompted by the necessities of coalition politics with a viable opposition. The LDP leadership in particular gave in to Sakigake and SDP to preserve the coalition. The pressures of coalition politics should not be underestimated in top-level decision-making. Another electoral pressure facing the LDP as a party was the existence of a viable opposition party, the NFP (although now defunct). In fact, the submission of NFP bills to the Diet usually immediately preceded some action by the governing parties, perhaps acting as a stimulus to action. The NPO Law-making process itself is characterized by legislative and coalition politics, and by extensive citizen group lobbying. None of this could have happened before 1993. Without the plausibility of the need for coalition partners, elements in the LDP would have never shifted their stand so quickly on the NPO law towards a more liberal regulatory regime. What is important in viewing the making of the NPO Law as an expression of post-1993 politics is that the LDP had to actually coordinate policy-making itself in a coalition, i.e. with other parties, and not with the bureaucracy alone. This by definition


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leads to more legislative and political action in the Diet and less in the bureaucracy. The locus of action, and power, shifts.45 This shift in turn changes politics. For example, it increased the possibilities for lobbying pressure by the citizens’ groups. Because organized groups can deliver votes (as AMDA in his district proved), Kumashiro¯, as a legislator, was much more receptive to arguments by the citizens’ groups than the bureaucrats were.46 Media pressure is similarly more effective on vote-sensitive legislators. The NPO Law is the first evidence of that change, which, should it come to full fruition, is more momentous than any individual bill. After a slow start, more and more groups of thousands of people have gained legal status under the law. Initial reaction has divided non-profits into three categories. Older groups that had laboured as ‘voluntary associations’ despite the operational handicaps that brought (see the Pekkanen and Simon chapter, in this volume), hesitated to use the law. Slowly, though, they are deciding to become NPO Legal Persons. More recently-formed groups were quicker to use the NPO Law to gain legal status. This was their ‘shortcut to legitimacy’. More groups founded in the 1990s fall into this category. Finally, some groups formed to take advantage of the NPO Law. The creation of a new legal category has served as a stimulus to VNPO activity. The NPO Law itself is but one of many changes striking at the concentrated power of the central bureaucracy, and thus may also presage a new role for non-profits in Japan. In the Diet, Kato¯ Koichi recognized this transformative nature of the law when he said, ‘In order to end the closed situation of the “development by guidance from above", we have to plan for the change from the “large government” in which bureaucrats direct the nation,’ and continued, ‘It is not enough just to make the bureaucrat-led big government smaller. The development of independent VNPOs and NGOs in which individuals can autonomously participate is also necessary.’47 While many unresolved questions remain, all of these movements – strengthening civil society, deregulation, decentralization, MP’s Bills, Information Disclosure Law – are likely to have a common effect, in diminishing the power of the central bureaucracy and opening up new possibilities for the development of the non-profit sector.

Notes 1 See also Robert Pekkanen, ‘Japan’s New Politics: The Case of the NPO Law’, Journal of Japanese Studies, 26, 1, Winter 2000, pp. 111–143. 2 On vertically divided administration, or tatewari gyo¯sei, see Samuels who calls it ‘the single most important structural feature of Japanese public administration’. Samuels, Richard. The Politics of Regional Policy in Japan: Localities Incorporated? Princeton University Press: Princeton, NJ, 1983. 3 C’s: Shimin Katsudo¯ o Sasaeru Seido o Tsukuru Kai, Kaisetsu: NPO ho¯an, Tokyo: C’s: Shimin Katsudo¯ o Sasaeru Seido o Tsukuru Kai, 1996, pp. 3–4.

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4

5 6

7

8

9 10

11

12 13

Robert Pekkanen Hyogo Prefecture figures show that in the 8 months after the disaster, 1.3m volunteers had participated in the relief and reconstruction of Kobe (cited in Dentsu¯ So¯go¯ Kenkyu¯sho, NPO to wa nani ka?, Tokyo: Nihon Keizai Shimbunsha, 1996, p. 119). Elsewhere, the figures cited are 1.3m volunteers in the first year, eventually reaching 2m, and a total of 170 billion yen in donations (Shadan ho¯jin nihon seinen ho¯shi kyo¯kai, Borantia hakusho ’96–’97, Tokyo: Shadan ho¯jin nihon seinen ho¯shi kyo¯kai, 1997, pp. 65, 71). Kyo¯do¯ Tsu¯shin put it at 1.2m volunteers in a release dated less than six months after the earthquake (Kyo¯do¯ Tsu¯shin, 13 July, 1995). Volunteers as a percentage of the population are higher in the United States (48.8 per cent in 1995) than Japan (26.9 per cent in 1996), but still high in Japan (Yamauchi, Naoto. NPO de¯tabukku. Yuhikaku: Tokyo, 1999, p. 59). It is rather the large, independent NPOs that are absent in Japan and present in the United States. As early as 13 July 1995, Kyo¯do¯ Tsu¯shin used the term ‘The Year of the Volunteer (borantia gannen)’. NIRA kenkyu¯ ho¯kokusho No. 960075. Shimin ko¯eki katsudo¯ no sokushin ni kan suru ho¯ to seido no arikata. National Institute for Research Advancement: Tokyo, Japan, 1995. The group [Borantia mondai ni kan suru kankei sho¯cho¯ renraku kaigi] included the Prime Minister’s Office, Police Agency, Management and Coordination Agency, Economic Planning Agency (EPA), Environmental Agency, National Land Agency, Ministry of Justice, Ministry of Foreign Affairs, Ministry of Finance (MOF), Ministry of Education, Ministry of Health and Welfare, Ministry of Agriculture, Ministry of International Trade and Industry, Ministry of Transport, Ministry of Posts and Telecommunications and Ministry of Labour, Ministry of Construction, Ministry of Home Affairs (MOHA). Nikkei Shimbun. 4 February 1995. Yamamoto Miwa of Sakigake calls this commitment crucial in firmly establishing the NPO Law as a MP’s Bill. Yamamoto Miwa, personal interview, Tokyo, Japan, 18 July 1997. Nikkei Shimbun. 4 February 1995. The LDP was represented by Kumashiro Akihiko, a former Ministry of Welfare official and a first term Dietman from Okayama’s Second District. The SDP was initially represented by second termer Goto Masanori, while Sakigake sent Domoto Akiko, a former TBS newscaster. After the elections of 1996, Sakigake was nominally represented by Wataumi Kisaburo, a party official, while Domoto’s secretary, Yamamoto Miwa handled the workload. At the same time, Tsujimoto Kiyomi took over for the SDP, replacing Goto, who was re-elected as a proportional representation (PR) candidate of the Democratic Party of Japan. Tsujimoto was a first term Dietman, a PR representative of the SDP, who had been active herself in volunteer relief activities after the Hanshin earthquake. Initially, though, the Coalition NPO Team was Kumashiro¯, Domoto, and Goto¯. Kumashiro¯ remarks, ‘We at the LDP thought we could leave the law to the bureaucrats, as normal. But, SDP and Sakigake had a strong view not to (maybe because they are used to being in the opposition). So, we went along with them.’ Kumashiro¯ Akihiko, personal interview, Tokyo, Japan, 19 August 1997. Sakigake no shimin katsudo¯ ho¯jin ho¯an. Sakigake seisaku bukuretto No. 2, Sakigake: Tokyo, Japan, 1995. Kumashiro¯ Akihiko, personal interview, Tokyo, Japan, 17 August 1997.


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14 Tanaka Yasufumi, Keidanren, Social Affairs Bureau, personal interview, Tokyo, Japan, 8 October 1997. 15 As part of their lobbying process, groups prepared draft law versions to express their preferences to the politicians. These include C’s (21 August 1995), Yokohama Workers Collective (10 February 1996), and Nihon Seinen Kaigisho (January, 1997). More frequently, groups issued written statements or commentaries on the various NPO Draft Laws, which expressed clear policy preferences. 16 Kumashiro¯ Akihiko, personal interview, Tokyo, Japan, 19 August 1997. 17 Kaisetsu NPO Ho¯an, pp. 6–7. Sakigake no shimin katsudo¯ ho¯jin ho¯an, passim. Sakigake’s proposal also contained the notification system of approvals and the court control over dissolution, but went further in proposing a new third party institution, the Citizens Activities Promotion Committee, for supervision of the NPOs ongoing activities. This Committee was envisaged to be like the Fair Trade Commission, a neutral watchdog, but with its members appointed also from the ranks of non-bureaucrats. The Sakigake proposed law deliberately sets conditions for as many citizens’ groups to get legal status as possible, the widest possible entry point. It also specifically avoids supervision by the bureaucrats. The Citizens Activities Promotion Committee is proposed in Articles 32–34. In the law it is not clear, but in the later discussion Domoto states that these Committees will be organized and funded at the prefectural, not central, level. In the discussion after the law, the Sakigake lawmakers speak of the prevailing Japanese policy on NPOs (of high hurdles to become a legal person and liberal treatment afterwards) and say, ‘the Sakigake thinking this time is to completely reverse that, and make the hurdle as low as possible at the entry level. Make a framework to invite in citizen participation.’ (ibid., p. 66). They also speak of their attempt to construct a system which will reduce dependence on the state (ibid., p. 70). 18 Again, they were defined in a liberal interpretation. For example, the phrase ‘beginning with volunteers’ and referring to types of citizens’ groups was spelled out to mean only organizational forms including, but not limited to volunteer groups. Yoto NPO purojekuto kakunin jiko. 19 Shimin katsudo¯ sokushin ho¯an (kasho¯) no kosshi shian. 20 Shimin katsudo¯ sokushin ho¯an (kasho¯) no kosshi shian and Yo¯to¯ NPO purojekuto no giron no keika. 21 Kumashiro¯ mentions C’s active role in lobbying him and calls Matsubara an effective representative in Kumashiro¯’s book on the NPO law. Kumashiro¯, Akihiko, Nihon no NPO ho¯, Gyosei: Tokyo, 1998, p. 39. 22 Matsubara Akira, personal interview, Tokyo, Japan, 7 August 1997. 23 Tanaka Yasufumi, Keidanren, Social Affairs Bureau, personal interview, Tokyo, Japan, 8 October 1997. 24 Personal interview with Kumashiro¯ Akihiko, Tokyo, Japan, 19 August 1997. 25 Kaisetsu NPO ho¯an, p. 11. The last point is opposed to the more common definition of NPOs as groups which do not distribute profits to shareholders or investors. 26 This was a dramatic increase from 1992–93, when the figures were 2134, 787, 676, and 366 respectively. Sasakawa Peace Foundation. Ko¯eki Ho¯jin galley manuscript, 1997. 27 Kaisetsu NPO ho¯an, p. 20. C’s Nyu¯sureta¯ 11ban, 29 October 1996.

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28 ‘Kato¯ Koichi has been interested in volunteers for a long time, because of his interest in welfare. So, he wanted to raise the number of volunteers who could lower costs for welfare’. Kumashiro¯ Akihiko, personal interview, Tokyo, Japan, 19 August 1997. 29 In fact, all the Sakigake Representatives, except for Domoto herself, who appear in the Sakigake Citizens Activities Legal Person Law book to advocate a legal change, deserted to the DPJ. Specifically, they were Hatoyama Yukio, Yanase Susumu, Igarashi Fumihiko, and Takami Yu¯ichi. 30 Nikkei Shimbun, 30 May 1997. 31 Asahi Shimbun, 7 June 1997 32 For example, it calls tax privileges for NPOs ‘indispensable’ but provides the same period of time to study the issue as the governing parties draft. Shimin katsudo¯ sokushin ho¯an (yoto¯an) ni tai suru Minshuto¯ no kangaekata. 33 Kumashiro¯ himself says that the ‘debate in the Cabinet Committee should serve as important reference’ for this (for reasons of length, only my English translations are provided here). Kumashiro¯’s other comments include: ‘For the ordinary good legal person, this law permits no interference at all.’ ‘These 11 categories themselves are, obviating decision and without flexibility, defined to be in the public interest. The aim is to limit the amount of discretion [over the definition].’ ‘In contrast to the strict permission (kyoka) system of the Civil Code, our objective is to establish a system distinguished (sumiwaketa) by its extreme ease of application in the licensing (ninsho¯) system.’ Here Kumashiro¯ is also referring to the legal necessity for sumiwake or distinction from previous laws. ‘The essence of ninsho¯ is to reduce the realm of discretion for the bureaucrats.’ From Debate (to¯ben) in Cabinet Committee of Diet on 28 May–3 June 1996. 34 Yomiuri Shimbun, 1 December 1997. 35 Kaisetsu NPO ho¯an, (2nd edition), p. 54. 36 Yomiuri Shimbun, 10 December 1997. 37 Kaisetsu NPO ho¯an, (2nd edition), pp. 50–51. 38 C’s Nyu¯sureta¯ 18 ban, 26 December 1997. Kaisetsu NPO ho¯an (2nd edition), pp. 53–55. 39 Nikkei Shimbun, 11 December 1997. 40 Asahi Shimbun, 10 February 1998. C’s Nyu¯sureta¯ 19 ban, 9 March 1998. Yomiuri Shimbun 1 February 1998. 41 See articles in Asahi Shimbun, 19 March 2001 and 23 April 2001; Ko¯hoku Shimbun, 15 January 2001; and Yomiuri Shimbun, 15 January 2001. 42 ‘Zeisei yu¯gu¯ ichi wari ka’, Asahi Shimbun, 23 April 2001. 43 Yamaoka Yoshinori, director of the Nihon NPO Senta¯ and editor of NPO Kiso ko¯za (Gyosei: Tokyo, Japan, 1997), says ‘Even without the Kobe earthquake, we would have had the NPO Law by the beginning of the next decade. In November 94, when C’s was set up, Matsubara said, and everyone agreed, that it would take another 5–6 years. The quake just sped it up.’ Yamaoka Yoshinori, personal interview, Tokyo, Japan, 18 September 1997. 44 Suzuki Hiroshi, adviser to Sakigake, personal interview, Tokyo, Japan, 25 September 1997. The Nikkei Shimbun also notes that ‘for Sakigake and SDP the NPO Draft Law is something on which their parties lives are staked, and could even lead them to leave the coalition.’ Nikkei Shimbun, 27 May 1996. 45 It follows then that we should see more MP’s Bills proposed and passed, if the Diet has really increased in salience since 1993. Until 1993, 30 per cent of laws


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proposed in the Diet were MP’s Bills, although they enjoyed a 36 per cent passage rate, while the bureaucrat-drafted bills passed at an 87 per cent rate. Statistics from Igarashi, Takayoshi Giin rippo¯. Sanseido¯: Tokyo, Japan, 1994. 46 Note that the LDP’s point man on the NPO Law has published a book on the subject, Nihon no NPO ho¯. Gyo¯sei: Tokyo, Japan, 1998. Such credit-claiming activities (deserved in Kumashiro¯’s case) indicate the potential electoral value of this law. The value of the NPO Law for the LDP should not, however, be overemphasized. It is also an issue which could have damaged the LDP in an election, should the LDP have opposed it; coalition politics, and the role of the opposition, had a great deal to do with the LDP stance. 47 Comments on 3 March 1998. Nikkei Shimbun, 4 March 1998 and Mainichi Shimbun, 4 March 1998.

5

The legal framework for voluntary and non-profit activity Robert Pekkanen and Karla Simon

Introduction This chapter discusses the Japanese legal and regulatory framework for voluntary and non-profit organization (VNPO) activities in Japan.1 After a brief introduction placing the Japanese framework in a comparative and historical perspective, the body of the chapter explains the central provisions of the current laws and regulations. Key aspects of the laws are highlighted, and the typology of organizations that have been formed under the provisions is described. Four things stand out in comparative perspective. First, although Japan’s Constitution of 1946 specifically guarantees the freedom of association in Article 21, the legal framework within which the freedom is supposed to be exercised was until quite recently extremely cumbersome. This legal framework antedates the Constitution, as it is based in the Civil Code of 1896. Second, during Japan’s entire post-Occupation history, and despite massive social changes, there was no change in the system for regulating nonprofit entities until 1998. This is quite remarkable, given not only the internal social changes but also the development in thinking about these issues outside Japan. Third, compared to other industrialized democracies, Japan’s legal framework for VNPOs is relatively strict, making it difficult for groups to form legal entities. The system is also quite stingy with the tax and other benefits they receive.2 Fourth, Japanese law frequently inhibits the autonomy of the VNPOs it governs, and it can be applied to the disadvantage of groups that seek to maintain their independence from state control. All of this makes it difficult for independent groups to grow large in Japan and for large groups to remain independent. This hinders the development of a strong VNPO sector and the existence of dissenting voices within it.

Sources of Japanese law Before turning to the specifics of the legal and regulatory framework for VNPOs in Japan, it is important to place Japanese law in comparative context. Two points need to be made here. First, Japanese law is in the

The legal framework of the sector

77

tradition of the civil law, and not the common law, but the latter has had some influence on legal developments (e.g., the creation of the trust form for charities under Article 66 of the Trust Law). Second, Japanese law has a long tradition of incorporating foreign influences, beginning with Chinese law, continuing in the Meiji period with French and German law (the latter of which influenced the Civil Code of 1896), and later, in the Occupation, with the influence of American law. However, Japanese borrowing from other legal traditions has often been self-conscious and adaptive.

Regulating the VNPO sector in general The legal framework for voluntary and non-profit activity encompasses a variety of different laws, governing different aspects of the interaction between VNPOs3 and the state. These include the legal rules governing the creation and operations of VNPOs as well as the legal rules governing access to benefits provided by the state, such as tax exemption and tax deductibility of donations. There are also laws dealing with direct state support, through public sector transfers.4 In addition, there may be laws governing volunteer activity, an increasing area of state concern around the world. In general the Japanese legal framework encompasses all of the types of laws that govern VNPOs. This chapter deals mainly with the law affecting formation and oversight of such organizations, their access to tax benefits, and the regulations affecting state support and government contracts.

Acquiring juridical personality One of the most important points of interaction between the state and VNPOs is in the state’s granting of legal personality to groups seeking to acquire that status. Registration (civil law) or incorporation (common law) is in many countries a fairly simple and essentially ministerial process. Generally, the law requires that founding documents (e.g., articles of incorporation, statute, or by-laws) be filed with the registering or incorporating body (court or agency). These documents must state purposes and activities for the non-profit entity that are appropriate under the laws of the registering or incorporating jurisdiction.5 In addition, forms must be filled out and a small fee must be paid to the registering or incorporating body. Once these requirements are fulfilled, the organization acquires legal personality. In Japan, it is more difficult for VNPOs to acquire legal personality than in most other industrialized democracies. Of course, Article 21 of the Japanese Constitution provides for the freedom of association. However, in practice, this broad guarantee applies to voluntary and informal groups of citizens and does not imply that any group can easily obtain juridical personality (‘legal status’ or ‘ho¯ujinka’).6 Without legal status, small groups

78

Robert Pekkanen and Karla Simon

can still operate in Japan, but they are at a significant disadvantage; groups that are not legal persons cannot sign contracts or open bank accounts. This means, for example, that as a group they cannot hire staff, own property, sign lease agreements for office space, undertake joint projects with domestic government bodies, or even, on a mundane level, lease a photocopy machine. Legal status is important not simply because of its operational ramifications, but because it confers legitimacy on groups themselves and on civil society as a whole. For a description of the types of legal entities governed by Japanese Law, see Table 5.1.

Legal categories of registered non-profit entities in Japan Assuming that most organizations desire to obtain legal personality, this section describes the legal regimes that permit them to do so. The first of these deals with Public Interest Legal Persons (PILPs), which are defined in Article 34 of the Civil Code – Incorporated Associations and Incorporated Foundations. The second group is a wider category of PILPs, which serve the public interest but which are authorized by special laws attached to Article 34. These include Social Welfare Legal Persons, Medical Legal Persons, Private School Legal Persons, Religious Legal Persons, and Special Non-profit Activities Legal Persons. A third category includes VNPOs whose legal status is authorized under other laws, such as Public Charitable Trusts and Neighbourhood Associations (see Table 5.1) It is important to note in this discussion that the ‘Special Non-profit Activities Legal Persons’ are newly authorized as a special category of non-profit legal entity under the 1998 law commonly known as the ‘NPO Law’.7 Public Interest Legal Persons organized under Article 34 of the Civil Code In the Civil Code ‘Public Interest Legal Persons’ (PILPs) include two different types of organization – Incorporated Associations and Incorporated Foundations; this division reflects the typical civil law division of entities into those with members (associations) and those that own property (foundations). Incorporated Associations or shadan ho¯jin are authorized by Article 34 of the Civil Code, which provides for ‘associations with the objective of worship, religion, charity, education, arts and crafts, and other activities for public interest, and not for profit’. Associations are formed by members, but once formed, they obtain legal status apart from their members and regardless of changes in the size of the membership. Once registered, an association operates under a Charter of Association and is governed by the general assembly of all group members (shain so¯kai). The members may and usually do elect a board of directors to oversee the dayto-day activities of the organization. The Incorporated Foundation or zaidan ho¯jin is the other type of PILP authorized by Article 34 of the Civil Code. The objectives of incorporated

Civil Code, Article 34 (1897)

Civil Code, Article 34 (1897)

Social welfare business Law, Article 22 (1951)

Association shadan ho¯jin

Foundation zaidan ho¯jin

Social welfare corporation shakai fukushi ho¯jin Educational Corporation Religious Corporation shu¯kyo¯ ho¯jin Medical Corporation

Source: Pekkanen, 2000c

Public Trust Law, Charitable Trust Article 66 (1923 – applied 1977) Approved Local Autonomy communityLaw 260 (2) (1991) based organization Special nonSpecial Nonprofit activities profit Activities legal person Promotion Law NPO ho¯jin (1998)

Private School Law, Article 3 (1949) Religious Corporation Law, Article 4 (1951) Medical Law, Article 39 (1950)

Governing law (date)

Entity

Ministry of Health and Welfare

Associations or foundations whose objectives are to establish a hospital or clinic where doctors and dentists are regularly in attendance, or a facility for the health and welfare for the elderly Trusts with the objectives of worship, religion, charity, education, arts and crafts, and other purposes in the public interest Organizations formed by residents of a community

Non-profit entities whose activities include those in promotion Economic Planning of health, welfare, education, community development, arts, Agency culture, sports, disaster relief, international cooperation, administration of organizations engaging in these activities, etc. (11 examples)

Minister of competent government agency Mayor or town or village headperson

Minister of Education Minister of Education

Ministry of Health and Welfare

Competent gvernment aency

Competent government agency

Central permitting body

Corporations established under the law for the purpose of establishing a private school Corporations having the purpose of evangelizing, conducting religious rites, and educating and nurturing believers

Associations with the objective of worship, religion, charity, education, arts and crafts, and other activities for public interest, and not for profit Foundations with the objective of worship, religion, charity, education, arts and crafts, and other activities for public interest, and not for profit Corporations established under the law with the objective of social welfare businesses

Purpose of the entity

Table 5.1 Categories of non-profit legal entities in Japan

12 814

11 867

Number of existing entities

183 894

1 012

841

Notification todokede

Certification ninsho¯

433

Permission kyoka

Approval ninka 14 048

Certification ninsho¯



Permission kyoka

Permission kyoka

Permitting standard

80


foundations must also be for ‘worship, religion, charity, education, arts and crafts, and other activities for public interest, and not for profit’. While Incorporated Associations are formed around a group of members, Incorporated Foundations are formed around an amount of money (patrimony or endowment). A foundation comes into existence to make sure that the funds will be maintained and managed in order to serve a public purpose specified by the donors. A foundation does not have members, but it is governed by a board of directors, in accordance with basic rules laid down by its founders in the charter of the foundation. Permitting procedures for foundations are similar to those for associations, but with an emphasis on meeting specified capital requirements (see below). Problems with the Civil Code system of PILPs The difficulties with the PILP system set up in the Civil Code include three separate issues, all of which revolve around the requirement that the group seeking PILP status apply for permission from a competent ministry before acquiring legal status. These are the definition of ‘public interest’, the wide discretion granted to the competent ministries in applying the standards for defining ‘public interest’, and the high capital requirements they impose in certain cases. Thus, administration of the PILP system has created significant problems for groups seeking legal status and eventually led to the reforms in 1998. Defining the Public Interest. The most difficult criterion for groups seeking status as PILPs has always been defining objectives that can be classified as being ‘in the public interest’.8 The Cabinet Directive of 20 September 1996 entitled ‘Approval and Supervision of Public Interest Corporations’ (‘the Standards’) states that PILPs must have as their objective the carrying out of activities for the public good. Organizations not recognized as operating in the public interest were defined as: . .

.

groups that gather for the sake of maintaining personal ties, such as reunion and alumni groups; organizations that offer welfare services to people who formed the group with a specific purpose or to members of specific occupations; and support organizations that provide economic or spiritual support to individuals (self-help groups).

PILPs are given permission to form (kyoka) by applying to the ‘competent government agency’. For example, an organization dealing with legal issues would apply for permission from the Ministry of Justice, while one concerned with promoting good relations between Japan and Trinidad and Tobago would apply to the Ministry of Foreign Affairs. In practice, the activities of some unregistered groups are within the


81

jurisdiction of a variety of ministries. This causes problems for them when they apply for legal status, because they must receive permission from all the concerned ministries, a situation known as ‘joint supervision’ (kyo¯kan). For example, an Amnesty International type organization would be required to receive permission from the Ministry of Justice and the Ministry of Foreign Affairs. Administrative Discretion. In practice, the determination of what is ‘in the public interest’ is within the ‘discretion’ (sairyo¯) of the competent ministry. The Administrative Procedures Law makes challenges against denial of ‘approval’ quite difficult. It also does not require that the reasons for rejection of the application be specified. In addition, the Civil Code sets no time limits within which an application must be considered, which means that applications can languish on the desks of bureaucrats for years, thereby effectively denying an organization access to legal status. Outright denial of an application is rare, because it can trigger an administrative suit contesting it. Unless the authorizing agency has clearly violated proper application of the law, however, it is unlikely to lose such a case. In the Adachi Ward Physicians Association case, for example, an application to establish a second incorporated association of physicians within the same ward as an extant one was rejected (Japanese Supreme Court decision of 13 July 1988, Hanrei Jiho no. 1297, at 29). In this case the court determined that administrative agencies are granted broad discretion in approving the establishment of a public interest corporation. A disposition which refuses to grant authorization is not unlawful, unless one can deny that a certain level of reason existed in the determination process through the conclusion that it would be proper to deny approval. (Amemiya, 1997 p. 135) Even though the definition of ‘public interest’ might appear to be met by the objectives of an organization, the permitting system has been implemented in a way that groups whose objectives or styles differ from those favoured by the permitting ministry find it very difficult to gain approval. As a result, such groups are barred from legal status by a system reliant on bureaucratic discretion.9 In fact, even if a group is non-profit and is operating in the public interest in a more general sense, there is no bureaucratic obligation to grant permission to that group so that it may incorporate legally (Amemiya, 1997; Hayashi, 1972, p. 53). The result is that groups that the bureaucracy does not view favourably can be effectively denied legal status. This contributes to the stunted development of many such groups and shapes the development of the Japanese voluntary sector as a whole (Pekkanen, 2000b; see also Yamamoto, 1999). On the other hand, the ministries have set up a number of PILPs that are essentially parastatal organizations. In addition to having been established by funds from a ministry, these PILPs generally have a large number of

82


retired bureaucrats from that same ministry on their boards. They also receive operating income from the ministries that established them. While it is impossible to quantify with precision how large this ‘GONGO’ (government operated non-governmental organization) slice of the nonprofit sector is, estimates from detailed analysis suggest at least one-quarter of all PILPs are GONGOs (Pekkanen, 2002).10 It is also important to recognize that the administrative discretion granted under the Civil Code makes it exceedingly difficult for an organization to change its purposes, particularly if those purposes would exceed the jurisdiction of the competent ministry that granted the initial permit. As ministries are jealous of their prerogatives, they have made it problematic for PILPs to expand what they do, even in national crises. It is in fact the failure of competent ministries to show flexibility at the time of the ‘Great Hanshin earthquake’ that led to the political crisis resulting in the passage of the 1998 NPO Law reforms (Pekkanen, 2000a). Capital Requirements. Even for those groups that appear to fit in the proper activity categories, the administration of the PILP provisions has resulted in high financial requirements being applied. Citing the Civil Code call for a ‘sound financial base,’ some ministries have required capital of as much as 300 million yen ($2.3 million) in order for a PILP to register.11 Naturally, this amount of money is difficult for a group of citizens to raise, and many viable groups cannot accumulate funds in such high amounts. Public interest groups organized under special laws Because of the narrowness of the PILP definition and the difficulties associated with it, the Diet enacted a series of special laws beginning in 1949, which have permitted certain other organizations operating in the public interest to be established under specific regimes. The applicability of these special regimes was limited to, e.g., social welfare organizations (1951), private schools (1949), religious organizations (1951), and health care organizations, such as hospitals and clinics (1950). Under an expansion of the 1923 Trust Law, charitable trusts were permitted beginning in 1977, and they are allowed to have a wide variety of public benefit purposes but they also must go through a permitting scheme similar to that for PILPs. More recently, the Diet also created by special legislation a regime to govern ‘approved community-based organizations’. It was not until 1998, however, that a more general approach to liberalizing the organizational and operational aspects of the non-profit sector evolved. This section tracks the history of the various regulatory systems created during the Occupation for certain types of VNPOs that are both incorporated and related to Article 34 of the Civil Code. The next section deals with the new ‘NPO Law’, adopted in 1998. The third section addresses the two other forms of non-profit organization that are permitted in Japan and came into being or usage more recently. Neither of these two


83

types of organization is created under a law that relates to Article 34 of the Civil Code. It is convenient to provide an explanation of certain legal terms as applied in Japan. These are set out in Table 5.2. A Social Welfare Corporation is an organization formed under the Social Welfare Business Law, Article 22. This 1951 law was part of the US-led Occupation era (1945–1952) reforms. Technically, it is a Special Law attached to Article 34 of the Civil Code. As such, it carves out a subcategory of Public Interest Legal Persons and specifies different rules for them. Most importantly, perhaps, is that the rules for ‘approval’ are relaxed, which means that organizations that fit within the definition of ‘social welfare corporation’ can be formed more easily than a PILP. These groups are active in fields such as services for the elderly, children, and handicapped. The single largest group of Social Welfare Corporations is day care centres for children under five years of age. The standard that these organizations must meet in order to become juridical persons is called ‘approval’ (see Table 5.2), and it requires only that all legal requirements must be met by the organization. If they are, the Ministry is required to allow the organization to be established. This obviously removes the bureaucratic discretion that is applicable to PILPs under the permission system. On the other hand, social welfare corporations cannot easily change their purposes, except to the extent that the changed purposes would come under the jurisdiction of the Ministry of Health and Welfare, which is the most active ministry in overseeing these organizations. An Educational Corporation or a ‘Private School Corporation’ is another type of organization whose formation was liberalized by a Special Law attached to Article 34 during the Occupation. The law in question is Private School Law, Article 3 of 1949. These organizations are set up Table 5.2 Explanation of legal terms (descending order of discretion) Legal terms

Meaning of term

Permission Kyoka Approval Ninka

Gives significant bureaucratic discretion In practice can approximate kyoka, but technically less bureaucratic discretion is involved New term for 2001 Tax Reform measures discussed below. Implementation unclear, but likely between ninka and todokede A term whose level of discretion is contested

Qualification Nintei Certification Ninsho¯ Notification Todokede Registration To¯roku

Automatic approval, given satisfaction of clear criteria. No discretion Automatic approval. No bureaucratic discretion

Source: Pekkanen, 2000c

84


essentially to run private schools, thus relieving the burden on the public education system. The separate category of Private School Corporation was meant to ensure greater independence than would be available to educational PILPs, formed under the Civil Code. These groups in many cases had been incorporated as Foundations before the Second World War, and the state had the power to intervene in their activities, even to the level of dismissing a particular teacher. After the passage of the 1949 law, these organizations could be formed under an approval system, like the system later made available to Social Welfare Corporations. These organizations may apply to the prefectural board of education or the Ministry of Education and Culture for approval. A Religious Corporation is another type of organization whose formation was liberalized by a Special Law enacted during the Occupation. In this case, the relevant law is the Religious Corporation Law, Article 4 of 1951. These groups register under the Agency for Cultural Affairs under the Ministry of Education and Culture and an approval system is applied to their applications instead of a permission system. A Medical Corporation is a type of organization formed under the Medical Corporation Act of 1950, which allows the establishment of associations or foundations whose objectives are to establish a hospital or clinic. In order to meet the legal requirements, doctors and dentists must be regularly in attendance, or the facility must be for the health and welfare of the elderly. The Medical Corporation Act is another law passed by the Diet during Occupation, and its aim was obviously to liberalize the PILP regime for health care providers. The Ministry of Health and Welfare is most active in granting recognition to these groups under an approval system. NPO Legal Persons In 1998, in response to a very significant political shift in attitude, the Diet passed the ‘Special Non-profit Activities Promotion Law’, which created a new category of incorporated organization known as the ‘Special Activities Non-profit Legal Person’ or ‘NPO’. Similar to the laws adopted during the Occupation, this law is a Special Law attached to Article 34 of the Civil Code. The Economic Planning Agency is the agency designated by the law as the agency responsible for granting recognition to and overseeing NPOs. The system for access to legal status is called a ‘certification’ system. The ‘NPO Law’ aims to address some of the difficulties of the PILP system. In the long run, the NPO Law could invigorate Japan’s civil society. For one thing, the law will allow many more groups to gain legal status – becoming an NPO legal person is easier than becoming a PILP. Even more importantly, the NPO Law is designed to permit groups to gain legal status without being subjected to bureaucratic screening. Furthermore, it aims to allow the groups to operate without continuing bureaucratic administrative guidance. These measures could substantially increase the number of


85

organizations that can acquire legal personality in Japan. They could also change the way organizations relate to the government and to international organizations. With legal status, they will be able more easily to sign contracts to undertake projects with the government, and also to cooperate in projects with overseas organizations. The new NPOs should also be able to operate with a minimum of supervision by the bureaucrats (see discussion on pp. 88ff below, under Regulation). This independence is rare and prized in Japan. The organizations themselves, however, put the highest value on the legitimating function of being able to have legal status.12 This legitimacy extends to the groups as they gain separate juridical personality, and also to the sector as a whole. Since 1998 the sector has been recognized as having a socially valued purpose, and it seems no longer to require excessive bureaucratic intrusion into its affairs. The NPO Law began to be implemented on 1 December 1998, and it is still too early to judge the long-term results of the law. At this stage, however, three things stand out among the developments since its implementation began and these are discussed in the following paragraphs. First, the number of applicants for NPO status was initially quite low. It was not until early August 1999 that the number of applicants topped 1000. Expectations for an initial rush had been much higher. For example, Kanagawa prefecture had set up seven desks for the expected onslaught of NPO applicants; yet by 18 December 1999, there had been only eight applications.13 The rate of applications, however, almost doubled from winter to spring 1999. This reflected the wait-and-see approach of many groups, especially the established ones.14 Changing legal status takes some time and effort. For example, it would require the undoubtedly salutary but tedious task of transferring titles and contracts from the name of the organization’s leader to the name of the newly incorporated organization. Moreover, as in other cases where ‘the rules of the game’ are changed, it requires time for actors to adjust to altered incentives (see also Chapter 4 by Pekkanen, this volume). As familiarity with the law has grown, however, thousands of organizations have been able to gain legal status. By April 2001, 4626 groups had applied for and 3933 had been granted NPO Legal Person status. However, a survey of the 1034 groups granted NPO legal person status by November 1999 (to which 463 responded) found only 5.2 per cent ‘satisfied’ with the law. Although legal status itself was an important achievement for them, the vast majority of these groups (84 per cent) complained about the lack of tax benefits available. They wanted income tax exemption and tax-deductibility for contributions made to them. They received only the latter, as discussed below in the section dealing with Taxation. This trend in thinking appears to have continued among the more recent applicants, but there is only anecdotal evidence for that conclusion.

86


Second, implementation of the NPO law was intitially seen as an opportunity for continued administrative intervention in the activities of NPOs. Despite the law’s being written to strictly limit bureaucratic discretion, it appears that the practice of ‘administrative guidance’ (applicable to PILPs) was, at least intitially still being applied to some NPO applicants.15 Contrary to the intent of the law, bureaucrats are conferring actively with most of the applicant organizations before the application is filed.16 While this often may spring from a sincere attempt to help the organization complete the paperwork accurately, it is nonetheless a violation of the spirit of the law and looks a lot like a screening process. Third, some requirements of the law seem to have been applied too loosely at the outset of the law’s implementation. This resulted in a low number of rejected applicants (only 2 as of August 1999 – both essentially trade organizations, which were rejected because they limited membership to those in the trade). The law required that the reasons for rejection be explicitly stated and the applicant group could re-apply by taking the objections into account. This process, with its explicit publication of information, was envisioned specifically to avoid the uncertainties of ‘administrative guidance’ and screening and to give prospective applicants a sense of what might be expected of them in a more objective system. By April 2001, about 500 organizations had been denied NPO status, and the administrative guidance is giving new applicant organizations better information about how to meet the requirements. At this stage, however, it is still premature to judge whether the NPO Law will achieve the goals of its drafters. Other types of organizaitons in the VNPO sector A Public Charitable Trust is a Trust whose purposes are in the public interest. The Public Charitable Trust is based on a 1923 law that was not used for public benefit purposes until 1977, when it seemed a potential remedy to problems inherent in the PILP scheme. Nevertheless, permission (kyoka) is still required to form such an entity. The Ministry of Construction and the Ministry of Foreign Affairs authorized the first two charitable trusts in 1977. While Public Charitable Trusts have increased in number, there are still very few public benefit organizations organized as trusts in Japan. A Neighbourhood Association is not usually recognized as a legal person. However, some neighbourhood associations (NHAs) have held property, in effect recognizing their separate status from their members. Because of the operational difficulties such groups would face without clear legal status, the government responded by creating a new legal category for incorporated Neighbourhood Associations in 1991 (under the Local Autonomy Law 260 (2)). These organizations apply to the Mayor or town or village headperson for recognition; the process is essentially one of


87

‘notification’ (todokede) as opposed to permission. The government’s responsiveness to this issue is in contrast with the protracted disputes over the creation of the Special Non-profit Activities Legal Persons.17

Regulation of the operations of VNPOs A frequent complaint about the regulation of VNPOs in Japan has been that it severely constrains the autonomy of those that are set up as PILPs. In part, this is because the competent ministry has wide supervisory powers over the organizations that are under its jurisdiction, and the organizations have significant reporting responsibilities to their competent ministries. While this is not an uncommon regulatory system, two factors about the Japanese system are important to note. First, the competent ministries have viewed their roles less as oversight and more as interference, and the amount of discretion they have exercised in this regard has been excessive. Second, the courts tend to respect what the competent ministries discern to be ‘in the public interest’. The existence of these factors makes the PILP system a constraining one for the Japanese VNPO sector. Now that the new NPO Law sets out different reporting requirements for those organizations registered under it, the situation is different. This section compares and contrasts the system of regulation for PILPs with that for NPO Legal Persons. VNPOs formed under the Special Laws are not treated separately in this section because the regulatory requirements they face are similar to those for PILPs. Reporting In many countries the regulatory body that allows a non-profit organization to acquire juridical personality requires the organization to file annual reports that describe the activities and finances of the organization for the previous year. In other countries a second regulatory body may require such reports. Most countries have rules exempting certain types of organization (e.g., churches) and small organizations from making such reports. The length and complexity of the reports varies from jurisdiction to jurisdiction. Reports are required to be filed in part so that the general regulatory body has information about whether the organization continues to be operational. The most significant reason for requiring such reporting is to assure accountability of the organizations and the protection of the public from unscrupulous operators. Some countries require that annual reports be published in newspapers; others require only that they be made available to the general public in the organization’s offices. Failures to file reports or filing false or fraudulent reports will ordinarily subject a non-profit organization to sanctions, whose severity depends on the severity of the problem (e.g., number of reports omitted, extent of falsity, etc.)18

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PILPs Every PILP has reporting duties to the competent ministry, which retains the power to investigate the organization and to revoke the PILP’s legal status if severe legal violations occur. The competent ministries exercise ‘administrative guidance’ over the PILPs they oversee.19 Backed by sanctioning power, this ‘administrative guidance’ forces PILPs to comply with bureaucrats’ preferences and impairs the independence of the VNPO sector.20 Such regulatory control has been employed in such a heavy-handed way that many observers regard the Social Welfare Legal Persons, which are also subject to the ‘administrative guidance’ system, as little more than subcontractors for the government, bereft of the independence necessary to qualify them as true non-governmental organizations. In fact, despite the great logistical problems it creates, established foreign entities that are active in Japan sometimes actually chose not to become PILPs in order to avoid bureaucratic interference. In an Economic Planning Agency (EPA) nationwide survey of Japanese VNPOs, the most common reason cited for not applying for legal status was that accounting and finance reporting requirements were too onerous (61 per cent of groups listed this reason). The third most common was the fear that the objective of the non-profit organization, or the content of its activities, could be controlled by the bureaucrats (45 per cent).21 PILPs must submit annual activity reports, including a list of assets, accounts of changes in membership, and financial statements for the past year, as well as planned activities reports and budget estimates for the coming year. NPOs Within three months after the end of its fiscal year, each NPO must file financial statements and an activity report with the Economic Planning Agency, which must distribute them to any prefectural governor with jurisdiction over the area in which the NPO operates. In addition, each NPO must file a list of the names and addresses of all individuals who were officers during the year, indicating which of them received remuneration, and a list with the names and addresses of at least ten members. Any member or other ‘interested party’ is entitled to see these reports unless there is a ‘just and proper reason’ for not making them available. Under rules to be prescribed by the Prime Minister’s Office, members of the public are also entitled to view any reports at the government agency with jurisdiction over an NPO. Investigations: PILPs With respect to PILPs the competent government ministry is empowered to investigate the activities. In addition, that ministry can issue directives that,


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if not obeyed, can result in the dissolution of the PILP. The agency can make on-site inspections and audits to ensure that its directives are carried out and that the PILP is engaging in activities within its registered purposes. Investigations: NPOs If there is ‘sufficient reason to suspect’ that an NPO has violated any law, regulation, administrative order, or its own articles of incorporation, the Economic Planning Agency can request a report from the NPO or inspect the books, records and other materials of the organization. Upon request, the NPO being investigated is entitled to a statement of why the government agency believes that there is ‘sufficient reason to suspect’ that there has been a legal violation, etc. Dissolution Because a VNPO can acquire juridical personality only by registration or incorporation, the process whereby such an organization ceases existence necessarily involves the intervention of state authorities. VNPOs may have their existence terminated voluntarily or involuntarily, and the law generally describes the procedures for each. Procedures for dissolution and liquidation vary depending on whether an organization has members or is a non-membership organization. Voluntary termination is requested by an organization, while involuntary termination is accomplished upon a petition from a regulatory body or a general attorney for the government. Involuntary termination is ordinarily requested if an organization fails to file annual reports for several years (suggesting that it has simply disappeared) or if it has violated laws or failed to otherwise perform appropriately. Courts are ordinarily the bodies that dissolve and liquidate VNPOs. They are also responsible for ordering the distribution of any remaining assets (after the payment of claims of creditors) to appropriate distributees (e.g., other VNPOs with related purposes). 22 PILPs PILPs may be dissolved either voluntarily or involuntarily. Civil Code Article 68 [1] [iv] provides that PILPs are to be dissolved if the competent ministry, which permitted their incorporation, cancels the authorization for the establishment of the corporation. Article 71 of the Civil Code states that the supervisory ministry may cancel its approval of a PILP if the PILP has engaged in activities outside its purposes as defined in the articles of incorporation, or if it has violated the conditions under which it received approval for establishment, or if it violates supervisory orders issued by the supervisory ministry. The Civil Code Enforcement Law, Article 25, requires an inquiry by the authorizing ministry, which also requires that the ministry

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indicate the reasons for the cancellation to the affected parties, who then have the right to a legal proceeding and appeal. A cancellation of authorization is interpreted as a response to changed circumstances, and not as a mistake by the permitting ministry ab initio. Despite the possibility of appeal, the legal deck is stacked in favour of the permitting ministry – in part because of the considerable discretion attached to the discernment of the public interest (Hayashi, 1972, pp. 192–193). NPOs An NPO can be dissolved: . . . . . .

by a resolution of a general meeting of members; occurrence of any reason for dissolution specified in the articles of incorporation; the impossibility of successful performance of operations relating to the non-profit activities that are its objective; absence of members; merger; or bankruptcy.

The articles of association of the NPO must specify the means for dissolving it, and upon dissolution any remaining assets can only go to another NPO, the government, or certain specified types of Social Welfare Organizations. In order to begin proceedings for involuntary dissolution of an NPO, the Economic Planning Agency normally must first give a notice of a need to correct. This can be done if it determines that an NPO does not have specified non-profit activities as its primary purpose, is a gangster or violent organization, does not have ten members, or otherwise violates laws, regulations, administrative orders based on law, its own articles of incorporation, or has operations that are ‘materially lacking in propriety’. In such a case, it may order the NPO to take measures within a specified period to correct the situation. If corrections are not made, the agency may dissolve the organization. Further, any person who violates an order to correct, as well as the NPO itself, is subject to a fine not exceeding 500,000 yen (approximately $4,400). If the NPO has violated laws or regulations and it is clear that improvement cannot be expected as a result of an order to correct and the objectives of supervision cannot be fulfilled through other means, the agency may dissolve the organization without first issuing an notice to correct. When the government agency orders dissolution, either with or without first issuing an order to correct, the NPO may request a public hearing, and ‘efforts must be made’ to hold such a hearing. If public hearings are not held when requested, the government must give the NPO a written statement of its reasons for not holding one.


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Special rules for NPO mergers Upon submission of all of the documents and information required for the establishment of an NPO, and the approval of the supervising agency, one NPO may be merged with another. Creditors must be given at least two weeks to object to any merger. If any creditor objects, the NPO must satisfy that creditor’s claims or give the creditor sufficient assets to guarantee payment, unless there is no possibility that the merger will harm that creditor. Unless provided for differently in the articles of incorporation, merger requires a three-fourths vote of members at a general meeting. The NPO that survives or results from a merger succeeds to all the rights and obligations of the NPO(s) that cease to exist because of the merger.

Taxation of VNPOs and their donors Tax benefits are designed to promote the growth of VNPOs and the purposes they promote. To the extent they are available to public interest organizations, they give recognition to these organizations and their promotion of the public interest. Tax benefits allow the organizations to retain more of their resources, which in turn spurs their development. Japanese VNPOs have not received tremendously favourable tax treatment over the years. For the purpose of this chapter, we concentrate on two dimensions of taxation of Japanese VNPOs: income tax exemption for the organizations themselves, and income tax deductions for contributions (by corporations or individuals) to them. The application(s) that a non-profit organization must make in order to receive various tax privileges allowed by law is/are generally separate from the application for the acquisition of juridical personality. Applications for tax benefits are made to the tax authorities and separate sets of criteria must be met for each of the various types of tax benefit. In addition, separate sets of forms must be filled out and additional fees must be paid. In general tax benefits (tax exemption, ability to receive donations that are tax-deductible or subject to credits, zero rating or lower-rating for the value added tax (VAT), etc.) are granted only by the tax authorities. There may be several different tax authorities who can grant such privileges (e.g., national, state, and local authorities all may have the ability to grant tax privileges). Tax laws may require that organizations to which tax privileges are granted refrain from certain activities (e.g., lobbying, business, etc.)23 These general principles apply to Japanese VNPOs. Income Tax Exemptions Under Japan’s Corporation Tax Law, Articles 4 and 7, PILPs are exempt from corporate income tax except to the extent they receive income from profit-making activities. There are 33 specific types of profit-making

92


activities listed in the law, and for those the tax rate is only 27 per cent (as opposed to the 37.5 per cent rate imposed on for-profit corporations). In addition, PILPs are allowed to exempt from taxation up to 20 per cent of their income from profit-making activities if that income is used to expand the core activities that are in the public interest. PILPs are subject to consumption tax (e.g., VAT), other indirect taxes, and local taxes. They may be exempt from local taxes only if their main purpose is the establishment of a museum or the pursuit of studies. PILPs are exempt from several other types of taxation including taxation of the interest earned on endowment funds. These benefits are significant, but they are available only for PILPs organized directly under the Civil Code Article 34 and not for other organizations, such as NPOs organized under the 1998 Act. Social Welfare Corporations, Private School Corporations and Religious Corporations are also subject to the favourable tax regime that applies to PILPs, but they face a few different rules. For example, they can deduct the greater of 50 per cent or 2 million yen of the income earned from their profit making activities. Medical Corporations, on the other hand, do not enjoy the same kind of tax treatment as do PILPs. They are taxed like forprofit corporations, at the full corporate tax rate, except to the extent they receive medical fees as reimbursements by the social insurance system. This exception applies only to ‘Special Medical Corporations’ (tokutei iryo¯ ho¯jin) that the Ministry of Finance has certified as being especially in the public interest. Such Special Medical Corporations are taxed at 27 per cent and receive some other tax exemptions as well (e.g., tax on real estate acquisitions for nurses’ training facilities). No other Japanese VNPOs, including NPO Legal Persons are exempt from income taxes. This feature of the fiscal year 2001 tax reform, discussed below, is quite puzzling and tends to continue to favour PILPs and other non-NPO legal persons. Deductibility of charitable contributions – traditional rules In general it is clear that making contributions to a non-profit organization deductible from the contributor’s income increases resources available to the organization and also encourages the donation by giving the added tax benefit to the contributor. Qualifying contributions from corporations or individuals to PILPs can be deducted in Japan, but the circumstances under which these contributions qualify for deduction is limited. Moreover, the application of tax deductibility is left to a considerable extent to the discretion of the Ministry of Finance (Amemiya, 1999, p. 208). Charitable contributions are deductible if they are made to organizations designated by Income Tax Law 78 (2)–[2] as ‘Special Public Interest Promoting Corporations’ (tokutei ko¯eki zo¯shin ho¯jin) (or to designated purposes, shitei kifukin) of regular PILPs. These Special Public Interest


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Promoting Corporations, or tokuzo¯ as they are commonly known, include 26 corporations based on Special Laws and closely linked to the government. These include the National Institute for Research Advancement and the Japan Foundation, as well as all Social Welfare Corporations and Private School Corporations. PILPs organized under the Civil Code can be added to this list by being certified by the Minister of Finance, and almost 900 have obtained the proper certification. Individuals’ contributions of up to one quarter of their annual income over a floor of 10,000 yen (about $100) are deductible. Corporations contributing to tokuzou can do so up to limits determined by a formula (1.25 per cent of income plus 0.125 per cent of paid-in capital). The limited number of organizations that can receive a deductible charitable contribution under the Income Tax Law prior to the 2001 reforms is shown in Table 5.3. Bequests to Special Public Interest Promoting Corporations are also deductible from inheritance taxes. Tax reform In the Fiscal Year 2001 Tax Reform, provisions were made to allow certain Specified Non-profit Activities Legal Persons (NPO Legal Persons) to gain the status of ‘Tax-Deductible (‘nintei’) Specified Non-profit Activities Legal Persons’ (hereafter, Tax-Deductible NPOs). These provisions were enacted on 31 March 2001, and came into effect on 1 October 2001. Applicants must be NPO Legal Persons and be certified by the Commissioner of the National Tax Administration as having satisfied a list of requirements, as detailed below. It is important to note that although this new law permitted deductible contributions to be made to the Tax-Deductible NPOs, the contribution limits set out in the Income Tax and the Corporation Tax, discussed above, were not increased. Bequests to Tax-Deductible NPOs are also deductible from inheritance taxes, but Tax-Deductible NPOs are not exempt from local taxation.

Table 5.3 Special public interest promoting corporations (1996) PILPs incorporated associations (shadan houjin) and foundations (zaidan houjin)

822

Private School Corporations

1 125

Social Welfare Legal Persons

14 832

Other Total Source: Data from Naoto Yamauchi, 1999

189 17 026

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Qualifying for tax-deductibility under the new system The Commissioner of the National Tax Administration makes the determination of tax-deductible status. This official can also investigate the organization to make this determination (or to consider its removal). There are quite a number of qualifications that an NPO must meet to qualify for and maintain tax-deductible status.24 First, there are restrictions on activities if an NPO is going to qualify for tax-deductibility. Religious or political activities are not permitted. Provisions designed to avoid Tax-Deductible NPOs from being used as front groups prohibit special relationships with specific persons, contributions to corporations, religious groups, or political groups. They also limit self-dealing by prohibiting the distribution of profits to directors, employees, contributors, or their relatives. Similarly, no more than 1/3 of employees or directors may be members of the same family, nor may 1/3 of directors or employees be employees or directors (including relatives of such) of another legal person or group (this regulation is intended to prevent the non-profit organization from being a front organization). Second, there are restrictions on expenditures. At least 80 per cent of expenditures and at least 70 per cent of contributions must be spent on Specified Non-profit Activities (meaning those activities for which groups formed to perform can receive legal status as NPO Legal Persons). To be able to fit within the tax-deductible class, NPOs must make available to the public and also provide to the National Tax Administration the criteria, methods, and names of individuals by which or by whom grantees will be solicited and evaluated. Actual funding decisions must be treated in the same way. Except in times of emergency when notification may follow, transfers of funds overseas must be notified in advance, including date, amount, and recipient. Strict accounting standards are spelled out for TaxDeductible NPOs. Third, there are also three ‘public benefit’ tests, which must be met for an NPO to qualify. There is a geographic test: the Tax-Deductible NPO must either: (1) receive contributions from individuals or legal persons from multiple geographic areas (cities, wards, towns or villages) (no more than 80 per cent from one area); (2) engage in Specified Non-profit Activities in multiple geographic areas (no more than 80 per cent in one area); or (3) spread its funding or service across multiple areas (again no more than 80 per cent in one area). A second test includes four provisions designed to prohibit mutual benefit organizations from qualifying. For example, more than half of the activities must not be services or funds for the benefit of members. Nor may more than half of the Tax-Deductible NPOs activities be for exchange, contact, exchange of opinions, etc. among members. The third public benefit test is the public support test. An accounting formula is provided to determine that at least 1/3 of the group’s total


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revenue comes from public support via contributions. Both revenue and public support are defined in detail. Revenue does not include such items as government funding (hojokin). Contributions from any individual (or his or her relatives) or legal person will only count towards the public support total up to 2 per cent of total contributions. This prohibits the organization from having a single large donor count towards the public support test. Contributions from directors, employees and their relatives only count towards public support under certain conditions. In addition, only contributions of 3000 yen (about $30) or more count towards the public support total.25 Finally, there are reporting duties for Tax-Deductible NPOs, which are fairly extensive. Organizations must file reports every year (within three months of the year’s end) with the National Tax Administration. The National Tax Administration will keep on file and permit public access to these documents for three years after they are filed by the NPO. The following documents are required to be filed: documentation of funding (sources and amounts of income, amount of borrowing); lists of activities and services, charges, and objects of provision; list of parties engaged in transactions of 500,000 yen or more a year with the Tax-Deductible NPO, their names and the amounts; conditions for membership, membership fees, recruiting scope, and numbers of members residing in different geographic areas (administrative units); specific accounting of activities engaged in with the contributions (including planned activities), scope and methods of collection of contributions; contributor’s name, address, and amount given; names and compensation of employees; copies of all documents submitted to the permitting agency that granted the Tax-Deductible NPO its status as an NPO Legal Person. This agency must also attest that the NPO Legal Person has not violated its own charter or the law. Although the changes in the tax laws in 2001 do qualify as reform in that they allow NPOs to gain access to tax-deductible contributions, the requirements of qualification are exceedingly rigorous.26 In addition, it is curious that income tax exemption was not granted to NPOs at the same time as tax deductibility was permitted. This new tax regime tends to continue to prefer PILPs, in that they are allowed to be exempt from income tax and do not need to meet some of the requirements that NPOs face.

Public revenues of VNPOs Subsidies, contracts, and other public funds create resources for VNPOs that promote the development of the sector.27 Of course, too great a reliance on public funding can raise questions of organizational autonomy. Even in the United States, however, the state is the greatest single source of revenue for the entire non-profit sector [Salamon, et al., 1999]. This is true in Japan, as well. What is more interesting, however, is the pattern of disbursement of state resources. The Japanese state has favoured social

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welfare VNPOs at the same time resources for advocacy groups have been scarce. This is consistent with a pattern of state support for some organizations, though at the cost of their autonomy, coupled with efforts to discourage the development of other groups. The situation for many VNPOs that might receive state support has been complicated by Article 89 of the Constitution. This article stipulates that private organizations not under public control may not receive public funds. The interpretation of Article 89 varies, and the Ministry of Health and Welfare is said to be the most strict in interpreting its application to organizations that it supervises. Employment in the fields of education, health care and social services account for 86 per cent of total employment in Japan’s VNPO sector.28 Promotion of and government funding for Social Welfare Legal Persons is so great that most of them can be considered for all intents and purposes as part of the Government of Japan. This is also reflected in the tax treatment (see Table 5.4 above) of charitable contributions made to them, which outstrips that of any other group of VNPOs. The situation is very different when the treatment of organizations not so closely allied with the purposes of the government is taken into account (see Pekkanen, 2001a, 2002). These organizations tend to be small in terms of employment and budget, with advocacy groups in Japan averaging only 3.35 employees per group. In contrast, the average number of employees for a PILP is 1,409.29 Advocacy and environmental organizations receive the smallest amount of public funds in Japan. For example, while the average VNPO in Japan derives nearly half of its revenue from public funds, environmental organizations must make do with 27 per cent of theirs.30 In another study of Japan’s VNPOs, Tsujinaka found that 72.9 per cent of civic groups (shimin dantai – usually referring to more activist citizens’ groups) did not have legal status, and only 5.2 per cent of them had annual budgets exceeding 100 million yen. In contrast, Tsujinaka found that 90.9 per cent of agricultural or forestry groups had legal status and nearly a third of them had budgets over 100 million yen. And, while 29 per cent of civic groups had no budget to speak of, all agricultural or forestry groups had funds.31 In the same study, Tsujinaka found that civic groups were less likely than other types of group to be involved in reciprocal relationships with government agencies – providing and receiving information. In a separate study, moreover, Tsujinaka and Mori (1998a) found that civic groups were the least likely of all group categories, at 27.6 per cent, to be active on a national scale.32 Consistent with the patterns described in this chapter it is clear from the survey that independent civil society groups receive very little support from the state. They are treated as suspicious or threatening ‘outsiders’ more frequently than as potential ‘partners in public service’.


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Conclusion This chapter has detailed the current status of the regulation of the VNPO sector in Japan. While it shows that changes have occurred in recent years, they are not sufficient to adequately encourage the growth of a truly dynamic and independent civil society. Despite recent improvements, such as the 1998 NPO Law and the 2001 changes in tax treatment, the legal framework for Japanese VNPOs still has room for positive change. Expanding tax benefits would be a good first step. Loosening the regulatory hold that the bureaucracy has on large non-profit groups would be an even better one. In conclusion we recommend that the Japanese state look more closely at developments in other prominent industrialized countries and learn from their approaches to the VNPO sector – it has been shown that freedom of operations and significant tax incentives can promote a truly vibrant civil society that can partner with the state to accomplish important social goals.

Notes 1 In this chapter the terms voluntary and non-profit organization and non-profit organization will be used inter-changeably. Whilst the former is a more accurate reflection of the nature of the sector in Japan, the latter is more commonly found in Japanese legislation at present. 2 An important caveat is that there have been many policies in Japan promoting certain aspects of the VNPO sector – neighbourhood associations, social welfare legal persons, volunteering, and recently, and to a smaller extent, internationally-oriented development NGOs. See Pekkanen, 1999, 2001c, 2002, and forthcoming; Pickert, 2001; Kage, 2001 unpublished; Reimann, 2001. 3 Although much of the general literature in this field refers to all types of VNPOs as NPOs or NGOs (non-governmental organizations), in this chapter we reserve the term ‘NPO’ for the special type of VNPOs formed under the 1998 NPO Law. 4 All of these laws are important if the state is going to be able to take advantage of working cooperatively with the NPO sector. See Simon and Irish, 1998, Symposium issue of IJNL 2001. 5 For a fuller discussion of what good practice is in this regard, see ICNL, ‘World Bank Handbook on Good Practices for Laws Relating to Non-Governmental Organizations’ 1997, 2002; http: //www.icnl.org/handbook/english.html (hereinafter World Bank Handbook). 6 Under Japan’s Civil Code system, only 26,089 groups gained legal status as nonprofit Public Interest Legal Persons (PILPs), versus the 1,140,000 American VNPOs formed as legal entities. 7 A fourth category might include non-profit entities established as ordinary corporations because of the difficulties of becoming a PILP under Article 34 of the Civil Code. In practice, there have been some organizations that have resorted to being formed as a corporation under Article 35, but this chapter does not consider them.

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8 It should be noted that it was considered to be conceptually impossible for the government to be mistaken in its development of the definition of ‘public interest’. This conceptual difficulty pervades the way in which the PILP regime is administered and the way in which courts regard appeals against the exercise of a ministry’s discretion. 9 Juristo, ‘NPO ho¯ no kento¯’. No. 1105. 1 February 1997. NIRA kenkyu¯ ho¯kokusho No. 960075. Shimin ko¯eki katsudo¯ no sokushin ni kan suru ho¯ to seido no arikata. National Institute for Research Advancement, Tokyo, Japan, 1995. 10 For a general discussion of the problem of QUANGOs and GONGOs, see generally World Bank Handbook, 1997 and 2001. 11 The provision reads ‘ko¯eki ho¯jin wa setsuritsu mokuteki no tassei nado no tame, kenzen teki na jigyo¯ katsudo¯ o eizoku suru no hitsuyo¯ na kakko¯ to shita zaiseiteki kiso o yu¯ suru’ [in order to achieve the objectives for which it was established, the public interest legal person will have a sound financial base]. Note here, too, that this phrase is theoretically subject to a quite liberal interpretation. 12 A survey by Japan’s Economic Planning Agency showed that the citizens’ groups themselves identified the lack of social recognition to be the most serious single consequence of not having legal status. However, while all products of lack of legal status, answers such as ‘not having staff stability’ and ‘not being able to undertake trust work for the government’ and ‘not being able to sign contracts’ were all counted as distinct replies. (EPA Survey p. 27). 13 C’s nyu¯sureta¯ 22, 25 December 1998, p. 2. Mainichi Shimbun, on 6 December 1998, notes that although 3000 groups had been expected within the year, only 52 applied on the first day. 14 Noting this phenomenon, Nihon Keizai Shimbun, of 29 November 1998 gives the example of a Tokyo group involved in development work in Bangladesh which says that although legal status is ‘necessary’ for the group, they still have decided to wait and see how the law works in practice. 15 Mainichi Shimbun, 6 December 1998. The piece also notes that despite the law’s provisions, bureaucrats feel they still must scrutinize the groups out of a sense of responsibility should the group later misbehave. For a description of the ‘administrative guidance’ system, see infra under the discussion of regulation of PILPs. 16 Of 402 respondent groups (the incomplete survey mentioned above), 80.6 per cent reported being asked for changes to their application by the bureaucracy. Personal communication. Akira Matsubara, 20 August 1999. For a discussion of ‘administrative guidance’, see text at note 18. 17 This reflects the general bias the Japanese state has for promoting small local grassroots groups and inhibiting the autonomous development of large nonprofits. See Pekkanen 2000a, 2000b, 2000d, 2001a, and especially 2002, and forthcoming. 18 For a general discussion of these issues see the World Bank Handbook. 19 This supervision is established by Civil Code Article 67. Paragraph 2 establishes a ‘supervision system’ (kanshi seido) by the ‘competent supervising ministry’ (shumu kancho¯). Civil Code Article 84 makes further provisions for fines by Directors of PILP who violate directions by the competent ministry. 20 The Director of the Sasakawa Peace Foundation (a PILP), Iriyama Akira puts it well when he says, ‘even those like us who make it through and get permission


21 22 23 24

25

26

27 28

29 30 31 32

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have to suffer from very severe control and guidance from authorities. If I start to talk about the notorious administrative guidance, it’ll take days.’ Remarks at conference ‘Financial Support to NGOs’ sponsored by Japan Center for International Education, Tokyo, Japan, 20 June 1997. EPA Survey. Also see Juristo ‘NPO ho¯ no kento¯’. No. 1105, 1 February 1997. For further discussion of these issues, see World Bank Handbook. For a general discussion of the tax privileges accorded to VNPOs, see ICNL, Tax Preferences for Non-governmental Organizations. Note that some of these requirements might be Tax-Deductible by implementing ordinance. However, even if so, the great likelihood is that they will be altered only very slightly. The provisions can be found on the Ministry of Finance website: http: //www.mof.go.jp/genan13/zei001g.htm Note that some of these requirements might be amended by an implementing ordinance. However, even if they are, the great likelihood is that they will be altered only very slightly. The provisions can be found on the Ministry of Finance website: http: //www.mof.go.jp/genan13/zei001g.htm The public support test, while seemingly drawn from US law, is much more burdensome than the equivalent requirements of IRC section 501c) (3). It is unclear what the Diet was aiming at when it imposed these very strict tests. See generally Simon and Irish, 1998 and IJNL symposium issue, 2001. In a multinational analysis, Salamon, Anheier, et al. find this is the largest and ‘a much higher concentration than the 22–country average (68 per cent)’. (Salamon, Anheier, et al., 1999, p. 251). Naoto Yamauchi, 1997, Nonpurofito ekonomı¯, p. 217. Data are from the Prime Minister’s Office, 1997. The average for VNPOs is 45.2 per cent of funding coming from public sources [Salamon, Anheier, et al., 1999, p. 253; Yamauchi, 1999, p. 149]. Data are presented in Tsujinaka, et al., ‘Dantai no kiso ko¯zo¯ ni kan suru chousa’ chuukan houkokusho, 1998. Yutaka Tsujinaka and Yuujiro Mori, ‘Gendai nihon no rieki dantai: katsudo¯ ku¯kan betsu ni mita rieki dantai no zonritsu ko¯do¯ yo¯shiki’, Senkyo, vol. 51, no. 4, April, 1998.

References Amemiya, Takako. 1997. ‘Japan’, in The International Guide to Non-profit Law. Lester Salamon, ed., New York: John Wiley and Sons. Amemiya, Takako. 1999. ‘Japan’, in Philanthropy and Law in Asia. Thomas Silk, ed., San Francisco: Jossey-Bass. ¯ ta Mio. 1998. ‘The Scale of the Atoda, Naosumi, Amenomori, Takayoshi and O Japanese Non-profit Sector’. In The Non-profit Sector in Japan, Yamamoto Tadashi, ed., Manchester: Manchester University Press. Hayashi, Shuzo¯. 1972. Ko¯eki ho¯jin kenkyu¯ nyu¯mon (Introduction to Research on Public-Interest Legal Persons). Tokyo: Ko¯eki Ho¯jin Kyo¯kai. International Center for Non-profit Law (ICNL). 2001. Tax Preferences for Nongovernmental Organizations International Center for Non-profit Law (ICNL). 1997, 2002. World Bank Handbook on International Journal of Non-profit Law (IJNL), vol. 3, is. 4, 2001. Symposium Issue: NGO/Government Partnerships, Report on a Con-

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ference for Government Officials, Nongovernment Organizations, and NGO Representatives. Ishida, Takeshi and Ellis S. Krauss. 1989. ‘Democracy in Japan: Issues and Questions’. In Democracy in Japan, eds, Ishida, Takeshi and Ellis S. Krauss. Pittsburgh: University of Pittsburgh Press. Johnson, Chalmers. 1982. MITI and the Japanese Miracle. Stanford: Stanford University Press. Jurisuto. 1997. ‘NPO ho¯ no kento¯’ (Investigating the NPO Law). Jurisuto 1105. Kage, Rieko. 2001. ‘Why Volunteer? Explaining the Micro-Level Foundations of Civil Society’. Ph.D. diss. prospectus. Harvard: Harvard University (Unpublished). NIRA (National Institute for Research Advancement). 1995. Shimin ko¯eki katsudo¯ no sokushin ni kan suru ho¯ to seido no arikata (The Laws and System Regarding the Promotion of Citizen Public-Interest Activities). Tokyo: NIRA. Pekkanen, Robert. 1999. ‘Civil Society in Japan’. Paper presented at the annual meeting of the Association of Asian Studies Annual Meeting, Boston. Pekkanen, Robert. 2000a. ‘Japan’s New Politics? The Case of the NPO Law’. Journal of Japanese Studies. 26, (1): 111–48. Pekkanen, Robert. 2000b. ‘Ho¯, kokka, shimin shakai’ (Law, the State, and Civil Society). Leviathan, 27: 73–108. Pekkanen, Robert. 2000c. ‘Law, the State, and Civil Society’. Paper presented at the annual meeting of the Association of Asian Studies Annual Meeting, San Diego. Pekkanen, Robert. 2000d. ‘Theories of Civil Society: How Japan Fits’. Paper presented at the annual meeting of the American Political Science Association Annual Meeting, Washington, DC. Pekkanen, Robert. 2001a. ‘An Analytical Framework for the Development of Civil Society and the Non-profit Sector’. Washington, DC: Aspen Institute, Non-profit Sector Research Fund Working Paper Series. Pekkanen, Robert. 2001b. ‘A Less-Taxing Woman? New Regulation on Tax Treatment of Non-profits in Japan’. International Journal of Not-for-profit, L 3, available at http://www.icn1.org/journal/vol3iss3/cr_apacific.htm#.Japan. Pekkanen, Robert. 2001c. ‘Civil Society and its Regulators: Non-Profit Organizations in Japan’. Japan Information Access Program, Policy Paper. Washington DC: JIAP. Pekkanen, Robert. 2002. ‘Civil Society in Japan’. Ph.D. diss. Harvard: Harvard University (Unpublished). Pekkanen, Robert. Forthcoming. ‘Molding Japanese Civil Society: State Structured Incentives and the Patterning of Civil Society’. The State of Civil Society in Japan. Frank Schwartz and Susan Pharr, eds. Pickert, Mary Alice. 2001. ‘Dis-Embedding the State? The Transformation of the Intermediate Sector in Japan’. Presented at the annual meeting of the Association for Asian Studies Annual Meeting, Chicago. Prime Minister’s Office. Various years. Ko¯eki ho¯jin hakusho (Public-Interest Person White Paper, 1998). Tokyo: Ministry of Finance. Reimann, Kim. 2001. ‘Building Networks from the Outside In: International Movements, Japanese NGOs and the Kyoto Climate Change Conference’. Mobilization, 6(1): 69–82. Salamon, Lester M. and Helmut Anheier. 1997. Defining the Non-profit Sector: A Cross-National Analysis. Manchester: Manchester University Press.


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Salamon, Lester, Helmut K. Anheier, Regina List, Stefan Toepler, S. Wojciech Sokolowski and Associates. 1999. Global Civil Society: Dimensions of the Nonprofit Sector. Baltimore: The Johns Hopkins Comparative Non-profit Sector Project. Shimizu, Hiroko. 2000. ‘Strategies for Expanding the Non-profit Sector in Japan: An Assessment of the Potential and Constraints on Non-profit Organization Use of Volunteers and Paid Staff’. Paper presented at the International Philanthropy Fellow Seminar, Center for Civil Society, Baltimore: The Johns Hopkins University. Shipper, Apichai. 1999. ‘Reconstructing Reality: Foreign Workers and Secondary Associations in Japan’. Tokyo: United Nations University, Institute of Advanced Studies. Simon, Karla W. and Irish, Leon E. 1998. Legal Mechanisms for Development Partnerships. International Journal of Non-profit Law, http: //www.icnl.org/ journal/journal.html Tsujinaka, Yutaka. 1988. Rieki shu¯dan (Interest Groups). Tokyo: University of Tokyo Press. Tsujinaka, Yutaka. 1998. ‘Seijukugata shimin shakai to NPO/NGO shimin katsudo¯ dantai’ (Mature Civil Society and NPO/NGO Citizens Activities Groups). NIRA seisaku kenkyu¯ 11(9): 16–23. Tsujinaka, Yutaka and Mori, Yu¯ji. 1998a. Gendai nihon ni okeru rieki dantai no zonritsu yo¯shiki (Interest Groups in Contemporary Japan). Tsukuba: Tsukuba Ho¯sei. Tsujinaka, Yutaka and Mori, Yu¯ji. 1998b. ‘Gendai nihon no rieki dantai: katsudo¯ ku¯kan betsu ni mita rieki dantai no zonritsu ko¯do¯ yo¯shiki’, Senkyo, vol. 51, no. 4, April, 1998. Tsujinaka, et al., ‘Dantai no kiso ko¯zo¯ ni kan suru chousa’ chuukan houkokusho, 1998. Upham, Frank. 1987. Law and Social Change in Postwar Japan. Cambridge, MA: Harvard University Press. Yamamoto, Tadashi. 1999. Deciding the Public Good. Tokyo, Japan: JCIE. Yamauchi, Naoto. 1997. Nonpurofito ekonomı¯ (The Nonprofit Economy). Tokyo: Nippon Hyo¯ronsha. Yamauchi, Naoto. 1999. NPO de¯tabukku (NPO Databook). Yuhikaku: Tokyo.

Periodical Japanese Newspapers: Mainichi Shimbun; Nihon Keizai Shimbun.

6

Businesses and the NPO sector in Japan Development and prospects Nobuko Kawashima

Introduction What Michael Useem states in relation to corporate philanthropy in the US exactly applies to Japan: ‘corporate gifts to non-profit organizations do not constitute a major fraction of either’s income’ (Useem 1987: 340). Nonetheless, just as he continues, the stakes are high for both sides in Japan, too. This chapter analyses the development of the business nonprofit organization (NPO) relationship in Japan over the last ten years, tracing it from the rise of corporate philanthropy to the emergence of a business–NPO partnership. It looks at the development of corporate philanthropy which has contributed to that of the NPO sector, and points out some of the issues for the expansion or deepening of the cross-sectoral partnership in the future. A few notes about what I mean by the term Non-Profit Organization (NPO) in this paper must be made here. There is no easy way of defining the non-profit or voluntary sector, as Salamon and Anheier (1997) extensively discuss, a problem almost universally experienced in many countries. This is particularly the case in Japan due to the complex legal system concerning the sector as I have detailed elsewhere (Kawashima 2001). I have chosen to be self-definitive and arbitrary rather than employing an objective categorization of organizational forms. Broadly mixing the definition employed in a report on citizen’s public interest activities (NIRA 1994) with the definition used in a comparative research project organized by the Johns Hopkins University in the USA, I will discuss those organizations which typically possess the following features: . . . .

independence from government; formality or continuity (thus excluding one-off projects but including unincorporated groups); established by private initiatives (thus excluding quasi-non-governmental organizations and trade associations); some element of ‘public benefits’ (however, this does not exclude selfhelp groups);

Businesses and the NPO sector in Japan . .

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profits not divided among members; and self-governance.

I will, however, use the term NPO ho¯jin when referring specifically to NPOs incorporated under the Law on the Promotion of Specified Non-profit Activities enacted in 1998, as discussed in the previous two chapters on legal reform of the NPO sector in Japan.1 The literature on which this chapter draws includes books and major studies on corporate philanthropy particularly those published by the Keidanren,2 or the Japan Federation of Economic Organizations, the most established, powerful and influential business organization in Japan. As will be seen, the Keidanren has been promoting corporate citizenship and has conducted surveys among its member companies representing 1000 of Japan’s top companies across industries. The published reports of these surveys shed light on the development of corporate citizenship over the last ten years or so. In addition published proceedings of seminars and symposia have been consulted. My personal interviews with the corporate philanthropy officers of major companies have also informed the writing of this chapter. All citations from the Japanese references in the following are my own translation.

Early 1990s: the rise of corporate philanthropy During the late 1980s to early 1990s businesses in Japan were introduced to the idea of corporate philanthropy and corporate citizenship as a guiding principle and philosophy of management and corporate behaviour for the first time. Of course corporate philanthropy had existed in Japan prior to that. But it had mostly derived from the personal philosophy of the company owners and not instituted in the mission of companies. Businesses were making donations, but often reluctantly and in an ad hoc manner, in response to requests from Keidanren-led or governmental fundraising campaigns. Since the last 1980s, however, Japanese businesses have changed considerably, which, I will argue, has had a positive impact on the development of the NPO sector. What has formed the background to the rising awareness of corporate philanthropy can be analysed at both the macro and micro level. The former refers to a broad societal context, including factors such as an increase in complex social problems, the need for diversity in social services and in Japanese society in general. The micro level is related to changes in the operating environment for the business sector. At the macro level, there had been a growing public awareness that many of the social problems and issues Japan faced could no longer be left to the state. For example, one of the most serious concerns for Japanese social policy is the speed at which society is ageing. The Japanese population has hitherto been relatively young. However, it is projected that by the year 2015 about 25 per cent of the total population will be over sixty-five,

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double the current figure, and the ratio of those aged seventy-five and over in particular is expected to increase (Ministry of Health and Welfare 2000). Pension payment above all, but also the cost of health and care for the elderly, are expected to push up social expenditure, something the government has tried hard to contain, at a time when the younger, working population is diminishing. In the meantime the collaboration between the bureaucracy, politicians and industry which had shaped the pre-war structure of the Japanese economy and politics started to erode in the early 1990s, manifested by the first defeat for the Liberal Democratic Party since 1955 in the general election of 1993. Together with the globalization of the economy, the shift of the economy from traditional manufacturing to service and high-tech industries challenged the old coalition. Under these circumstances people started to feel the need to have a more diverse approach to the governance of the public sphere, calling for greater for-profit sector involvement with the NPO sector. At the same time consumerism was re-emerging and a concern with quality of life was growing. People were increasingly dissatisfied with the quality of the services provided by the public sector, which in principle guaranteed only minimum standards and offered a limited range of choice. The general public started to articulate the belief that social service provision should be customer-oriented rather than supplier-led. Alternatives were increasingly sought which might improve the quality in welfare services, for example, in community-based services. At the micro level focusing on the corporate sector, Japanese businesses were experiencing rapid globalization from the second half of the 1980s. Manufacturers set up factories and distributions overseas particularly in the USA, whilst financial firms invested in overseas properties and stock markets. The globalized activities of Japanese business, however, often caused much tension and conflict locally. It became necessary for large businesses to cope with criticism towards Japan in the foreign countries where they operated, whether advanced such as the USA or developing such as Indonesia. Particularly in the USA where the indigenous business sector extensively contributes cash and non-cash support to a wide range of social causes, it was becoming an urgent issue for Japanese subsidiaries to have an understanding about the importance of corporate citizenship (Keidanren 1996: 16). Another factor that helped the development of corporate philanthropy stemmed from the changes in Japanese society mentioned earlier, namely, growing sentiment that Japan needed to reform the economic, political and social systems that had sustained its postwar growth. The business community felt the need to change its culture from being profit-driven and hence narrow-minded to being more receptive to diverse ways of thinking which had hitherto often been dismissed as inefficient in Japan. For this purpose, to become more community-related seemed to offer a solution. Businesses hoped to learn from different philosophies and principles of behaviour, something which philanthropic activities seemed

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to encapusulate. Businesses thought that opening doors to the culture different from the corporate world would help to revitalize themselves and to nurture an environment full of innovation, creativity and originality. This change in culture was defined as one of the long-term, indirect returns of corporate philanthropy (Shimada 2001: 7). In short, both the business sector and the general public were seeking an alternative culture for Japanese society where diversity would be respected and creativity nurtured. It was clear that the old division of labour between the public and private sectors would no longer be effective. According to Takeo Shiina, former Chairman of IBM Japan and Chairman of the Corporate Philanthropy Committee of Keidanren, the business sector felt that it was its responsibility to invest in the creation of a healthier and more vibrant society and enhancing its well-being, without which economic growth would not be sustainable (Gekkan Keidanren 2000, 5: 14). One of the most symbolic phenomena in this context to represent the rising corporate awareness for the need to engage in philanthropy was the foundation of the One Percent Club administered by Keidanren. Drawing on the American model, this is a voluntary association for businesses and individuals who commit themselves to donating at least one per cent of their pretax income to charitable causes. There are neither binding rules nor measures to monitor whether the donations are actually made to the promised level or not, but the point is that the club members are sympathetic to a philanthropic society and committed to contributing to the creation of one in Japan. Considering the club is of a voluntary nature, with no immediate return or penalty involved for its members, it has been remarkably successful, gathering as many as 176 companies from its outset and numbering 282 companies and about 1500 individuals in 2000. The establishment of this club received considerable media attention, and promoted the development of corporate philanthropy in the following years. Major contributions officers who met regularly at the Keidanren defined corporate philanthropy in the following terms: ‘to identify social and societal issues and aim to solve them voluntarily by contributing corporate resources without expecting immediate and direct returns’. Businesses thereafter have set up divisions dedicated to corporate philanthropy with designated budgets, and have sometimes re-written mission statements for the whole company integrating the spirit of a socially responsible business, in addition to setting goals and objectives for corporate donations and other philanthropic activities. A large number of companies have appointed managers responsible for the planning and implementation of philanthropic activities. Despite such a quick rise in corporate philanthropy built on the philosophy of ‘enlightened self-interest’, it must be noted that back in the early 1990s few businesses paid attention to NPOs as partners, with whom they could work in realizing their spirit and ethos. This might look strange or even implausible in an Anglo-American context where donations to

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NPOs is central to corporate philanthropy programmes. Japanese businesses at that point were more internally focused. Although there was a general understanding about the importance of being socially responsible, it was difficult for the managers posted to the newly-created departments for corporate philanthropy. The staff struggled to ‘theorize’ why businesses needed to change their attitudes and plough their profits back to the community and how this could be linked to their profit-making activities. A large number of seminars and symposia were held to develop theories and justifications on this issue. Quite a few study trips were made to the USA and Europe at the same time so as to learn the philosophies and concrete examples of corporate philanthropy activities abroad. In planning corporate philanthropy programmes, attention was paid first of all to self-promoted activities and secondly to volunteer activities by employees, but less to NPOs. Self-promoted activities encompassed a broad range of events such as making company grounds and facilities available to the public on certain days, inviting single mothers and their children to picnics, or developing multimedia technologies specifically for visual artists. The Keidanren has regularly surveyed its member companies and the corporate members of the One Percent Club on attitudes and examples of corporate philanthropy. Around 320 companies have responded each year and the results have been published in the Reports on Corporate Philanthropy by the Keidanren. The Reports show that Japan’s major businesses at least tend to have a good grasp of corporate philanthropy already. As Table 6.1 shows, self-promoted activities by the respondents occupies a steady and important place. For many companies, there are additional expenses for self-promoted programmes for the public interest, which are not reflected in these figures. For example, a number of Japanese businesses own and manage arts venues that do not yield net profits, but such activities are financed as a form of corporate support for the arts. The budget for cultural affairs in such cases tends to be handled by a separate designated department and is therefore unlikely to be included in Table 6.1. Second, volunteering was particularly preferred in the business sector to a wide range of schemes and projects introduced as good examples of corporate philanthropy in action. It can be argued that employee volunteering was highlighted because companies were finding it desirable for their employees to extend their life experiences beyond the company. In Table 6.1 Expenditures of corporate philanthropy programmes per company in the survey (million Yen) 1993 1994 1995 1996 1997 1998 1999 2000 2001 Self-promoted activities Charitable donations

115 293

115 281

106 297

147 265

144 275

138 247

148 257

148 274

110 234

Source: Keidanren 2001: 169, http://www.keidanren.or.jp/japanese/policy/2002/081.pdf (accessed on the 14 February 2003)


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other words, employee volunteering was considered to be instrumental to the goal of changing corporate culture as explained earlier. Volunteering was also of interest to the companies because this needed only modest investment and required no large-scale change in the law on, for example, taxation. It can also be said that businesses failed to understand that volunteering was only one component of an NPO and that supporting the latter could open up many possibilities. Businesses started with encouraging employee volunteering by providing three resources: paid leave especially for such purposes; making direct donations to the organizations employees volunteer for; and giving information on organizations which employees could go and assist. By 1993 over one third of the respondents in the Keidanren survey provided some form of support for employee volunteering, and the figure jumped to over 60 per cent by 1999. Some companies felt that the most important form of corporate philanthropy was their employees being seen to be volunteering in the communities in which the businesses operated. They effectively forced their staff to ‘volunteer’ on weekends, for example, cleaning parks and streets. Although this shows a misunderstanding of the concept of volunteering, there were many good practices, and the media were keen to report these cases. Whilst individual companies were concerned with theorizing their philanthropic activities and particularly interested in employee volunteering, the business community as a whole was interested in issues related to tax relief for charitable donations. In order to understand why this was made an issue, it is necessary to explain at some length the relevant schemes of Japan which present a very complicated picture. There are four kinds of gifts which can be deducted from the taxable income of companies. First, donations to the Japanese government (central and local) can be fully deducted. Second, donations to ‘Public Interest’ projects as designated for the period of a year by the Minister of Finance and initiated by Public Interest Corporations and others, can also be fully deducted. Third, donations to tokutei ko¯eki ho¯jin (Special Public-InterestPromoting Corporations), including all Educational Corporations and Social Welfare Corporations, part of Public Interest Corporations designated as such and some Special Legal Entities, can be deducted. Whereas there are no upper limits on the donations for the first and second categories, donations in the last category can only be deducted up to a certain limit worked out through a formula.3 What is important to note here is that the Public Interest Corporations mentioned above are often quasi-governmental. Also the Educational Corporations and Social Welfare Corporations are private in constitution but are semi-public, as they are publicly-funded, closely scrutinized by the relevant governmental departments and mostly ‘institutionalized’ rather than remaining voluntary in nature. Special Legal Entities, for example the Japan Highway Public Corporation, can hardly be called private and voluntary. In short, corporate

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gifts which are tax-deductible within these three categories do not represent private philanthropy but in practice finance government activities. There is however a fourth category of tax-deductible donation for companies which has little to do with government intervention. This category is in fact a curious one, since there is no specification whatsoever as to the status of the recipient or the purpose of the gift; only a formula (the same as the one spelt out in note 3) exists to set a limit on the sum of deductible donation. Businesses can thus make use of this category in making charitable contributions and obtain tax concessions relatively freely, which in theory should benefit NPOs. In practice, however, this is often used for the purpose of making donations to political parties, or making financial transfers to sister companies and others which help creative accounting (NIRA 1994: 30). It is therefore extremely difficult for NPOs to be considered as beneficiaries under this scheme. Moreover, whilst the first three categories are applicable to donations by individuals (with a different formula), the absence in the system of an equivalent of the fourth category for private individuals has often been cited as one of the stumbling blocks to the development of a philanthropic society. The Corporate Philanthropy Report of 1992 by the Keidanren thus argued that tax-deductibility should be broadened to encourage business and individual support for philanthropic causes (18). Table 6.2 shows the breakdown of corporate giving under the different categories of tax-deductibility and its trend since the mid-1980s. It is difficult to determine the exact level of corporate giving for charitable purposes in Japan because of this tax relief scheme, and it is unknown whether relaxation of tax-deductibility might result in an increase in donations. It is apparent from statistics released by the Inland Revenue that the corporate sector as a whole does not make donations up to the existing deductibility limit: corporate gifts in cash totalled about 454 billion yen in 1996, which represented only 15 per cent of the deductible amount for tokutei ko¯eki ho¯jin (Special Public-Interest-Promoting Organizations) and about half of the amount for any gift (Ko¯eki ho¯jin 1997, 2: 6–7). As has been explained, these gifts however are even inclusive of donations for purposes that can only be described as non-charitable. Table 6.2 Corporate donations by all companies in Japan, 1985–99 (billion Yen)

Category 21 Category 3 Other2 Total

1985

1987

1989

1991

1993

1995

1997

1999

53.1 45.4 186.4 285.0

64.1 55.0 236.8 355.9

88.4 66.6 267.3 422.3

121.5 85.6 356.3 563.4

101.0 79.2 343.4 523.6

102.6 74.7 275.7 453.0

96.3 73.9 403.7 574.0

77.8 64.9 340.3 483.0

Source: Internal Revenue 1993, 2000 Notes: (1) The fluctuations in this category are caused by the changes in the projects defined as ‘Public Interest’ Projects. (2) This is supposed to include donations in the first and fourth categories explained above.


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The government therefore argued that the lack of a so-called adequate tax-deductibility scheme for charitable donations was an excuse for declining appeal rather than a substantial hurdle. The business sector argued, however, that the state should explicitly show its supportive attitude towards corporate philanthropy by broadening the scope of taxdeductibility for charitable donations. Evidence was also shown that there was a substantial number of companies whose donations exceeded the taxdeductibility limits, numbering 30 to 60 out of the 300 or so respondents in the Keidanren surveys during the first half of the 1990s. These companies found the limitation inconvenient and discouraging (Keidanren 1996: 23). To sum up, corporations in the early 1990s were internally-oriented, paying little attention to the range of NPOs actively engaged in a variety of social causes. The Corporate Philanthropy Report of 1992 published by the Keidanren highlighted three specific policy issues and emphasized the need for change on each of these. The first is the need to increase accessibility to information on Special-Public-Interest-Promoting Corporations. As has been explained, these organizations have privileged status in the treatment of tax-deductibility, but it was only from 1992 that even the full list of their names was made public. If a company wanted to make a tax-deductible gift, it would want to choose one of these Corporations, but it was difficult to know where they were and what they were doing for whom. The second policy issue the Report discussed is related to taxation. The business sector demanded that company giving should be made more flexibly taxdeductible. It also argued that in order to create a more genuinely civil society in Japan, individual giving to charitable causes should receive more favourable taxation treatment. The concern with these issues, particularly the first one, shows that businesses were more interested in relatively ‘established’ organizations within the broad NPO sector than small-scale grassroots associations. The third policy proposal mentioned in the 1992 Keidanren report was a call for more information on where people can participate in volunteer activities. However, NPOs were not mentioned as a place to which people were already giving their time.

Mid-1990s: NPOs in a higher profile It is therefore safe to conclude that although corporations were becoming acutely aware that they needed to become more socially oriented and responsive in the early 1990s, they did not have extensive knowledge about or sufficient contact with the prospective recipients. NPOs, particularly civic groups and activities that might well be unincorporated, received limited attention. This, however, started to change in the mid-1990s. The major turning point was the Hanshin Awaji earthquake of 1995. This natural disaster (discussed in more detail in the earlier chapter by Makoto Imada), that killed thousands of people, drew the attention of the mass media and of the corporate sector to the ‘existence’ and impact of the

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voluntary sector. In contrast, it was much reported that central government and local authorities were slow in responding to this human tragedy. Many of the businesses that had corporate philanthropy programmes worked with NPOs to provide immediate aid for the victims and subsequently supported the communities of Kobe in their redevelopment efforts. Through these incidents, the value of volunteers and voluntary groups, who were dedicated and responsive to the local community, was much appreciated by the society at large. It was not only the speed but also the commitment that NPOs were making to fill diverse needs that impressed businesses. Whilst governmental provision of relief, meals for example, was standardized for everybody, NPOs catered for specific dietary needs of the different communities. Some NPOs helped people with limited literacy in Japanese in Kobe’s deprived areas hardest hit by the earthquake. For these people, ethnic minorities living in Japan for a long time but unable to read Japanese, translations were provided of the announcements and instructions on evacuation, and the aid and provisions offered by the local authorities. This natural disaster, unprecedented in terms of loss in the recent history of Japan, had a profound impact on the discourse on corporate philanthropy, which started to include references to NPOs. This is manifested in the 1996 version of the Keidanren Corporate Philanthropy Report: ‘volunteering is only one of the parts that compose a wide range of NPO activities’ (Keidanren 1996: 21) The Report further emphasized the important role NPOs could play with businesses: We hope that NPOs which are important partners for businesses when they put philanthropic goals into action are socially recognized and have a sound basis for their activities. . . . It is difficult for us to make charitable donations to unincorporated associations and apparently ‘business firms’ which are de facto non-profit activities [due to the lack of legal framework appropriate for them] and to collaborate with them for social programmes. (Keidanren 1996: 21–22) High expectations for NPOs were mentioned not only in the context of corporate philanthropy but also in changing the culture of Japanese society which the business sector did not find thriving: We expect . . . NPOs to bring changes to Japanese society which seems to be at its deadlock with their distinctively positive features such as innovativeness, flexibility and enthusiasm. . . . Japanese society after World War II has neglected the importance of diverse values, and instead sometimes tried to exclude them. It is important now that we change our attitude dramatically from having government as the sole planner and provider of social services to encouraging the private sector


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including not only ourselves but also citizens to participate in making Japan a better place to live in (ibid.: 22) The Keidanren, recognizing the important role grassroots civic groups could play, became actively involved with the proposed legislation for such groups. To explain the legal problems concerning NPOs in Japan would exceed the limited space of this chapter, but in short, private, voluntary associations for public (and mutual) interests had found it extremely difficult to incorporate themselves and remained unincorporated. A research committee formed within the Keidanren worked hard to realize the enactment of a new law that would provide a legal framework for such groups. A new law passed in 1998 for Specified Non-Profit Activities owed much to the existence of support given by the business sector.

Late 1990s: from support to partnership Thus in the mid-1990s the business sector began to realize the importance of NPOs. However at this point NPOs were seen as a possible beneficiary of corporate philanthropy, in other words, somebody to give to. The new law was needed by businesses because without this legal framework it was difficult for them to give donations to semi-NPOs which were not legally formalized. Another change took place in the second half of the 1990s. This time the major trigger was one of the worst economic climates in the postwar history of Japan. Although the end of the so-called ‘bubble economy’ of the 1980s was experienced much earlier, serious symptoms of the recession the Japanese economy was experiencing became more prominent in the second half of the 1990s. With the economy so weak, budgets for corporate philanthropy could hardly expand, but it would be too simplistic to conclude that corporate philanthropy just declined. Rather, businesses polarized into those that are keen and continue with corporate philanthropy and those that lost interest or withdrew. The Centre for Employee Volunteering has been conducting surveys including questions on corporate philanthropy to over 1000 companies across all sizes and industrial sectors in Japan. According to its report published in 1999, 44.9 per cent of the responding companies engaged in some kind of corporate philanthropy activities in 1998, significantly down from 72.2 per cent in 1991 and 52.5 per cent in 1995 (Centre for Employee Volunteering 1991). It finds however that over 70 per cent of the large businesses with more than 1000 employees still have philanthropic programmes. These companies express their determination to continue the programmes regardless of the economic climate, indicating that corporate philanthropy has firmly taken root in a specific segment of the business sector.

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The Keidanren Report likewise shows the stable place of corporate philanthropy amongst major businesses. As Table 6.3 shows, the level of company giving has managed to remain relatively strong, with a significant increase in relative terms caused by a decrease in corporate income. The economic difficulties of recent years has instead driven businesses with a firm belief in corporate philanthropy to seek optimum effectiveness of their philanthropic activities. Giving away in its own right would no longer be good enough however virtuous it might be. Corporations are now goaloriented in their philanthropic programmes, paying attention to the effects of giving. NPOs emerged as an important partner with whom corporate resources may have achievements to the best possible effects. The 1999 version of the Report by the Keidanren thus gives lavish praise and credit to the NPO sector. The questionnaire for the survey on which the Report has been based sent to major companies this time added some questions regarding corporate attitude and behaviour towards the NPO sector. To the new question ‘To what extent do you feel supporting the NPO is important?’, more than two thirds regard it as important (Keidanren 1999: 33, 85). The Report is also full of admiration and expectations for NPOs: It is important to recognize the NPO sector as the third sector, in addition to the government and businesses, that contributes to solving the increasingly complex social issues in Japan, as NPOs serve diversity in values with their innovative power and professional expertise (Keidanren 1999: 19) Accordingly, the status of NPOs has been lifted from ‘the beneficiary of corporate philanthropy’ to ‘an equal partner for business’ (ibid.: 24). To back up this change in the business attitude to and perception of NPOs, in fact corporate donations to NPOs narrowly defined (i.e. citizens associations and NPO ho¯jin under the new law) have increased four-fold. In 1997 donations to NPOs averaged 32.5 per company and amounted to eight million yen in total. Within two years, the value of such donations jumped to 44 million yen although the number of donations remained the same or slightly decreased (Keidanren 2001: 171). With a slight decrease to 35 million yen in 2001, it is unknown to what extent donations in this category will remain maintained and it must be noted that the informants, Table 6.3 Expenditures on corporate philanthropy as percentage of pretax corporate income 1993 1994 1995 1996 1997 1998 1999 2000 2001 Percentage Number of respondents

4.25 3.50 3.30 2.88 2.97 2.70 4.76 2.56 3.31 310 318 312 350 319 256 229 274 218

Source: Keidanren 2001: 170, http://www.keidanren.or.jp/japanese/policy/2002/081.pdf (accessed on the 14 February 2003)


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numbering 306 firms in 1999, only represent large, established businesses which were keen on corporate philanthropy programmes. Nevertheless, it seems safe to conclude that at least businesses in this group are becoming positive about ‘partnering’ with NPOs. Given the above data on corporate giving to NPOs as defined broadly in this paper and to NPO ho¯jin under the law of 1998 in particular, one wonders what significance corporate gifts have for the NPOs’ income. Unfortunately this is very difficult to know for two reasons. One is that although statistics on the Public Interest Corporations (part of which are NPOs as defined in this chapter) is available, it is meaningless for our purposes as these organizations by definition include a large number of quasi-governmental entities. Second research into non-profit financing seldom distinguishes corporate and individual donations. According to a survey conducted by the the Economic Planning Agency of central government into 4152 citizens’ public interest groups (for whom incorporation has become possible with the law of 1998), only 4.8 per cent of their annual income comes from donations and 7.9 per cent from ‘grants from the private sector’ (Economic Planning Agency 1997). The respondents of this survey however include a large number of very small groups: 40 per cent of the respondents did not (or could not) provide data on annual income and expenditure, and one third of those who did earned less than 100 000 yen per annum. A follow-up survey conducted by the Economic Planning Agency into 663 NPO ho¯jin and 760 civic associations however finds a larger proportion of the respondents (particularly NPO ho¯jin) reporting the receipt of donations, although for the majority the total value of the donations per organization is less than two million yen per year (Economic Planning Agency 1999: 41, 106). Interesting data can be obtained in a research report by C’s (2001) that surveyed 346 NPO ho¯jin established under the law of 1998. It finds that each NPO on average received about 20 per cent of its annual income (average 25 million yen) from donations. To what extent the donations come from the business sector is, however, unknown. It must also be noted that one fourth of the total sample of 346 received no donation at all. Overall, as I stated in the opening sentence of this chapter, company giving to NPOs is marginal both for the donor and for the recipient, particularly to grassroots NPO ho¯jin. Nonetheless, this is not to deny the importance of the business–NPO relationship for both sides where it exists. Although still small in number, there are some interesting cases of business–NPO partnerships in recent years. For example, Nissan Motor Company has started a new scheme of sending university students to NPOs for internship. The major purpose of this scheme is not to provide NPOs with a workforce, but it is meant to help students regardless of what they wish to be in the future to develop their ability and skills to identify issues, analyse them and devise solutions. In theory an internship scheme with such an aim could take place at Nissan, but the company thought that NPOs

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would be more effectively able to train students for developing such skills, and has been asking NPOs to help the programme and host the students. This programme does not cost the company much money, but has been very successful in giving new perspectives and experiences to the awarded students and the host organizations. NEC, one of the largest electronic manufacturers in Japan, had worked with the Wild Bird Society of Japan for nine years. During that period, company experts were involved in developing software to track the migration courses of specific birds in danger of extinction. NEC was much impressed with the professional expertise on the subject and judged this to be a worthwhile cause to support. The partnership was fruitful for both sides. For NEC, the project has served its policy for natural environmental protection. Sometimes consortia are set up to help NPOs. The Japan Alliance for Humanitarian De-mining Support (JAHDS) is a good example of such a multibusiness–NPO partnership. Although this NPO had the technology of locating groundmines from its outset, it needed other resources to make the technology work in practice. Other relevant technologies have been developed by Omron Inc and IBM Japan, whilst transport has been provided by Japan Air Lines, Toyota and Honda. Additional business partners have been involved to give their business-related skills or funds.

Businesses and NPOs: Issues With businesses becoming interested in and active about working with NPOs for tackling social problems in Japan, it is important to note some of the issues for the development of such a partnership. It seems that many of the hurdles to a good NPO-business relationship identified in the early 1990s have been removed by now. As I have noted, the businesses that have remained committed to corporate philanthropy have written specific goals and objectives, which are put into action by designated personnel with corporate resources in a systematic and professional way. The problem of legal complexity for semi-NPOs has been solved by the legislation of 1998. From October 2001 Special NPO ho¯jin designated as such will have a special status in relation to the tax-deductibility of the gifts made to them. The changing relationship between business and NPOs as has been described in this chapter can be better understood with the framework given by Austin (2000). Identifying three types of NPO–business relationship on a Collaboration Continuum, he calls the first phase of the relationship ‘philanthropic’, which is classic and still commonplace. According to him, however, the relationship is increasingly moving to the second ‘transactional’ phase. While the relationship in the first phase is generally limited to a company giving annual, generous grants to a charity, the second phase involves more active, project-specific activities such as cause-related marketing and event sponsorships. In the USA the relationship is progressing recently to the third stage that he calls ‘integrative’. This involves both sides agreeing


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on missions, values and goals that lead to collective action and organizational integration. At this stage resource exchange between the partners intensifies. The alliance is central to both organizations’ strategies and may well involve personnel involvement at the governance level. A very limited number of cases to exemplify the third, ‘integrative’ phase exist in Japan, too. One is the foundation of an NPO by IBM Japan. This NPO aims to provide support for the development of Information Technology at other NPOs. The company has provided not only funding but also personnel, including retired members of its staff, to set up the NPO. It is expected that the ‘parent’ company and the NPO will continue to develop projects together, and that the latter will help to implement the corporate philanthropic plans of IBM (Dentsu¯ Institute for Human Studies 2001: 28–29). One large outstanding issue for a further development of business–NPO relationships, therefore, seems to rest with NPOs. The above example of the IBM-initiated NPO, albeit planning to involve other businesses and private individuals, suggests that existing NPOs may not always be attractive to businesses for various reasons. Firms may well find it easier and more effective to help set up an NPO which they know will be competent with reliable management skills in strategic planning. The NPO sector is well aware of the need to learn good management skills, as discussed further in the concluding chapter to this volume. There have been quite a few publications and seminars on non-profit management at various places and occasions across the country, focusing both on general principles and on specific issues such as accounting. Whilst these are important and may be useful, however, they tend to be training for immediate use rather than management for organizational development. In the long term, strategies and management at senior executive level must also be developed. Issues involved at this level include strategic planning, organizational design and marketing management. Gradually, initiatives are being taken to address this level of management, but there is still some way to go. Although not much discussed in the Japanese non-profit sector yet, Anglo-American experience suggests an additional issue; non-profit governance at board level will also become critical in the near future.

Conclusion This chapter has traced the development of the business–NPO relationship since the early 1990s up to the present day from the evolution of corporate philanthropy to what might be called the first signs of integrated alliance between the two sectors. Although this may be limited mainly to Japan’s leading companies, the business sector has by now accommodated the principle of corporate citizenship and understands it will serve long-term business purposes. NPOs have emerged as an interesting partner for putting the philosophy of community relations into action, which has been manifested in some of the business–NPO partnerships of recent years.

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To conclude what may seem a positive description of the relationship between the profit and non-profit sectors, however, it must be noted that there is potential for competition and conflict between the two, particularly when NPOs start to possess good management skills. Related to this issue is the law on Long-term Care Insurance enacted in April 2000 which aims to develop community care for the elderly. This new social insurance enables those in need to purchase services from a variety of service providers who are registered with local authorities. They can be from any of the three sectors: public, private for-profit and private non-profit. Thus NPO ho¯jin in local communities caring for the elderly may well start to provide services on a contractual basis with local authorities who are in charge of reimbursing the costs. At the time of writing, less than 3 per cent of the registered service providers are NPO ho¯jin, 26 per cent for-profit businesses, while the rest includes Social Welfare Corporations and Medical Corporations (Ministry of Health and Welfare 2000). It is still too early to examine whether the legislation has led to any competition between NPOs and business, but a research report by C’s (2000) shows that about half of the 463 NPO ho¯jin under the survey working in a variety of fields including personal social services are aware that their own activities at least partly compete with the business sector. Considering that over 35 per cent of NPOs in a different survey (Economic Planning Agency 1999: 56) express their hope of deriving their annual income mainly from contract fees and user payments in the future, competition with for-profit care providers may well cause strain and debate in the years to come.

Notes 1 This legislation marked a major development in the history of the NPO sector in Japan. Other forms of non-profit corporation are hardly accessible for the general public who want to establish a formal organization for their not-forprofit, public (or mutual) benefit. Under this law the establishment of an NPO only needs governmental registration. Twelve areas of activity are specified for registration purposes. At the time of writing over 5000 NPO ho¯jin are registered. 2 The formal name of Keidanren (now renamed Nihon Keidanren) in Japanese was Keizai Dantai Rengo¯ Kai, but the abbreviation has been widely used. 3 The calculation is made as follows: (paid-in capital and capital surplus62.5/ 1000 + current net profits62.5/100)61/2.

References Austin, J.E. (2000). The Collaboration Challenge: How Non-profits and Businesses Succeed through Strategic Alliances. San Francisco: Jossey-Bass. Centre for Employee Volunteering (1999). Kinro¯sha no Borantia ni kansuru Cho¯sakenkyu¯ (Research Report on Employee Volunteering). Tokyo: Centre for Employee Volunteering.


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C’s (2000). Tokutei hieiri katusdo¯ hojin no genjo oyobi katsudo¯ no jo¯kyo¯ ni kansuru cho¯sa ho¯kokusho (Research Report on NPO ho¯jin: Current Status and Activities). Tokyo: C’s C’s (2001). Tokutei hieiri katsudo¯ ho¯jin no katsudo¯ jo¯kyo¯, zaimu, zeimu nadoni kansuru jittai cho¯sa ho¯kokusho (Research Report on NPO ho¯jin: Activities, Finance and Taxation). Tokyo: C’s Dentsu¯ Institute for Human Studies (2001). Kigyo¯ wa iman NPO to do¯ kakawaro¯ to shiteiru no ka? (What relationships are businesses today trying to forge with NPOs?). Tokyo: Dentsu Inc. Economic Planning Agency (1997). Economic Planning Agency (1999). Tokutei hieiri katsudo¯ ho¯jin no katsudo¯ unnei no jittai ni kansuru cho¯sa (Research Report on NPO ho¯jin: Current Status and Activities). Tokyo: Publications Unit of the Ministry of Finance. Gekkan Keidanren (2000), 5: 14. Tokyo: Keidanren. Kawashima, N. (2001). ‘The Emerging Non-profit Sector in Japan: Recent Changes and Prospects’, The Non-profit Review, 1,1: 5–14. Keidanren (1992). Shakai ko¯ken hakusho 1992 (Research Report on Corporate Philanthropy, 1992 version). Tokyo: Nihon Ko¯gyo¯ Shinbun Keidanren (1996). Shakai ko¯ken hakusho 1996 (Research Report on Corporate Philanthropy, 1996 version). Tokyo: Nihon Ko¯gyo¯ Shinbun Keidanren (1999). Shakai ko¯ken hakusho 1999 (Research Report on Corporate Philanthropy, 1999 version). Tokyo: Nihon Ko¯gyo¯ Shinbun Keidanren (2001). Kono hasso¯ ga kaisha o kaeru: atarashii kigyo¯ kachi no So¯zo¯ (This Idea will change the Company: Creating New Corporate Values). Tokyo: Rimu Shuppan. Ko¯eki ho¯jin (1997), 2: 6–7. Tokyo: Ko¯eki ho¯jin Kyo¯kai. Ministry of Health and Welfare (2000). Ko¯sei hakusho (White Paper on Health and Welfare). Tokyo: Ministry of Finance. NIRA (1994). Shimin Ko¯eki katsudo¯ kiban seibi ni kansuru cho¯sa kenkyu¯ (Research Report on the Support System for Citizen’s Public-Interest Activities). Tokyo: National Institute for Research Advancement. Salamon, L.M. and Anheier, H.K. (1992). ‘In Search of the Non-profit Sector, I: The Question of Definitions’, Voluntas, 3, 2: 124–151. Salamon, L.M. and Anheier, H.K. (1997). ‘The Challenge of Definition: Thirteen Realities in Search of a Concept’, in Salamon, L.M. and Anheier, H.K. (eds), Defining the Non-profit Sector. Manchester: Manchester University Press. Shimada, K. (2001). ‘Introduction’, in Keidanren, Kono hasso¯ ga kaisha o kaeru: atarashii kigyo¯ kachi no so¯zo¯ (This Idea will change the Company: Creating New Corporate Values). Tokyo: Rimu Shuppan. Useem, M. (1987). ‘Corporate Philanthropy’, in Powell, W. (ed.), The Non-profit Sector. New Haven: Yale University Press.

Part III

Key managerial challenges for the sector

7

The challenges of growing the NPO and voluntary sector in Japan Robert O. Bothwell

Introduction and summary A survey of NPO leaders in Japan and others seriously interested in the country’s NPO and voluntary sector, conducted by the author in Fall 2000 and Winter 2001, reveals that the challenges facing Japan in growing its non-profit sector are many and diverse. This chapter reports the findings of the survey. The authoritarian government, which historically has taken care of communities’ social welfare needs, is a primary challenge identified. NPOs can seek adequate legal and public space to enable citizens to organize needed alternative services and give voice to alternative public policies, but the authoritarian government has only slowly allowed this space to develop, and then only under chilling restrictions. Related to this challenge, is the sentiment that the government does too much. NPOs can initiate actions that organize citizens to do more, but the government has had a hard time restraining itself from trying to meet all community needs. Also related, is the belief that citizens have become too dependent on the government. NPOs can help citizens outgrow this dependency and rely more on themselves for solutions to community issues. Also related to authoritarian government is the authoritarian culture of Japan. Government bureaucracy makes use of this culture for its own ends. NPOs have to be wary of the authoritarian culture or they will find themselves ineffective in changing society. A rather strange finding of the survey is that fewer than one-third of the respondents mentioned the economic or business sector as having any relevance to the growth of the NPO and voluntary sector. And even when they do mention it, few express any imperative connection, either positive or negative. Another equally interesting finding is that the concept of ‘democracy’ is also connected to the NPO and voluntary sector by fewer than one-third of the respondents. Most respondents ignored the connection, making it appear that the development of the NPO sector may not be perceived as a necessary ingredient of greater democracy in Japan, nor even that democracy itself is a form of government worth improving. Some respondents express doubts about the legitimacy of the NPO sector, and this makes building of trust between the sector and citizens

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difficult. The operational challenge is for NPOs to figure out how to make substantial connections with the public and recruit volunteers to expand the sector’s base. Related to the concept of legitimacy is the challenge of vision for the NPO sector. In fact, vision is the most critical theme touched upon by survey respondents because of its potential impact on most of the themes discussed herein. Many express concern about the need to create and build a vision for the sector and how it should fit in with the rest of society, with government and the economic sector. Some desire greater vision about provision of alternative social welfare services, others about alternative public policy formulation. Still others see vision being critical to establishing the legitimacy and independence of the NPO sector. And others see vision as crucial to improving all the internal challenges of the sector. Depending on one’s view, establishing or maintaining the independence of the NPO sector from government is an important challenge. Government funds may be necessary for NPOs, but not if the cost is extreme dependence. Developing private sources of revenue is seen as necessary to counterbalance government yen. Beyond the challenges of legitimacy, vision and independence – challenges which primarily concern NPOs’ external relations with government, the business sector and the public – are the internal challenges which hamper the growth and development of the NPO and voluntary sector. These include leadership, organizational capacity, human resources, planning, management, administrative competence and collaboration among NPOs. More than half the respondents identify these internal issues as important challenges in growing the sector. NPO finances are another major internal challenge. Many agree that money is way too limited today for the NPO sector to have any great influence. Raising private money is crucial, but how to go about this is not generally known. Finally, among the many challenges to growing the NPO and voluntary sector, several respondents see the need to provide adequate monetary incentives for organization and development of NPOs through creation and enactment of new tax legislation. In light of the continuing economic standstill, government and the business sector appear slow to see the long-term wisdom in passing such legislation. Even if solid tax benefits were to be ensconced in new legislation, there is the realization that these benefits will not necessarily stimulate NPO and volunteer growth, unless the other challenges are met head-on. Each of these foregoing ten themes will now be discussed in-depth. A concluding section will identify the most dominant themes, summarize the connections among all ten themes, and project key issues for the future.

Methodology The survey was conducted by e-mail starting with 27 NPO leaders in Japan who the author had met in his 1992 and 1999 visits to Japan or had met in

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Washington, DC or at scholarly conferences. Some of these leaders are also authors of chapters in this present volume (such as Makoto Imada and Yoji Nishizutsumi). These leaders identified additional NPO leaders and others seriously interested in the sector through the ‘snowball’ method (i. e., each was asked to identify one to three others who they thought should participate in the survey, and once contact was established with the additional people, they too were asked to identify more potential survey respondents). All told, 65 people were individually contacted, and 38 (58 per cent) responded. The contacts known to the author responded at a slightly higher rate than the others. All responses but one were in English, the one exception was a lengthy response in Japanese which the author had translated. Historical and terminology clarification note From the Meiji era on, especially after the Second World War, NPOs were created and supported at the pleasure and often direction of national government agencies. These NPOs are frequently labelled ‘public benefit corporations’ and will be referred to as such in this chapter. They have been created to help carry out government policies, e.g., in the fields of social welfare, medical services and higher education. They receive much government money. This is ‘the gigantic NPO sector’, according to Akira Matsubara, secretary-general of the Coalition for Legislation to Support Citizens’ Organizations (C’s). Then, in the 1970s and 1980s citizen NPOs organized, which Matsubara reports were ‘frequently labelled “antigovernment”’. They were the beginnings of the ‘small NPO sector’. This sector grew in the 1990s, was further stimulated by the Hanshin Awaji earthquake of 1995, and was a key factor in the enactment of the NPO Law of 1998, which allows incorporation of citizen NPOs so they can act as legal bodies (lease office space, open bank accounts, etc.). These citizen organizations of the ‘small NPO sector’, as well as citizen groups that are unincorporated, are what people usually refer to when they talk about ‘NPOs’. Any reference to ‘NPOs’ in this chapter will clearly refer to such citizen organizations. Additionally, in the international arena, nongovernmental organizations (usually also non-profit) are called ‘NGOs’, as they will be in this chapter.

Key themes and issues The authoritarian, caring, government A major challenge to growing the NPO and voluntary sector is that Japan is seen as having an authoritarian government which takes care of its citizens regarding their social welfare. Partly, the dependence is historical, and partly the dependence has been fostered by successful government activity since the Second World War. Citizens have depended on government since the days of

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the emperor, and democracy after the war has not changed that. This latter is true because the government is credited with a primary role in engineering the economic miracle of Japan, Inc. after the devastation of the war. Professor Naoto Yamauchi, scholar of the NPO sector, writes, ‘At the heart of the risks currently borne by the Japanese social economy is the problem of excessively large government’ (Yamauchi, 1998, #7). As one survey respondent says, ‘The public, the volunteers and NPOs depend on, demand support from and go along easily with what government wants.’ NPO leaders say the government does too much. When government has identified community needs, its sole movement into the private realm has been to orchestrate creation of large public benefit corporations, fund them, and place former government people on their boards and staffs. These nonprofit corporations exist within the purview of their host bureaucracy; they have no incentives or encouragements to expand their activities beyond their beneficent bureaucracy. Katsuji Imata, President/CEO of Japan–US Community Education and Exchange (JUCEE), explains, The greatest ‘impediment’ for growing the NPO and voluntary sector is that government is still trying to do too much. Bureaucrats won’t give up their territory. And the sad thing is that they are not villains. They are not ‘control freaks’. Rather, they are paternalistic. After all, they are the ones that created the economic miracle in Japan’s postwar era by setting policy priorities and focusing on the welfare of the corporate sector. . . . They can’t see how the society will sustain itself if they don’t play the fatherly role. As a result, people are suffocated by the same-old uniform measures in different social, economic and educational policies. This government social welfare agenda leaves little room for truly private social welfare activity. According to Tsuyoshi Kusumi, chair of the Center for Public Resources Development, Japan has built up a centralized and bureaucratized structure. Under Japan’s bureaucratic tradition, Japanese citizens and non-profit organizations have been removed from dealing with public affairs by the government. In Japan, the third sector of voluntarism has less power than the other two sectors: in financial strength, resources and influence on public services and polices. Consequently, there is little room in the Japanese system for public services to be provided by private entities. In fact, Kusumi adds, NPOs ‘have been excluded from public service provision . . . The preconceived idea that public services should be provided by the government is still widespread.’ This has led citizens basically to depend on government for all community social welfare needs.


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Hideaki Uemura, chair of the Citizens’ Diplomatic Center for the Rights of Indigenous Peoples, states this well. He says there is some history that must be understood: In the feudal age, the governments in Japan successfully provided people with many kinds of public service compared with other governments in the world. They constructed roads and ports, established communications and financial systems, provided fire fighting services, and offered welfare services to people through the organization of Buddhist temples. As the result, the Japanese basically depend on the work of the government. ‘Our Japanese society believes deep in our hearts’, adds Chimaki Kurokawa, managing director of Toyota Foundation, ‘that the government, both federal and local, are responsible for our lives. The bureaucrats understand this well and have made use of it. They have established high walls around their interests. And they have created many quasi-NPOs and foundations that are by the bureaucrats, for the bureaucrats and of the bureaucrats.’ One survey respondent sees current government initiation of non-profit corporations as a parallel with the ‘nationalism movements during WWII’. Another articulates that ‘Non-profit organizations are strongly understood just to be a vehicle for putting the policy of the government into effect, a vehicle for the control of government.’ A young post-graduate student observes, ‘Japanese people thought government was perfect. This made them very trusting of the government. Consequently, they ignored public policy development. But eventually the people found out that government is not perfect. Now citizens are novices in public policy formulation.’ The authoritarian culture Alongside the authoritarian government, several survey respondents say there exists an authoritarian culture, which government exploits. Makiko Ueno, research associate at The Urban Institute in Washington, DC, says, ‘Japanese people like order and uniformity, and the culture is authoritarian and hierarchical by nature and by tradition. Strong bureaucracy has had reasons to sustain it.’ A freelance writer and Korean national born in Osaka observes, ‘Japanese tend to be obedient to authority such as government, even if its legitimacy is in doubt. Traditionally there is no solid individualism in Japan.’ Another freelance journalist, from Japan, but now based in San Francisco, agrees that the Japanese like to conform. He recommends that ‘the independent sector should be careful not to be trapped in the same hole’. Graduate student Hiromi Mizota Wimalasiri worries about NPOs in the same way. She says:

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Robert O. Bothwell Japanese people tend to make decisions based on customs of long standing, rather than on their own ideas. For example, for a long time, Japanese families have taken care of their elderly. Now, they don’t want to live together with their old parents, but they think they must do so because it is customary. This kind of situation happens all the time in Japan. This makes most things dysfunctional. NPOs fall into the same kind of trap, which means they waste resources and do not act effectively for civil society.

The economic sector and NPOs What is particularly interesting in surveying Japanese NPO leaders and others intensely interested in NPOs, is that the economic sector, whether large corporations or small businesses, is mentioned by less than a third of the respondents, either as an obstacle to expanding the NPO and voluntary sector or as a possible substantial contributor. Rarely is the economic sector faulted for active intervention that prevents development of the NPO and voluntary sector or is it praised for active assistance. There seems to be a basic disengagement between the economic sector and most of those involved/interested in the NPO and voluntary sector. ‘During the decades after WWII, Japan enjoyed a huge economic success; people neglected the community, family and politics,’ observes Chimaki Kurokawa. ‘We are paying the bills now. We know NPOs are to be the new players in these circumstances, but it will take time to convert the imprinted mind set.’ Yasuo Harima, vice president of Japan Society for Studies of Voluntary Activities, echoes this thought: After World War II, Japan achieved economic success and became a wealthy society. Unconsciously, economics became the center of our politics, culture, education, family, and so on. For the development of the NPO and voluntary sector in Japan, it is necessary to change this paradigm. We must ask ourselves the fundamental question of whether there is something more valuable than money. . . . We Japanese haven’t been making every effort to make use of the economic prosperity for the growth as mankind. Makiko Ueno and Makoto Imada have quite different concerns about the influence of the economic sector. To them the 1990s economic stagnation in Japan is provoking insidious trends. Ueno thinks that ‘Recent economic problems are turning Japan back to being inward-looking and nationalistic.’ Whereas Imada, director of the Civil Society Research Institute, observes, ‘Because of economic depression, businesses expect powerful government.’ Both respondents are worried that this situation might lead to reduced attention to the developing NPO movement.


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But another observer credits the corporate establishment with helping the NPO movement. Jerry Inman, former representative of the Asia Foundation in Tokyo, reports that the Keidanren, the ultimate corporate association in Japan, ‘weighed in’ to help obtain passage of the NPO law of 1998. These corporate leaders, he says, had a ‘significant impact on the lawmakers’. According to Professor Yamauchi, ‘The non-profit sector in Japan could not survive without the support of the corporate sector.’ (Yamauchi, 1998). He cites National Tax Administration Agency data that 1.43 per cent of corporate income in 1995 was donated to NPOs (Yamauchi, 1998). This proportion is higher than in the USA (1.2 per cent in 1995) (Kaplan, 1999, p. 33). Hideto DeDe Kawakita, editor/publisher of NPO Management Review, also reports that, ‘more than 40 per cent of Japanese NPOs are provided non-cash support from business corporations’, according to a survey of some 100 NPOs his organization conducted in Fall 2000. Nevertheless, some respondents don’t believe corporate philanthropy reaches the ‘small NPO sector’. They focus on the need to develop more corporate support for NPOs. Tsuyoshi Kusumi, a dedicated student of both the US and Japanese non-profit sectors over the last decade, does not believe that ‘Japanese society has developed a tradition of donations’. He observes that ‘business corporations provide only a few grants for NPOs’. And Hisae Tomita, a former corporate employee herself, believes that ‘Developing corporate philanthropy is a major challenge, as is developing collaboration between NPOs and corporations.’ While Yoshinori Yamaoka, managing director of the Japan NPO Center, urges that ‘Companies should not just support NPOs, they should also cooperate with them on projects.’ But Inman does not see much chance of expanded corporate giving unless there is ‘encouragement through tax incentives. . . . Without these, the business community will find little justification for participating in “good corporate citizenship”.’ Meanwhile, Akira Matsubara of ‘Cs’ wants NPOs to engage the forprofit sector in a new way. He wants NPOs to subject private businesses to a public scrutiny which holds them ‘socially accountable to address the diverse plural needs of society’. This may put the business corporations into competition with non-profit public benefit corporations and NPOs, but Matsubara thinks this will have positive benefits for society. He reports that the competitive process is already beginning, as the government has asked business corporations to offer nursing care insurance. Expressing a troubling negative concern about the interaction between the business sector and the NPO sector, Hideaki Uemura observes that ‘The small business sector in Japan has been growing up under the guise of NPOs, especially after the NPO Act passed recently (1998) by the Japanese Diet.’

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Democracy and the NPO sector Equally interesting in this survey is that the concept of ‘democracy’ is mentioned no more than the economic sector in connection with NPOs and voluntarism. ‘Advocacy’, making ‘public policy’, or proposing ‘alternative public policies’ also are hardly mentioned. Thus, in considering the challenges of growing the NPO and voluntary sector in Japan, it seems that the NPO and voluntary sector may not be seen by most respondents as having the crucial function of encouraging democracy in Japan. Of course, Kazuaki (Aki) Okabe, freelance journalist, thinks that, ‘Maybe democracy is so basic to NPO development that many simply forgot to mention it. Or, NPO activists may be cautious in expanding their argument to a bigger political context, because they are fed up with ideological overtone, which was a tradition in Japan’s social change movement.’ Jerry Inman expresses similar thoughts, saying ‘Statistics may not tell the whole story . . . The political sensitivity of this issue may have inhibited some respondents.’ Nevertheless, some respondents express strong feelings about the connection between the NPO sector and democracy: ‘With the unfortunate history of WWII, Japanese society couldn’t embrace democratic ideas and concepts very well.’ ‘Our democracy is still not mature.’ ‘Japanese policy-making process is not democratic.’ Makoto Imada outlines the issues rather forcefully: ‘Recently, the Japanese central government, led by the Liberal Democratic Party, became an authoritarian, statist government. Because of economic depression, businesses expect powerful government. I feel the danger of totalitarianism.’ A major challenge, therefore, ‘is the concept of civil society itself’. As Makiko Ueno was quoted earlier: ‘Recent economic problems turn Japan back to being inward-looking and nationalistic.’ She continues, ‘Lacking both a tax support system for non-profits and a strong independent mind set among the population, non-profit leaders are facing a daunting counter-movement against a more democratic, civil society.’ One young respondent, Rie Yoshida, an NPO fellow of the Center for Global Partnership (CGP), knows there are many people who ‘don’t care what is going on in their community, who don’t care what is going on in society at large, who care only about their own “good life” first. . . . These people are indifferent to civil society, democracy, civic participation and public interests.’ The ‘paternalistic’ bureaucrats, who ‘created the economic miracle in Japan’s postwar era by setting policy priorities and focusing on the welfare of the corporate sector’, says Katsuji Imata, ‘can’t suddenly change their minds and give much freedom and latitude to the citizenry, which is the necessary ingredient for the civil society to flourish. Japanese bureaucrats are too responsible.’ Jerry Inman argues that the society as a whole needs to ‘recognize that a healthy NGO sector is an important component of democratic governance’


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. . . That NGOs need to ‘provide opportunities for citizens to become personally involved in . . . democratic institution building’, . . . and ‘move from opposition to effective advocacy, to become equals with government and corporate counterparts to discuss strategies for cooperation on internal and international problems.’ Two respondents focus on the need for NPOs to enhance their capacity to advocate, to propose alternative policies or programmes to the government. ‘A viable non-profit sector’, says one, ‘will never be established without efforts to change government processes, and introduce truly participatory democracy.’ On the other hand, two other respondents are sceptical. Heeja Lee, freelance writer, observes that ‘Japanese tend to avoid being political. They misunderstand “non-governmental” to mean “apolitical”.’ And Katsuakira Kihara, president of the Non-profit Policy Association, states unequivocally that NPOs are not seen as formulators of public policy, nor as real policy-makers. The definitions of what is ‘public’ and what is ‘government’ are crucial to Japan’s democratic future, Hiromi Mizota Wimalasiri argues: We must get rid of our preconceived notion that ‘public’ means ‘government’. Many Japanese people misunderstand the concept of ‘public’, thinking it means ‘government’ not ‘citizens’. Even though American public policy has been defined as ‘what government does’, the American people don’t trust government much. The Japanese people should think about what ‘public’ means. ‘Public’ is a definition to be made by citizens. Whether the Japanese can get rid of their notion of ‘public’ being ‘government’ not ‘citizens’, depends on whether the Japanese can make a democratic citizens’ society in the future. Lee shares Mizota Wimalasiri’s concern. She does not believe that Japanese people have ‘fully thought out what government is and what value individuals should have’. But Yoshida is clear: ‘Our society needs selfdependent people.’ Ray Yoshimi, another CGP NPO fellow, reflects that ‘Our society is not mature in investing the citizens with responsibility . . . Our citizen sector is unskilled. . . . But some people are now thinking that only positive thinking and responsible citizens can solve the problems in our society. They are learning that talking, discussing, criticizing and blaming others must only be a prelude to acting themselves.’ Legitimacy of the NPO sector Some people see the issue of legitimacy as the big challenge: the NPOs have not established their legitimacy in the eyes of society. It is not that they are seen as illegitimate (although, as already noted, one person believes that small businesses have misused the NPO concept for profit-making ends),

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but that they are too invisible to the public, therefore, the public has no basis to think about or trust in them. Others, while not using the term ‘legitimacy’, focus on the need for NPOs to establish or enhance their connection with the public. Evaluation of NPOs is seen by a few people as important to their legitimacy; evaluation by citizens is suggested by one respondent as a means to this end. ‘There is no clear theory and logic to verify the legitimacy of the nonprofit sector,’ says Yayoi Tanaka, chief programme officer at Sasakawa Peace Foundation. ‘At the moment Japanese society is not providing a mechanism for NPOs to reproduce themselves,’ Toyota Foundation’s Chimaki Kurokawa observes, ‘because of a lack of support and understanding by the public.’ Yoji Nishizutsumi is a young business executive who has completed an MSc thesis on charities, and has worked as a volunteer for food banks and environmental non-profits in Toronto and Japan. He defines weak public support as ‘one of the most important challenges for Japanese non-profit organizations’. He understands that ‘although people are now kind of “non-profit crazy”, and everybody is talking about non-profits and volunteering, still for many people, engaging in some kind of charitable activity is not part of their daily life’. He cites research showing that ‘only 22 per cent of those who have a full time job engage in charitable activities’. Katsuakira Kihara agrees: ‘The social status, the social necessity and possibility of volunteer activities and NPOs have not been approved by the people.’ However, he believes that some people have ‘a strong view of NPOs as a concept, with hope and expectation that NPOs will be leaders of a social revolution, reformulating our society, and supplying the people with needed public services’, even as he knows that NPOs are far from delivering on this concept now. In the face of questionable legitimacy, what is there to be done for NPOs to gain the recognition and trust of the Japanese people? Some survey respondents focus on changing how the public views NPOs. Akira Matsubara, who leads the lobbying effort to expand government recognition and support for NPOs, asserts that Japanese society must discover the value of NPOs to be different from that of for-profit corporations, saying that ‘the existence of the entire NPO sector’ might be tied to this discovery. A ‘change in the public’s attitude’ is necessary, believes Jerry Inman, to one recognizing ‘that a healthy NGO sector is an important component of a civil society and a valuable resource to incorporate in strategies for internal and international problem solving’. Yoshinori Yamaoka sees ‘A major challenge being that the concept of NPO must permeate the whole nation. It is important that many people understand the significance of NPOs in Japanese society, and accept them as Japan’s new culture.’ Others agree. ‘The biggest challenge’, according to Hiromi Sato¯ of the Japan Foundation Center for Global Partnership, is


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building the consciousness of the Japanese citizen about the importance of growing the civil society. Once people are aware of the potential of the NPO and voluntary sector for the healthy growth of our society, the latent energy of the sector will emerge quite rapidly. Other sectors, such as lawmakers, bureaucrats, business persons, and scholars will set about playing their own roles. Sachiko Kishimoto, executive director of the Center for Public Resources Development, looks in a different direction to expand legitimacy and trust for the NPO and voluntary sector. She says, I think it is time to widen the base of supporters for the non-profit sector. I have a feeling that raising donations is more important for the citizen-donors than for the organization-donees. Donations are a way of participating in the society. Donations are a way for citizens to carve their tracks in the society. Donations are the expression of love for others. Professor Tatsuya Watanabe, Tokyo Keizai University, agrees. NPOs ‘need to make every endeavour to broaden, deepen and strengthen their support base. Only a handful of NPOs have more than 1000 supporting members.’ Local people must be a focus, urges Hideaki Uemura: ‘As the concrete assignment . . . we have to make sure that NPO activities benefit local people as much as possible.’ He thinks that local people would support NPOs as members if this were true. To improve their member base, continues Watanabe, NPOs must make a priority of being ‘open’, meaning recruitment ‘from a broad spectrum of citizens, democratic decision-making, systematic external monitoring and evaluation, and information disclosure. . . . Without strong and popular support, NPOs are ill-equipped to maintain their independence and be change agents.’ Hiromi Mizota Wimalasiri is in agreement: ‘NPOs should let people know more about their missions, visions and goals for civil society, since even now, in Japan, activities by NPOs are still unusual and unknown.’ Taking another tack concerning what needs to be done is Yamaoka: Many Japanese NPOs are small and have little capability. So few NPOs are able to gain trust from society. Japanese NPOs need to train themselves in formulating good plans, overcoming financial difficulty and developing administrative ability. NPOs also need to strengthen free and easy access to their information. These efforts will lead NPOs to become the organizations which can win trust from society. ‘The circumstances for understanding NPOs have been set up,’ says Yu¯ka Haruta, Japan NPO Center, ‘because recently there has been a drastic increase in the number of NPO activities appearing on the media (TV,

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newspapers, etc.) compared to five-six years ago; thus, attention to NPOs is growing.’ Yamaoka, however, warns that ‘only the specific people who are very concerned with NPOs now understand their significance; ordinary people do not know enough about them’. Scott Sugiura, senior programme associate at JUCEE, shares this concern. He thinks that one of the major challenges is ‘the Japanese conceptualization of . . . “non-profit” with “volunteer”.’ He thinks the general public equates the two terms and perceives a corresponding weakness in terms of professionalization and organizational development. NPOs’ limited access to resources and technical assistance perpetuates this view . . . Based on the weak understanding the American public has about what ‘non-profit’ means, I think it will be some time before the general Japanese public shifts from equating ‘volunteer’ with ‘NPO’. Recruiting volunteers is another way of earning the trust and support of Japanese society. History may stand in the way of this approach though, believes Matsubara, who warns that volunteerism in Japan traditionally was ‘government-driven’, from the Meiji era to recent years. Nevertheless, according to Kishimoto, ‘People have begun to feel, for the first time in the last fifty years, that voluntary activities are an essential part of their life/society.’ This is also how Watanabe sees it: ‘Volunteering and voluntary action won social recognition in the wake of the Hanshin Awaji earthquake in 1995, and ordinary Japanese citizens have come to take an ever-growing interest since.’ ‘It is important now to provide the opportunity and encourage citizens to become personally involved in addressing the challenges of development, environment, poverty, health care, aging and democratic institution building,’ believes Inman. Sugiura thinks that ‘Japan is ripe for change. Among college age youth there is a growing sense that corporate careers will provide neither traditional security nor a sense of satisfaction.’ Although he is uncertain about when ‘there will be a critical mass of professionals (young or otherwise) shifting from the for-profit to the non-profit sector’. Watanabe agrees with Sugiura about youth’s potential: ‘Changes are taking place,’ he says. ‘Younger generation leaders are more open-minded, less dogmatic and more inclined to work together. More and more young people, sometimes with graduate education degrees, knock on doors of NPOs to join. Young men and women today want to show and prove their worth.’ But Watanabe cautions, ‘NPOs are still unable to harness the voluntary energy or provide citizens with the means and opportunities to express their voluntary passions.’ ‘It is very difficult to find time to participate in charitable activities,’ adds Nishizutsumi. ‘It is necessary to create a support system, maybe legislation, which would encourage people to participate in


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charitable activities. Also . . . education reform is a key to encourage young people to engage in charitable activities.’ Another ‘possible solution to the lack of legitimacy for the NPO sector’, according to Tanaka, ‘is developing and structuring a normative theory of evaluation and complementary practical methodologies. The objectives of evaluation are: 1) accountability, 2) improvement, 3) creation of knowledge and 4) sharing of information and communication with stakeholders and the public.’ Takayoshi Kawai, government official and a member of the Hamamatsu NPO Network Center, agrees with the necessity for evaluation, but he adds an important caveat. He says, ‘There is the need for evaluation of NPOs, since they are agents operating in public space. But we must understand that citizens should be the evaluators. And the evaluation criteria should be more complex than what might be used to evaluate individual NPOs.’ Finally, Hideto DeDe Kawakita also agrees about evaluation being one of the most important challenges for growing the NPO and voluntary sector. But he believes that evaluation must be for organizational self-improvement, rather than for purposes of comparing different organizations. The vision of the NPO sector Related to the concept of legitimacy is the concern of some about the need for NPOs to create and build a vision for the sector and how it should fit into the rest of society. Also some focus on the proper roles of government, business and NPOs as an operational way of thinking about vision. ‘If I can use a very simple word, to identify the biggest challenge facing the NPO sector, it is “vision”. Building the vision for NPOs in Japan is key,’ says Yuko Suemura, the young woman who edits and publishes an e-mail newsletter, NPO/NGO Walker, which reaches 5000 subscribers. Yasuo Harima, scholar, foundation official and NPO activist, discusses the necessity for a focus on vision. These days, we Japanese have lost the passion to discuss NPOs in Japan as we once did. The major advocates seem to have lost their enthusiasm. There are a lot of complex reasons for this. Nevertheless, there is a fundamental lack of discussion about what it means to build a voluntary sector in Japan, and about what role NPOs will take in the voluntary sector. We should be discussing what the society, the life, the culture, the mentality of the Japanese should be. Instead, we Japanese have mainly been discussing much smaller scale issues, such as in public economics, for example, the care of senior citizens in an aging society, or the local governments’ financial troubles. Ray Yoshimi believes that some of the younger generation are doing just what Harima thinks should be done. She knows some salaried persons who

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have returned to universities ‘to consider their way of life, how to solve problems in society, and especially how they could contribute to these solutions’. Earlier, Harima was quoted as saying, ‘We must start with a fundamental question, Is there something more valuable than money?’ He expands on this question now: We Japanese have been working hard to catch up with the Western countries and overtake them without asking ourselves the deep question, ‘What kind of being is mankind?’ We must aim at reconstituting the severed relationship between people and people, people and nature, people and something great (God for some, ethics for some, Confucianism for some). Excessive egoism has been tearing apart the relationships among these elements. We must change our paradigm from individualism to community-ism. The paradigm of a new age must replace the autonomy that controls individual desires with a harmony of the entire community. NPOs are ‘community’. Their value is in their performance as community. The biggest challenge facing NPOs ‘lies within NPOs themselves’, says Professor Tatsuya Watanabe: The time is coming, or may have come already, when NPOs must look to themselves, not to others, and find out through introspection what they can and should do so that they may grow and become viable agents of fledgling civil society . . . NPOs must come up with valid, viable visions that are able to mobilize and capture people’s imaginations. Foundation officer Yayoi Tanaka warns, however, ‘I do not think that the pluralistic model developed in the US context could be copied in the Asian region including Japan. We should explore our own vision of civil society in the Japanese context. This will give us an idea of the role and expected functions of the non-profit sector in a broader perspective.’ Some people focused on the proper roles of government, business and NPOs as an operational way of discussing the need for vision. ‘The most important issue’, says Yuka Haruta, Japan NPO Center, is to establish an opportunity to discuss the social roles of NPOs among government, for-profit corporations, citizens and NPOs. I basically believe that it comes down to this, because currently each group (i.e., government, for-profit corporations, citizens and NPOs) interprets ‘NPO’ for its own convenience. For example, government simply sees NPOs as ‘subcontractor’ organizations. And many organizations applying for incorporated NPO status simply expect government subsidies.


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MikikoYamazaki, having worked with many volunteers for people with special needs through her Tokyo Voluntary Action Center, says she ‘wants the Japanese NPO sector to grow, but that doesn’t mean she wants a smaller government’. ‘Lots of people in Japan these days talk about government– non-profit partnership,’ says Katsuji Imata, JUCEE, ‘yet I have to question how many of them actually talk about substance. “Partnership” has become an empty word.’ Scott Sugiura, a JUCEE colleague, however, suggests that: A possibility might emerge in the near future, along the lines of the devolution of government services in the USA. As various demographic issues like aging, immigrant labour and homelessness become more pronounced in Japan, the government may opt to provide support to the NPO sector to deliver those services. A healthy civil society requires diverse needs to be met by a diverse range of services. These need to be provided by non-profit organizations, since the government has neither the capacity nor the flexibility to formulate and effectively implement such. Tsuyoshi Kusumi, Center for Pubic Resources Development, picks up on this theme. Japan is facing several difficult social issues, including an aging population, environmental destruction, the malfunction of education, economically distressed areas, and more. Japan needs to deal with such problems within the limitations of current governmental functions because of the recession, the inefficiency of governmental programmes, distrust of the government by the people and social pressure to minimize the expansion of the government. A new solution to social issues should address these social issues, but also constrain government. Kusumi wants to create a new public service system to address contemporary social issues. ‘This will require the reinforcement of the NPO sector as an alternative to the system of government public services. It should be based on collaboration between the NPO and government sectors because of the limitations on current governmental resources and functions.’ Matsubara suggests a five-point vision for the NPO sector: . . .

to provide flexible social services that match civil needs or generate new needs; to provide confrontational and competitive social services that improve effectiveness of all social services; to develop diverse private funding for social services so they are not ‘swayed by the financial constraints of government’;

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Robert O. Bothwell to have an equal partnership with the government which allows NPOs to decide which services better match civil needs; and through coordination with private companies, to hold these companies more socially accountable in addressing the diverse needs of society.

This last point would breach the strong line which, according to Matsubara, has divided the business community from the government/ social service sector since the Second World War. That line had private companies on one side, ‘responsible for the for-profit sector, centering around business activities’, and government on the other side, ‘responsible for not-for-profit social services’. Kusumi recognizes that the new non-profit sector is ‘still weak and narrow’. But he assesses that it is growing, and that some ‘expect it to play an important role in the innovation of public service provision in the twenty-first century’. He believes that NPOs have the virtues of being legitimate ‘independent’ entities with flexibility, responsiveness and innovation. Yet, despite their significant achievements, they have been excluded from public service provision, and in some cases have been prevented from incorporating. Even though they are needed by society, they still face many financial and managerial difficulties. Japan needs to examine the circumstances under which NPOs operate and become more hospitable to helping NPOs become genuine partners. ‘NPOs alone cannot make society a better place to live; they need collaborators,’ says Professor Watanabe. They need to initiate ‘healthy collaboration and partnerships with government and business’. Katsuakira Kihara takes this a bit further: ‘Collaboration among NPOs, government and business is crucial if sustainable communities and society are to be created, but the collaboration must be based on equal participation by each sector.’ Jerry Inman does not think that will happen until NPOs develop greater competence and self-confidence, which, he recommends, can be gained when government, corporations and foundations work with NGOs ‘as partners in the search for solutions to regional and global problems’. However, as a reminder of reality, Takeshi Akiba, associate professor on NPOs at Ritsumeikan University, notes that ‘Some government officials say, “The non-profit organizations are on equal terms with the government.” But, in reality, these officials are still influenced by the old concept of public relations: “The public sector is superior to the private one.” While working in the non-profit sector, I felt indignation against the government about this matter.’


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Independence from Government This is a key challenge. Some acknowledge that government funds might be necessary for NPOs, but assert that they must not become the tail that wags the dog. Also NPOs’ advocacy must not be compromised due to acceptance of government funds. Others assert that scarcity of any resources for NPOs is a threat to their independence. ‘The Japanese volunteer sector faces the challenge of establishing itself as an independent, proactive sector,’ asserts Kazuaki (Aki) Okabe, freelance journalist now based in California. ‘Japan has been governed by strong governments for a long time, probably since Ritsuryo Era, when the first dynasty was established in the seventh century. The government tends to do everything and control any efforts of non-governmental activities.’ Tsuyoshi Kusumi takes a similar position: The need for an appropriate relationship between non-profits and the government which preserves independence of the non-profits stems from the highly bureaucratic nature of Japanese society. Because of the concentration of power and resources in the hands of the government, the Japanese government tends to exploit and control private non-profit organizations. If Japanese society cannot reform this concentration of power, our non-profit sector will only be a ‘vassal’ of the government, and consequently, Japan will fail in carrying out the required transformation of the social system into one addressing current difficult issues. ‘Most . . . funds for NPOs are from the government or government-tied institutions,’ observes Jerry Inman. He adds, Bureaucrats by nature do not easily give up control, particularly if it concerns money. Although the rhetoric within the bureaucracy concerning working with or supporting NPOs has changed considerably in the last 10 years, there is generally a lengthy lag time between rhetoric and effective action. . . . I don’t see much hope for change in this situation until independent funding sources expand enough to provide a viable alternative to government funds. That is why Akira Matsubara proposes that NPOs develop diverse private funding for social services – so they are not ‘swayed by the financial constraints of government’. He believes that ‘the society hangs on the point whether the NPOs will be able to establish a new foundation regarding their funding’. If not, they will be ‘incorporated into the conventional governmentdriven system’ along with the existing public benefit corporations. Hideaki Uemura also sees that a primary challenge of the Japanese NPO and volunteer sector is to keep independent from the government. However,

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he is more concerned with NPOs’ advocacy than with creating a new public service system. He worries that many current NPOs ‘are apt to keep silent against the government’s policies, as volunteer groups did before WW II’. He is especially concerned because so ‘many NPOs are greatly dependent on the government’s financial support’. Professor Watanabe is similarly concerned. He believes that ‘easy money from the government is likely to make NPOs dependent on government funds, serve as its agents and contractors, and refrain from advocacy and watchdog roles’. Makoto Imada warns that there is a serious legal constraint on NPOs that accept government money that is independent of how much they receive. He says, Article 89 of the Constitution is very important. It says that ‘no public money or other property shall be expended or appropriated for any charitable, educational or benevolent enterprises not under the control of public authority’. This means that NPOs cannot be independent from the governments once they receive money from them. Takayoshi Amenomori, NPO consultant, sees the challenge of independence influenced not from too much government support, but from a scarcity of resources for NPOs, especially general operating funds. He says, One of the most serious obstacles to the growth of non-profit organizations in Japan is scarcity of resources. Above all, non-profit organizations seriously lack funds which allow them to operate independently. Those few grant-making foundations and governmental organizations which provide funds to NPOs usually give money on a project to project base, or attach strings to their subsidies. In order not to rely too heavily on such income sources, NPOs should strengthen their fund-raising capacity and develop new financial resources. Jerry Inman could not agree more. Yasuo Harima believes that for NPOs ‘To avoid government dependency, we have to spread widely the culture of donating money to NPOs among the Japanese society as quickly as possible.’ ‘If NPOs want to be independent,’ Imada observes, ‘they have to engage in income-generating businesses or depend on philanthropic money. Most NPOs in Japan are not well trained to run businesses and philanthropic money is very small.’ Yo¯ko Takahashi, managing director/secretary-general of the Japan Philanthropic Association, somewhat agrees. She says, ‘It is necessary that one-third of organizations’ revenues should come from independent fund-raising projects. We should not depend only on donations or sponsored programmes.’ Professor Watanabe declares that NPOs must ‘raise money in many different ways, including selling goods and services


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within and outside the scope of their mandates’ . . . even though the ‘moral fiat for “sei-hin”, or repugnance at immoral corporate behaviours, has impelled most NPOs to shun money-making activities.’ Internal challenges: leadership, organizational capacity, human resources, planning, management, administration and collaboration Beyond legitimacy, vision and independence as major challenges which principally concern the NPO sector’s external relations with society at large, more than half the survey respondents focus on the internal challenges. Networking among NPOs, leadership, organizational capacity, human resources, planning, management and administrative ability are all cited as crucial internal sector challenges. ‘Development of these capabilities is essential and precedes NPOs being taken seriously by the Japanese government and corporate sector and, maybe more importantly, by their international NPO colleagues,’ says Jerry Inman. Expanded collaboration and more effective networking among NPOs are seen as key internal challenges. Both Hisae Tomita, former volunteer staff of Hamamatsu NPO Network Center, and Mikiko Yamazaki, president of Tokyo Voluntary Action Center, identify this as crucial if NPOs are, in Yamazaki’s words, to ‘make a bigger social impact’. Leadership is the top challenge for several respondents when considering how to grow the NPO and voluntary sector. Makiko Ueno identifies the ‘real challenge’ as expanding ‘the political and intellectual leadership of the non-profit sector. Non-profit leaders face a daunting counter-movement against a more democratic, civil society because of the recent economic problems . . . The coming years will be a critical time for non-profit leaders. Intellectual leadership, especially, is needed now.’ Yuka Haruta, Japan NPO Center, notes that ‘The media are paying NPOs more attention now. However,’ she adds, ‘problems arise when we look for and cannot find the well-rounded persons who can really argue for and appeal to the public about the importance of NPOs. Confronted with the myriad issues and challenges in today’s NPO environment, we need to scout out and recruit appropriate people who can effectively advocate for the diverse roles of NPOs.’ Yasuo Harima identifies other skills needed in top leadership: It is crucially important for NPOs to build up their manpower with voluntary leadership. We need leaders with the following skills: perspective on the whole sector, sensitivity to identify the real needs, a sense of personal responsibility for taking appropriate action, and the capacity to reinvent themselves as the situation demands. It is the severe problem for Japanese NPOs that we have so few people with such leadership capability.

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One mid-career professional decided to provide such leadership. Ray Yoshimi left her job in the government to establish an organization working with teenagers at high risk of alcohol, drugs, HIV and crime. She wants to identify real possibilities for NPOs in the society by showing how some serious problems can be addressed in concrete fashion. ‘This is my challenge,’ she says. Capacity building is on the minds of some respondents as the key challenge of growing the sector. For Hideto DeDe Kawakita the focus of capacity building should be on improving governance by NPO boards of directors. But for most others, their interest in capacity building stems from concerns, as Katsuakira Kihara has assessed, that ‘The physical strength, ability, financial power and management of NPOs in general are weak.’ ‘We need progress in developing management skills, and presentation skills,’ says Yoko Takahashi. Toyota Foundation’s longtime NPO supporter, Gen Watanabe, thinks capacity building is needed in management, leadership, fund raising, planning and research. While Yoshinori Yamaoka, as managing director of the influential Japan NPO Center, believes training is key ‘in formulating good plans, overcoming financial difficulty, and gaining administrative competence’. Much more needs to be done in providing ‘seminars, materials and consultation’ to help build NPOs’ capacity, recommends Mikiko Yamazaki, Tokyo Voluntary Action Center. Both Gen Watanabe and Yamaoka also think a key challenge is providing support to fledgling NPOs. They favour development of support organizations in all regions of the country. Watanabe reports that ‘The total number of these organizations is currently 67. Many have been established by local governments. Others have been created with private funds; however, many of these have financial difficulties. It is necessary for them to develop new methods of raising funds.’ Yamaoka assesses that existing support organizations have limited capability: ‘They need greater financial capacity and employment of talented people.’ Yoshimi notes that the support centres lack staff with concrete knowledge of subjects which are the focus of developing NPOs (such as assisting at-risk youth or people who have experienced sexual assault). Nevertheless, Yamaoka believes that the support organization system can ‘have a strong influence on the future development of NPOs in Japan’. Tsuyoshi Kusumi shares Gen Watanabe’s and Yamaoka’s concerns about the challenge of providing support to NPOs. Kusumi says that ‘the most common weakness of NPOs is lack of resources, including funding, staff, management skills, information, equipment and offices’. NPO consultant Takayoshi Amenomori agrees: ‘One of the most serious obstacles to the growth of non-profit organizations in Japan is scarcity of resources.’ Jerry Inman says resources are required to improve NPOs’ organizational infrastructure and competency, leadership, human resources and professionalism. Yuko Suemura, NPO/NGO Walker e-mail newsletter, also notes


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that, ‘Most of the NPOs in Japan don’t have enough resources relative to their missions; therefore, I am sure that few NPOs are being very effective.’ The executive director of the Hiroshima NPO Center, Takayuki Nakamura, focuses on trained personnel as a key missing resource: ‘Lack of human and financial resources are major challenges to growing the NPO and voluntary sector in Japan. There are very few trained staff available to support NPOs, and very little training available to create trained staff.’ Professor Tatsuya Watanabe sees NPOs as ‘too amateurish at the moment’, needing better ‘professional capacities. The ability to garner the interest and participation of professionals in other sectors will help in this regard.’ Yamazaki agrees with both Nakamura and Professor Watanabe, citing her organization’s 1998 research which revealed that shortages of financial and human resources are two of the ‘three biggest problems’ NPOs face. Amenomori analyses that ‘the lack of financial stability results in an inability to attract professional personnel, and thus a vicious circle is formed’. Kawakita adds that NPO staffs are out of the loop for pensions and other social security systems that are routinely provided to corporate employees. Dr Tadahiro Katsuta, Citizens Nuclear Information Center, points out that science and engineering specialists are in short supply at NPOs, that salaries are too low to attract such people away from national research centres and universities. Inman points to another NPO personnel inadequacy. He says that, ‘The capacity of Japanese NGOs to become world class participants in international issues is sorely limited. Leadership with sufficient English language capability to participate as equals with their international counterparts is thin at best.’ Inman also identifies other problems for Japan’s international-oriented NPOs. He says that, ‘Although organizational development and effective networking are beginning to develop in Japan, it may be some time before NGOs have achieved sufficient strength, professional staff and volunteers, management capability and national networks to cooperate effectively with their international counterparts.’ He especially urges funding sources to be supportive of ‘networking taking place among grassroots citizen organizations, . . . so they can find common ground among themselves’ which will help them relate more effectively to relevant international NGOs. Beyond these professional inadequacies, however, is another equally major personnel issue. Professor Watanabe talks about how ‘sei-hin’, meaning pure and poor, limits the flow of people into the NPO sector. ‘The common people’, he says, ‘deem that NPO work ought to be nonremunerative and driven by high moral purposes. This has made people think twice before jumping into the NPO world.’ Hideaki Uemura sums the situation up well, saying, ‘Japanese NPOs need human and financial resources and many other things, such as fulltime staffs, a social welfare system, good and clean offices and helpful foundations. The infrastructure of the Japanese NPO sector is very fragile.’

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NPO finances Another of the internal challenges are NPO finances. Many respondents say that NPOs need money. Some say they need government money, but, of course, they must not become dependent on the government. Learning how to raise money from sources other than the government is important. ‘NPOs are facing serious financial problems,’ reports Mikiko Yamazaki, Tokyo Voluntary Action Center. ‘Many NPOs are not successful in fund raising or collection of membership fees,’ observes Akira Matsubara. Although NPOs are ‘much more visible than five years ago’, observes Takayoshi Amenomori, ‘NPOs are too much thought to be “volunteer” organizations, staffed by non-paid people, and are not seen as professionally staffed organizations. That is one key reason why resources are so scarce for NPOs.’ Tsuyoshi Kusumi believes that, ‘Japanese society has not developed a tradition of charitable donations.’ According to Hisae Tomita, ‘The top challenge is for us to develop a culture of giving and volunteering.’ Sachiko Kishimoto agrees: Development of individual donations is one of the biggest challenges for the Japanese non-profit sector: . . . .

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to open a new route for citizens to participate in voluntary actions of civil society organizations; to create a new way for citizens to express their wills and opinions to the public; to develop broader support for the non-profit sector, beyond the controversy between conservatives and liberals; to make healthy financial bases for grassroots organizations, so that they can fulfil their missions and embody marginal/minority/ new/pioneering/controversial values in the society; and to strengthen the non-governmental sector in order to keep a sound balance between government and the rest of society.

She adds, ‘I think it is time to widen the base of supporters for the nonprofit sector. For the first time in the past fifty years, the general population have begun to feel that voluntary activities are an essential part of their life and society.’ Takayuki Nakamura, Hiroshiman NPO Center, worries about a different problem for fund raising. He thinks ‘Japanese NPOs are challenged by the question of how to collect money from donors. The mechanisms for fund raising have not yet been established.’ Yamazaki agrees, saying that a ‘system of collecting people’s money’ must be developed, ‘especially for the new developing NPOs’. One survey of NPO membership, according to Hideaki Uemura, reports


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that the number of members of all NPOs not only has not increased, but rather has decreased a little since 1990. On the other hand, the number of supporters of the International Volunteer Savings sponsored by the Ministry of Post and Communication has rapidly increased for these 10 years. And many Japanese appreciated the establishment of sections in the Ministry of Foreign Affairs and the Agency of Environmental Protection to financially support NPOs. ‘These facts,’ says Uemura, ‘show that many Japanese would prefer supporting NPOs through governmental programmes rather than being actual members of the groups.’ Nevertheless, he believes that local people will support NPOs as members if NPOs act as advocates to government for alternative policies or programmes and orchestrate from their activities real benefits for the local people. Japanese NPOs must step up their thinking when it comes to raising funds, Hideto DeDe Kawakita argues. The key concept must become ‘marketing – the process of understanding and responding to beneficiaries and supporters . . . Outcome-oriented NPOs must learn to understand how to communicate with their “clients” more effectively.’ Matsubara thinks it ‘conceivable that Japanese NPO corporations will tend to shift to business-minded activities in the future, just as US NPOs’. And as they do that, they ‘will be exposed to more competition with and pressure from for-profit companies than now’, especially since the latter have been ‘extensively encouraged’ to enter the market of social welfare services, such as nursing care insurance. On the matter of giving by institutional philanthropy, Tsuyoshi Kusumi observes that ‘foundations and business corporations provide only a few grants for NPOs’. Makoto Imada, former president of the Hanshin/Awaji Community Fund and programme officer at two major grant-making foundations, agrees that ‘philanthropic money currently is very small’. Yamazaki also agrees, ‘Grants from Japanese foundations are small and limited.’ That is why Yamazaki and Scott Sugiura think a key challenge is to develop foundations. ‘Until the number of Japanese foundations increases,’ says Sugiura, ‘few NPOs will be able to build their capacity to the point where they can be stable and healthy organizations.’ He also urges existing foundations to focus on organizational development rather than project development, shifting their grant-making to provide general support (unrestricted grants) as the best way to improve NPO capacity. Takayoshi Amenomori agrees. ‘Those few grant-making foundations and governmental organizations which provide funds to NPOs usually give money on a project-to-project base, or attach strings to their subsidies.’ Jerry Inman argues that assistance from government, corporations and foundations must be made ‘without the funding institutions trying to control the NGOs’. Amenomori adds:

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Robert O. Bothwell In order not to rely too heavily on such income sources, NPOs must strengthen their fund-raising capacity and develop new financial resources. However, there are only a few professional fund-raisers. And support organizations such as the Center for Public Resources Development are new and are themselves in need of financial assistance.

Yayoi Tanaka, Sasakawa Peace Foundation, sees another problem. Many non-profit people complain of the scarcity of financial or human resources to sustain their programmes and organizations. On the other hand, many grant makers complain of the difficulties of finding the appropriate NPO partners. This is a mismatch problem between the NPOs and donors. One solution might be to create intermediaries to bring the two types of organizations together . . . The roles of the intermediary would be to mobilize resources from companies, government or individuals; allocate resources to the smaller or weaker NPOs; provide capacity building training; and give evaluation feedback to donors so that they will know how the resources are used by the NPOs. Examples of intermediaries are community foundations, United Ways, PBSP in Philippines, Friends of the Environment in Indonesia. . . . There are several organizations in Japan with such intermediary functions. However, most of them are quasi-governmental or governmental organizations. ‘Of course, money for NPOs is critical,’ says Imada. ‘Japanese governments, central and local, pretend to be eager to collaborate with NPOs in delivering many kinds of services. However, they do not provide enough money to NPOs to carry out these services. They treat NPOs as cheap labour organizations.’ Yamazaki, noting that there are now over 3000 NPOs registered under the 1998 NPO law, says ‘Most of them haven’t had chances to receive any governmental subsidy.’ Inman agrees: ‘While government is the major source of funding for NPOs, little government money goes to the vast majority of independent NPOs.’ Matsubara warns that government financial austerity in the current situation might ‘greatly weaken the capacities of the entire NPO sector, including the new NPO corporations’. But Professor Watanabe enters words of caution about more government money. He says that NPOs ‘want the government’s financial support with no strings attached. For example, they want multi-year general support grants. And while expanded enabling legislation and easy money may help NPOs, it might also backfire.’ As reported earlier, he thinks ‘easy money is likely to make NPOs dependent on government funds, serve as its agents and contractors, and refrain from advocacy and watchdog roles’. Inman summarizes the NPOs’ dilemma very well: ‘This is a real Catch 22. NPOs need to prove their capacity to be “players” in order to attract financial resources – but they need funding to improve their capacity . . .’


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Tax legislation This is a major challenge named by several respondents; legislation is urgently needed which would give tax breaks to individuals and corporations who make contributions to NPOs, and which would also exempt NPOs’ income from taxation. Public benefit NPOs now have such tax benefits, but NPOs incorporated under the 1998 NPO Law only in March 2001 received some such benefits. These are discussed in greater detail in earlier chapters in this volume. In Fall 2000, Gen Watanabe, Toyota Foundation, said, One of the problems of the Law to Promote Specified Nonprofit Activities (‘The NPO Law’), enacted in 1998, is the absence of a tax system for strengthening NPOs’ economic basis. A system of taxation needs to be established that will promote the flow of funds to NPOs. Under such a system, individuals and businesses could receive tax incentives for donations to NPOs. Also, when an NPO engages in profit-making business activities, it could be entitled to receive corporate tax deductions. The 1998 NPO Law stipulates that such institutional reform should be drawn up within two years (i.e., by the end of November, 2000), and carried out within three years. Yoshinori Yamaoka agreed with Gen Watanabe in believing that a primary challenge to growing the NPO and voluntary sector is the absence of a tax system for strengthening the economic base of NPOs: A system needs to be established that will promote the flow of funds to NPOs. Individuals and businesses should receive tax incentives when they donate to NPOs; and when an NPO engages in profit-making business activities, it should be entitled to receive corporate tax exemptions. Expectations are high regarding the efforts to develop new law. However, even if a tax system favourable to NPOs is adopted, it will not mean that the financial strength of NPOs will be immediately enhanced. For that to happen, each NPO will have to win the support of the public for its activities. Nevertheless, the important thing is to create the conditions for this to happen. And that will indeed mark the creation of a new non-profit culture.

Summary and conclusions This survey of NPO leaders in Japan and others seriously interested in the country’s NPO and voluntary sector, conducted in Fall 2000 and Winter 2001, reveals that the challenges facing Japan in growing its non-profit sector are many and diverse. However, using a conceptual map and delphi process to understand the connections among the ten themes discussed

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above, four themes stand out: the vision of NPOs; their legitimacy in society; the authoritarian, caring government; and NPO finances. The vision of NPOs clearly emerges as the most important challenge for growing the NPO and voluntary sector. No less than six of the other nine themes are dependent on it. ‘A nation cannot survive without virtue, it cannot progress without some common vision . . . A healthy, productive society is based on high expectations,’ declares management guru, Warren Bennis, in Why Leaders Can’t Lead (Bennis, 1989/1997, p. 41). The same can well be said for NPOs and the NPO sector in Japan. The vision of NPOs will impact the legitimacy of the NPO sector, whether it grows or diminishes in the minds of the public, government and the business community. The vision will impact the NPO sector’s independence from government, whether independence is seen as essential for NPOs to achieve maximum effect in society, or it is disregarded in the rush to build the sector primarily with government yen. The vision will influence Japan’s political democracy, whether NPOs seek to create moral and legal space for dissent from prevailing public and private policies, or they see democracy as inconsequential. The vision will impact the economic sector, whether by increasing criticisms and collaboration with it – both together can be productive – or by seeing the economic sector as largely irrelevant. The visions of NPO leaders will also guide how they address the internal challenges of networking among NPOs, leadership, capacity building, human resources development, planning, management and administration, and how NPO finances are grown, all of which can provide a better or lesser base to influence legitimacy, independence, democracy and the economic sector. ‘There is general consensus among experts that the longterm well-being of [organizations] is facilitated by something called “leadership”,’ writes non-profit management expert, Thomas Wolf. In listing the key components of leadership, the very first he lists is vision (Wolf, 1999, pp. 334–335). The legitimacy of the NPO sector stands out as the next most important challenge of growing the sector. At least three of the other nine themes depend on this legitimacy. Some believe that NPOs have not established their legitimacy in the eyes of society. NPOs are not seen as illegitimate, but that they are too invisible to the public, therefore, the public has no basis to think about or trust in them. The sector’s legitimacy in society, however, will influence the ability of NPOs to attract financing from individuals, corporations and government. And the more legitimate the NPO sector, the more independent it will be from government. Ultimately, the more legitimate are NPOs, the more they can inspire and help operationalize greater democracy. According to David Horton Smith, a leading scholar on grassroots organizations, High prevalence rates of grassroots associations and supralocal voluntary associations tend to be seen by many theorists as


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fundamental to participatory democracy, political pluralism, and civil society . . . Grassroots associations . . . offer societal outsiders one of the best persisting long-term ways in which to make participatory democracy and a civil society more real for them. (Smith, 2000, p. 249) The authoritarian, caring government also is as crucial a challenge in growing the NPO sector as is legitimacy. At least three of the other nine themes depend on the government’s inclinations and action. The government recently enacted tax legislation which provides tax benefits to NPOs for the first time (recognizing that public benefit corporations, the original concept for non-profit corporations, have had tax benefits for a long time). But, the strictures on these benefits are great. Subsequent tax legislation that provides excellent and easily accessible tax benefits for NPOs is greatly dependent on favourable thinking of the authoritarian, caring government. Such thinking may be unlikely, as Japan’s stagnant economy continues to resist the government’s solutions and the government finds less leeway in allocations of tax monies. While the government has been slow to enact legislation encouraging rapid growth of the NPO sector, nevertheless, the government has been generous in providing grants and contracts both for provision of public services and NPO support centres. As a jump-start after the explosion of interest in NPOs and voluntary effort after the Hanshin Awaji earthquake, this makes sense. But NPO and government leaders have to bear in mind that this policy may ultimately suffocate NPOs, by inhibiting the independence they will need to propose alternative public services and be effective advocates for alternative policy visions. Citizens have had a traditional dependency on their caring government for services. If alternative public services are to be developed in order to serve minority interests not currently served, or inadequately served, by government programmes, NPOs must help citizens outgrow this dependency and rely more on themselves for solutions to community issues. An authoritarian government, no matter how caring, will have great difficulty in allowing NPOs to expand citizen participation in policy formulation. The authoritarian culture will backstop the government in this. If citizens are to increase their roles in policy development, in order to address dangerous, erroneous or insufficient public policy, NPOs must identify key issues on which the government is vulnerable and press for citizen input into the policy process. Using NPOs to transform the authoritarian government into more of a democracy is on the minds of some of those surveyed, while most ignored the subject. Yet ‘Democratic politics’, writes Michael Edwards provide the best early warning of impending crises, the most effective channels for prevention and response, and the greatest likelihood that

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Robert O. Bothwell differences will be resolved peacefully. This need not mean the Western multi-party system, but any system that combines commitment from government with lines of accountability that enable public pressure to enforce it. (Edwards, 1999, p. 90)

Edwards is director of Ford Foundation’s Governance and Civil Society Unit, with 20 years’ experience in international development. His words carry weight. NPO finances are on many people’s minds as a critical challenge for growing the sector. Yet NPO finances emerge as the most dependent factor among the ten discussed in this survey. As identified above, NPO finances are certainly dependent on NPOs’ vision, legitimacy, the government, the economic sector and tax legislation. Richard Holloway, respected NGO consultant among third world nations, writes about Africa, but his message has great potency for Japan: Civil society organizations [sic] need to be convinced that if they wean themselves from foreign [government] funding, support of some other kind will be possible, and that they will be able to mobilize the resources they need to do the work they think needs doing . . . If Southern civil society organizations pursue a mission and perform functions that are valuable to society, if they communicate this well to the public, business and government, and if they undertake well thought-out efforts to obtain the resources needed to perform these functions, then, in most circumstances, such resources will be available. (Holloway, 2001, p. 11) A concluding thought: ‘Our awesome responsibility to ourselves, to our children, and to our future is to create ourselves in the image of goodness, because the future depends on the nobility of our imaginings,’ says Barbara Grizzuti Harrison (quoted in Themba, 1999, p. 159).

References Bennis, Warren. 1989/1997. Why Leaders Can’t Lead. San Francisco: Jossey-Bass Publishers. Edwards, Michael. 1999. Future Positive: International Cooperation in the 21st Century. London: Earthscan Publications. Holloway, Richard. 2001. Towards Financial Self-Reliance: A Handbook on Resource Mobilization for Civil Society Organizations in the South. London: Earthscan Publications. Kaplan, Ann E. (ed.) 1999. Giving USA 1999. New York: AAFRC Trust for Philanthropy.


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Pekkanen, Robert. 2001. ‘A Less-Taxing Woman?: New Regulation on Tax Treatment of Non-profits in Japan’. International Journal of Not-for-Profit Law, vol. 3, issue 3. Smith, David Horton. 2000. Grassroots Associations. Thousand Oaks, CA: Sage Publications. Themba, Makani N. 1999. Making Policy, Making Change: How Communities Are Taking Law into Their Own Hands. Berkeley, CA: Chardon Press. Wolf, Thomas. 1999. Managing a Nonprofit Organization in the Twenty-first Century. New York: Fireside/Simon & Schuster. Yamauchi, Naoto. 1998. ‘The Nonprofit Sector in the Japanese Economy: An Overview, SCOPE Working Paper 7’. Working Papers on Philanthropy. Sho¯nan kokusai mura, Hayama, Kanagawa, Japan: SCOPE PROJECT, The Graduate University for Advanced Studies. Yamauchi, Naoto. 1998. ‘Corporate Philanthropy in Japan, SCOPE Working Paper 12’. Working Papers on Philanthropy. Sho¯nan kokusai mura, Hayama, Kanagawa, Japan: SCOPE PROJECT, The Graduate University for Advanced Studies.

8

Strategic management and Japanese non-profits Can it work? Yo¯ji Nishizutsumi, Kira Rilington and Femida Handy

Introduction Non-profit vs for-profit institutions There are a number of similarities between for-profit and non-profit institutions. For instance, each develops and delivers products and services, each has multiple stakeholders, each makes strategic decisions and assesses performance, and each faces a changing environment. While these similarities exist, their differences are profound. For-profit institutions strive to perform better than competitors and produce above-average returns to shareholders. This ambition requires strong leadership by the CEO and top management team, adequate analysis of the environment, adequate development and implementation of a strategy that best fits the external environment as well as the company’s internal strengths, and an appropriate organizational structure. Non-profit organizations strive to provide services and assistance to groups of individuals that would otherwise not readily have access to them. These organizations are demand and need driven. They may feel obligated to diversify into new areas of service because constituents need it, even if they are understaffed and over budget. While strong leadership, adequate analysis of the environment, adequate development and implementation of strategy, and an appropriate organizational structure are desired in nonprofit organizations, it is not always attained. The primary differences between for-profit and non-profit organizations that fail to meet these objectives are that the market does not weed out poorly performing nonprofits, and stakeholders are more passionate about the availability of service rather than profits. The two types of organizations also face different labour pools which impacts their ability to achieve these objectives. Non-profit organizations rely heavily on volunteers or employees who earn far less than what they could in the for-profit sector. The prior experience of workers in non-profit organizations also varies in that more workers are hired for their passion and commitment to ‘the cause’ rather than based on their skills.

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Lastly, the ways in which these two types of organizations raise capital is very different. For-profit institutions have access to public equity and bond markets, as well as shareholders. Non-profits, on the other hand, generally rely upon donor support and government funding. Japanese vs North American charitable institutions Just as there are differences and similarities between for-profit and nonprofit organizations, there are differences and similarities between nonprofit organizations regarding their purpose and services. Japanese nonprofits are particularly unique relative to their North American counterparts. In North America, non-profit organizations may have an educational, political, religious, ethnicity-related, or charitable agenda. These organizations are relatively easy to form and may or may not receive funding from government sources. Japanese non-profit organizations predominantly focus on charitable activities because the government is intolerant of organizations that criticize it, or mobilize to oppose it. In fact, Japanese law is very specific about the types of charitable organizations that can exist, and the types of activities in which they can engage. For instance, Ko¯eki ho¯jin are public benefit corporations, Kaidan ho¯jin are incorporated foundations, and Shadan ho¯jin are incorporated associations. Historically, in order to incorporate, Japanese charitable organizations were required to have a large endowment. Yamamoto et al. found that: In order for an organization to be eligible for incorporation, it is generally required to have an endowment of 300 million ¥ ($3 million US), an annual budget of approximately 30 million ¥ ($300,000 US), an activity plan, and a board consisting of publicly esteemed individuals. (Yamamoto et al. 1995: 149–150) These criteria make it impossible for small-scale grassroots organizations to incorporate. Even after incorporation organizations must meet reporting and inspection requirements. Charitable organizations in North America are not regulated in the same way. There are also different tax implications for individual donors of charitable organizations in Japan relative to those in North America. In North America, individuals can deduct donations on their tax returns. However, in Japan, people working for corporations do not generally file a personal tax return. To receive a tax deduction for a contribution, the contribution must be at least 10,000 ¥ and individuals must file a personal tax return. This additional paperwork and scrutiny by the government limits the number of tax deductions requested by Japanese donors, and subsequently the amount of donations made. Lastly, there are significant

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cultural differences between North America and Japan that influence why and how charitable organizations are founded, and how they are operated. The concept of ‘IE’ Japanese society is sometimes euphemistically referred to as ‘Japan Inc’. While this can be an erroneous label, it indicates the interconnectedness of Japanese government and corporations. According to Nakane (1970: 3), a social psychologist, Japanese people tend to define themselves by group rather than by individual attributes. For instance, a Japanese person might refer to the name of his/her employer before referring to his/her job title or occupation. Strong adherence to a particular group strengthens the unity of its members. ‘The institutional unit (such as a school or company) is in fact the basis of Japanese social organization’ (Nakane, 1970: 3). This Japanese characteristic is reflected in a concept called ‘Ie’ or the household, whereby the relationship among members of a household is ‘more important than all other human relationships’ (Nakane, 1970: 5). According to this concept Ie, each member is encouraged to cooperate in order to maintain harmony and to attain the collective goals of the group (Nakane, 1970). In a company, the relationship between employer and employee is akin to the bonds among family members, and the head of the company strives to take care of his/her employees. Thus, corporations and government try to provide services and assistance akin to that provided by North American charitable institutions. Thus, for many years, charitable organizations did not have a strong presence in Japan. The notion of Ie is foreign to North American culture wherein non-profit charitable organizations provide ‘public goods’ and services to the community. North America also has a more diverse group of citizens and an individualistic culture relative to Japan. The concept of Ie is most effectively applied in a closed, homogeneous society where individuals are willing to be so strongly committed to a group. It is also most effectively applied in a stable environment whereby the needs of the group can be slowly communicated (without shame) and addressed. However, it is insufficient when a crises arises (such as the Hanshin Awaji earthquake), or when the needs of out-group members begin to cause problems for the general society (such as refugees living in poverty). Additionally, Japanese society is becoming more and more diverse as it has become more global regarding international trade and the influx of refugees. Thus, the concept of Ie is becoming more difficult to sustain in a way that satisfies the needs of all of society’s demands. Considering the challenges facing non-profits in general relative to their for-profit counterparts, traditional strategic management theories are inadequate for explaining and predicting how non-profits should address these issues. Similarly, while existing non-profit research has made strides in describing, and to a limited extent, prescribing how non-profits should


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conduct business it is inadequate for application to Japanese charitable organizations. Japanese charitable organizations are unique because of the cultural and legal reasons mentioned above and should receive special consideration. This chapter aims to develop such a model by combining existing non-profit research and organizational learning research taken from the strategic management literature.

Literature review Non-profit research Strategy change cycle, is one of the most influential theories in research on charities and was developed by Bryson (1995). It has three main components: planning, implementing and monitoring. It is important to note that these three components are separate and that each must be done effectively for a charitable organization to be effective and stay with its mission. Bryson’s main contribution is the usefulness of these principles that can be adopted easily and quickly within a charitable organization. However, it is limited in that a learning component is not assumed to be a part of one of, or all three of the processes. Similar to some of the strategic management theories discussed in the next section, the emphasis of this model is on the internal operation of the organization. Alternatively, Oster (1995) developed the Six-Force Diagram which is a modified version of Porter’s Five Force Diagram (1980), which emphasizes the external environment in which organizations operate. Specifically, this model suggests that six factors will exert influence on an organization and impact the strategy it adopts and the services it offers. These factors include: suppliers, clients, the availability of substitute products, the intensity of rivalry in the environment, the threat of new entrants, and in the case of charitable institutions, donors. Much like Porter’s model, by analysing these factors, Oster’s model helps an organization find congruence or ‘fit’ between what the charity is capable of doing, and what these factors allow it to do. Similarly, Shoichet’s (1988) 3 Delta Model tries to combine the importance of the internal aspects of a charitable organization with its external factors. The three factors that comprise this model are: structure, community and culture. However, its emphasis on congruence limits its applicability to charitable organizations operating in a changing environment in which there is definitely a period of time whereby the firm must be out of sync with the environment as it adapts. Strategic management research Strategic management research attempts to describe and predict why organizations exist, why they take the organizational forms that they do,

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and most importantly, why some perform better than others. There are subsets in the field of strategic management that address these issues differently. Simply put, some researchers view organizations as being a product of their environment. In other words, factors in the external environment determine organizations’ strategies, product offerings and their overall success. Other researchers suggest that it is the internal strengths and weaknesses of an organization that determine its strategy, product offerings, organizational structure and its overall success. These two ends of the continuum have, of course, led to studies whereby researchers aim to show that organizations that are best able to match their internal strengths and weaknesses to the factors in the environment are the best performers in the long term. A few of these theories are defined below. It is obvious by their assumptions and the contexts in which they have been tested that these theories are most appropriate for profit making organizations. However, there are aspects of these theories that can be adapted and applied to Japanese charitable organizations. Transaction cost economics view of organizations TCE theory suggests that organizations exist as a result of market failures (Jenkins, 1987). Market failures ‘arise when the market does not bring about an optimum allocation of resources’ (Trebing, 1987: 1716). Market failures can take one of three forms: monopolies; externalities; or information asymmetry (Dahlman, 1979; Mahoney and Pandran, 1992; Trebing, 1987; Yao, 1980). Information asymmetry occurs when information available to one party is not available to another (Williamson, 1975, 1985). When one party is able to obtain information unilaterally, the disadvantaged participant is faced with the high cost of trying to protect itself against opportunism. Williamson (1975, 1985) and Teece (1982) suggest that it is more efficient for firms to minimize such costs by internalizing transactions than by utilizing the market. In the case of non-profit organizations, it is possible to theorize that they exist as a result of market failure. However, it would not likely be due to one of the three forms noted above. Instead, non-profit organizations likely exist because for-profit organizations or governmental agencies are unwilling or unable to provide the needed services without charge to large groups of constituents. Despite this similarity with a fundamental premise of TCE, TCE is not an appropriate theory to use in understanding how nonprofit organizations should address their challenges, especially not Japanese charitable institutions. Specifically, the concept of opportunism, which arises when information asymmetries exist, is inappropriate. Constituents do not generally turn to charitable organizations because for-profit organizations or the government have taken advantage of them. In Japan, in particular, charitable organizations have a complementary relationship with the corporate and government sector.


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Resource-based view of the firm Resource-based view (RBV) suggests that some organizations are able to outperform other organizations and earn superior endowments because of their unique internally generated capabilities. There are four assumptions to this theory: (1) firm performance is driven by internal capabilities and resources; (2) resources are unique to organizations; (3) resources are immobile across organizations; and (4) over time, firms can acquire or develop new resources. The implications of these assumptions are important. Specifically, it allows for complexity in organizations which can add to its uniqueness, it allows for organizations to change over time, and it allows for some resources to be so unique to a specific organization that it cannot be easily imitated by competitors. The magnitude of the competitive advantage that can be gained by having a portfolio of resources depends upon the extent to which they either reduce the cost structure of the firm, or help differentiate the firm’s product offering. While charitable organizations are not trying to out-compete other organizations, they are in competition for limited donations and government funding. Therefore, to the extent that a charitable organization can differentiate itself from the others and establish a strong identity, it may be more economically viable. Due to the mission of each charitable organization, the needs of its constituents, and the volunteer nature of the industry, it is safe to say that each organization is unique and possesses unique resources. However, for the purpose of better understanding and anticipating how Japanese charitable organizations can best respond with challenges in its environment, the most important resource to consider is knowledge. Knowledge can take the form of content or process as discussed in more detail below. Knowledge is required to create and acquire unique resources in the future and to utilize them optimally. Knowledge-based view of the firm Knowledge-based view of the firm has not yet been accepted as a theory of the firm (Grant, 1996). However, there are a number of researchers who are in favour of it becoming an acknowledged theory (i.e., Grant, 1996; Kogut and Zander, 1992; Leonard-Barton, 1992; Nonaka, 1994; Spender, 1996). The premise of this view is that firms exist because they can share and transfer knowledge more efficiently and at less cost than the market (Kogut and Zander, 1992, 1993; Nonaka, 1994). The basis of comparison for this efficiency is other firms, not the market. The view is an outgrowth of resource-based view in that knowledge is considered to be the most valuable resource to firms (Grant, 1996; Leonard-Barton, 1992). A firm’s knowledge is said to consist of explicit and tacit knowledge, also referred to as what a firm knows (i.e., information content), and what it knows how to do (i.e., process) (Kogut and Zander, 1992; Nonaka, 1994).

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Spender (1996: 57) additionally stated that ‘A dynamic theory of the firm must be able to deal with uncertainty by allowing a firm to have “something up its sleeve”.’ What firms have up their sleeve are their abilities to acquire new knowledge and to learn. However, firms can become rigid in their know-how. In this sense, they become good at learning and knowing certain types of capabilities at the expense of learning others. Thus, the know-how in which firms invest and exploit is a path-dependent investment that may make it difficult or impossible for them to pursue new paths. Organizational learning Continuing in the same research stream as the knowledge-based view of the firm, organizational learning research provides practical, prescriptive information on how organizations can improve their ability to learn and codify knowledge. Prior to learning, organizations must have an accurate assessment of their current knowledge and where it is stored. From this point, new learning is a ‘product of a firm’s combinative capability to generate new applications from existing knowledge’ (Kogut and Zander, 1992: 391). While organizational knowledge creation begins with individuals, as it is shared through interaction and teamwork, it becomes organizational knowledge creation (Nonaka, 1994). The overall result can be organizations that are smarter than its individuals because individual limitations are overcome by the collective use of resources (Glynn, 1996). This theory appears to have the most relevance and applicability to Japanese non-profit organizations. Considering the challenges facing these organizations, those that survive will need to understand what it is they know, what it is they know how to do, and how this knowledge can be used to optimally allocate resources to service constituents while remaining economically viable.

Case studies Three case studies were selected to illustrate both the uniqueness of Japanese charitable organizations relative to their Western counterparts, and how organizational learning theory can best be applied in these settings. The three cases selected are: (1) So¯to¯shu¯ Volunteer Association (SVA); (2) Indo-Chinese Refugee Settlement Association (ICRSA); and (3) Chigasaki Volunteer Alliance (CVA). These three cases represent a crosssection of Japanese charitable organizations in terms of the geographical scope of their responsibilities. Specifically, SVA is an international organization, ICRSA is regional and CVA is local. Thus, the cases provide a comprehensive picture of the Japanese charitable sector.


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Case study 1: So¯to¯shu¯ Volunteer Association (SVA) So¯to¯shu¯ Volunteer Association (SVA) is a Japanese charity with an international focus. It develops educational initiatives for refugees and the poor in Thailand, Cambodia, and Laos. A So¯to¯shu¯ Buddhist monk who recognized a need for such services in the Southeast Asian countries founded it in December 1981. SVA’s organizational philosophy is based on a Buddhist principle: to affirm human dignity and human rights for each member of the community (SVA, 1996). This principle is embedded in its mission ‘to create a community where people live and learn together,’ (SVA, 1996). The So¯to¯shu¯ Buddhist sect had extensive prior experience in developing and disseminating such educational activities through the ‘Sunday Schools’ offered at their temples. SVA primarily provides three critical services in Southeast Asia, including library programmes, international relief, and Bangkok shantytown and rural development programmes. It also has a picture book programme in Japan that is designed to raise awareness about its other programmes and to procure picture books that can then be sent to Thailand, Cambodia and Laos. Beginning in 1981, a mobile library was used to service Cambodian refugee camps in Thailand. However, as the camps closed, the programme was refocused to service the rural and urban areas of Thailand, Cambodia and Laos. In 1988, the SVA expanded its activities by launching the Bangkok shantytown programmes. An increase in government assistance and public support facilitated these expansion efforts. Eventually SVA engaged in larger-scale activities such as adult and child education in sound agricultural practices. Due to the 1995 Hanshin Awaji earthquake, SVA additionally became involved in disaster relief efforts. More recently in 2000, the SVA began an assistance programme for Karen refugees, an ethnic minority in Burma fleeing persecution by the Burmese government. These refugees are escaping along the Thai–Burma border. At least, 120 000 refugees have already fled to Thailand. As SVA has grown and diversified into new services for more clients, it has to continuously evaluate the needs of a wide range of stakeholders. The issues concerning these stakeholders are complex, ranging from the human rights of refugees and ethnic minorities, to poverty and emergency disaster relief. SVA’s organizational structure has expanded along with the addition of new services (Figure 8.1). SVA employs a hierarchical decision-making process to better control the flow of information and to maintain clarity regarding everyone’s responsibilities. To effectively administer these programmes, SVA manages a large budget. In the fiscal year ending 1997, SVA’s revenue totalled 638.5 thousand ¥ (about $5.8 million US).1 One third of the revenues are derived from commercial activities such as catalogue and exhibition sales of handmade crafts (SVA, Annual Report, 1998). However, this source of revenue

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Yo¯ji Nishizutsumi, Kira Rilington and Femida Handy Advisors (2 advisors)

Chairman Nendo Matsunaga

Auditors (2 auditors)

Senior director Shigenari Arima

Board of directors (15 members)

Secretary general Tatsuya Hata

Tokyo Headquarters Planning

Bangkok office, Thailand

International program Chikyu Shimin program

Phnon Penh office, Cambodia

Craft aid program Public relations

Vientiane office, Laos

Accounting General affairs Preparatory division for incorporation

Figure 8.1 Organizational chart (SVA)

was expected to fall the following fiscal year (1998) by ¥18.5 million (about $168 000 US) (SVA, Annual Report, 1998). The second largest source of revenue (representing approximately 20 per cent of revenues in 1997) is government assistance. Membership fees and donations represent a small part of SVA’s revenue base relative to its commercial activities, however, they are critical to SVA’s overall agenda. These funds serve the dual purpose of raising public awareness and money. On the other hand, SVA’s total expenditures for the fiscal year ending 1997 were ¥650 530 thousand (about $5.9 million US), indicating that the organization overspent. SVA made up for the shortfall with a currency exchange gain of ¥33 790 thousand, giving the organization a net profit of ¥21 770 thousand. Much of the expenses (¥459 million or about $4.2 million US) were incurred operating the library, rural development and shantytown programmes in Thailand, Cambodia and Laos. SVA addition-


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ally spent approximately ¥146 million (about $1.3 million US) domestically on campaigning, hand-made crafts programme, public education, and research (SVA, Annual Report, 1998). Lastly, SVA incurred administrative costs of ¥46 million (about $418 000 US). Unlike its Western counterparts, SVA has not conducted large-scale fundraising campaigns using the media, such as telethons, or held benefit dinners. Instead, SVA has a much smaller annual year-end fundraiser and relies on collection boxes in So¯to¯shu¯ temples. Thus, while the organization, the number of services it provides, and the number of people it services has grown, the number of revenue sources has remained relatively constant. Considering the anticipated decline in revenue generated from commercial activities and the instability of government financing, SVA was faced with the challenge of finding funding alternatives. In 1999, SVA became a Shadan ho¯jin (incorporated association), meaning its commercial profits, membership fees, and donations are now tax-exempt up to 27 per cent (DIHS, 1996). However, incorporating meant that SVA had to give up its status as a religious affiliation and remove Sotoshu from its name, because religious organizations cannot incorporate as a Shadan Ho¯jin, only as a Shu¯kyo¯ ho¯jin. This decision was made undoubtedly after great deliberation of the alternatives. After all, SVA was founded on Buddhist principles and established brand recognition through its affiliation with So¯to¯shu¯ Buddhists. According to Tetsuya Hata, the Secretary General of the SVA, There were both nays and ayes for removing ‘So¯to¯shu¯ ‘from the organization’s name. Many long-time members remain attached to the name So¯to¯shu¯, since it was the influential So¯to¯shu¯ Buddhist sect that founded the organization twenty years ago. The name also gave the association an air of trustworthiness in the eyes of the general public. (The Daily Yomiuri, 8 November 1999) SVA now stands for Shanti2 Volunteer Association. The SVA has come to believe that important gains outweigh the disadvantages of loosing its ‘brand name’. The SVA is now under the direct supervision of the Ministry of Foreign Affairs. This has raised some concern that the organization’s activities may be restricted if they conflict with the views of the Ministry (The Daily Yomiuri, 8 November 1999). Mr Hata remains optimistic, noting ‘ the ministry has not made any demands regarding our activities so far’, but the fact remains that SVA will face more government intervention into its decision-making and programme implementation processes than it did in the past (The Daily Yomiuri, 8 November 1999). Combining theories from research conducted in the non-profit sector and organizational learning theory developed in the strategic management literature is ideal for examining SVA and other similar charitable organizations. SVA is essentially trying to remain a grassroots organization while it

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continues to grow. It is difficult to do both as a charitable organization for several reasons. First, for-profit organizations have the option of raising the price of its products or divesting unprofitable service divisions as a way to improve profitability. In offering a public good, charitable organizations are not afforded these options. Second, it is more difficult to attract and maintain a highly qualified labour force that can deliver the numerous services and analyse the environment to anticipate the changing needs of constituents. For-profit organizations are able to offer more attractive salaries and benefit packages to this type of labour pool than charitable organizations. Lastly, as the charitable organization expands its services, it is difficult to find volunteers and donors that want to support all of them, instead they generally believe strongly in just a few of the organization’s causes. Combining non-profit and organizational learning theory will allow us to better model and understand how charitable organizations can better chart their growth, attract financing and sustain their founding vision. Case study 2: Indo-Chinese Refugee Settlement Association (ICRSA) Indo-Chinese Refugee Settlement Association (ICRSA) is a non-incorporated charity. It was founded in 1985 in Kanagawa Prefecture to assist IndoChinese refugees in learning Japanese language and culture. Due to an extensive network with other similar charities, ICRSA is able to concentrate on coordinating activities while others in the network are directly involved in providing the services. ICRSA’s mission is to support and develop various activities such as providing Japanese language education and improving the living conditions of Cambodian, Laotian and Vietnamese refugees, and to promote the exchange of information among members. ICRSA hopes that through grassroots initiatives refugees will feel they are equal members in the community (ICRSA, 1988). Initially, ICRSA primarily focused on Japanese language instruction for children and adults. However, ICRSA’s services have expanded to include legal counselling (related to immigration), psychological counselling to alleviate the stress attributed to the reasons surrounding their departure from their country of origin (i.e., poverty, war, persecution), and the sponsoring of community events. ICRSA fulfils its mission with the aid of 270 unpaid volunteers, most of whom are housewives (aged 40 to 50), students, and some retired people. To attract more volunteers, ICRSA has begun offering seminars that give volunteers the opportunity to learn more about ICRSA and to provide existing volunteers the opportunity to fine-tune their teaching skills. As a result of peace in Indo-China, the number of Indo-Chinese refugees has declined. However, the number of refugees from other nations such as China and Latin America has risen. This change in ICRSA’s clientele suggests it may need to revise its mission statement which assumes the assimilation of refugees into Japanese culture.


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In addition to expanding its responsibilities to meet the needs of its existing and new clients, ICRSA faces the challenges that accompany having an unincorporated status. In other words, ICRSA is not a legal entity that is recognized by the government. This lack of legitimacy influences public perception, the types of volunteers it attracts, and its ability to raise money. However, it should be noted that the Kanagawa Prefectural government tries to nourish these types of grassroots organizations by providing grants through the Tomoshibi foundation. In fact, the government allocated ¥ 212 million (about $1.9 million US) in 1998 for this purpose. ICRSA has access to a limited amount of these funds and receives additional revenue from membership fees and donations (¥ 1000 or $8 US). Despite its limited resources, ICRSA currently has no plans to incorporate. ICRSA is a loosely structured organization because its budget is small and it acts more as a coordinator of charitable organizations rather than a direct provider of service (see Figure 8.2). It has a top management team, a volunteer board of directors, and six divisions operated primarily by volunteers. The Chairwoman, Hiroko Sakurai, is a strong leader as she sets forth to bring cohesion to this loosely structured organization. Ms Sakurai created the basic organizational structure which makes it easier for her to establish and communicate clear objectives to the different divisions. Similar to the case of SVA, combining research from the non-profit literature and organizational learning theory, can aid our understanding of how a loosely structured, unincorporated charitable organization such as General assembly Member agencies (15) Board of directors

Management team chairperson vice-chairperson Executive bureau (headquarters)

Volunteer meeting

Language programs Homework assistance Community events Han (divisions) Public relations Liaison Counseling

Figure 8.2 Organizational chart (ICRSA)

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ICRSA can best learn and make improvements. While ICRSA has a more regional focus than SVA, its role is being redefined by the expanding needs of its constituents while its sources of funding remain constant or are declining. The less formal organizational structure of ICRSA raises similar questions of how the organization should best manage its growth. Case study 3: Chigasaki Volunteer Alliance (CVA) Chigasaki Volunteer Alliance (CVA) was created in Chigasaki City, a suburb of metropolitan Tokyo, in 1980. Its purpose is to provide services that meet the needs of the elderly and people with physical and/or mental handicaps. CVA has seventeen member organizations that directly provide these services such as Braille books, language tapes, and transportation. Since CVA essentially coordinates the activities of these member organizations, its mission has been to act as a liaison among the organizations to better promote their activities. CVA holds monthly meetings for its member organizations during which they can exchange information and discuss problems. Other key initiatives sponsored by CVA include seminars and exhibitions designed to inform the public about their work. CVA particularly emphasizes its annual ‘Volunteer University’, a volunteer training programme aimed at illustrating how volunteers can become involved in the different member organizations. CVA has a very simple structure. The most serious issues are addressed at its annual General Assembly (stakeholders’ meeting). It is here that annual financial reports are disseminated and future activities are planned. The General Assembly includes a board of directors and representatives from member agencies. Each member agency retains the authority to manage their own daily activities and make budget allocation decisions. Similar to ICRSA, CVA is managed primarily by female volunteers (see Figure 8.3). Given the significant number of member agencies and their relative autonomy, CVA faces the challenge of trying to get each agency to rally around a collective goal. This challenge affects how CVA conducts fundraising because it has been difficult to sponsor a large-scale event involving a collective theme that would promote donations to each member agency. Thus, leadership is a critical issue CVA must resolve. Similar to both SVA and ICRSA, CVA faces the challenge of finding quality, skilled volunteers that are up to this challenge. According to Ms Iizuka, the current Chairperson of CVA, ‘it seems to be difficult for our members to understand that they are a part of CVA’ (Interview, 28 June 1999). Specifically, due to the volunteer nature of the work, CVA’s members do not feel personally responsible for raising money or carrying out the vast administrative work that is required. Most of Ms Iizuka’s efforts are, therefore, directed at enhancing the relationship among volunteers and at creating a comfortable work environment. As stated by one volunteer, Ms Furusho¯, ‘I appreciate a peaceful work place. I have always tried to create


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General assembly

Board of directors

Monthly member meeting

17 member organizations 40 individual patrons

Figure 8.3 Organizational chart (CVA)

an atmosphere where people can enjoy their work’ (Interview, 28 June 1999). An additional challenge arises when new volunteers arrive who need to be integrated into the organization and established volunteers have already established close relationships among themselves. As noted earlier, CVA has limited and unstable financial resources. It is heavily dependent on government, private grants and membership fees and donations. However, the government-affiliated agency that provides funding has recently experienced budget cuts and there is fierce competition among similar charitable organizations to obtain private grants. Therefore, research from the non-profit literature and organizational learning can definitely be combined and applied to addressing the leadership, management and funding problems facing organizations like CVA. Each of the three charities discussed above face operational difficulties including: budgetary constraints, a limited labour supply, volunteer management issues, less than optimal organizational structures and growing pains. Additionally, limited public awareness and interest and the diverging interests of multiple stakeholders make it difficult for these charities to effectively manage their external environment. To improve upon these operational, organizational, and management issues, charitable organizations like SVA, ICRSA and CVA can utilize strategic management tools such as organizational learning exercises. This is illustrated in greater detail in the following section.

Strategic management for Japanese charities In order to anticipate and respond to environmental changes and to effectively address existing challenges, Japanese charities need to be flexible,

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creative and innovative. In other words, they must become learning organizations (Senge, 1990; Zimmerman, Lindberg and Plesk, 1998). To create a learning organization, Senge (1990: 7) suggests it is important to look at issues holistically so organizations can see ‘the whole pattern of change’. Hence the strategic model Japanese charities should adopt should emphasize ‘learning’. In Japanese culture, metaphors are often used in education to provide the participant with a visual schema of the concepts. Hence, it may be easier for Japanese charities to modify their culture, organizational structure and processes using relevant metaphors. However, what should Japanese charities be learning? And does a new emphasis on learning imply that they were not learning before? Due to the challenges facing these charitable organizations, organizational learning needs to occur in the following areas: (1) the interest of stakeholders or stakeholder analysis; (2) best practices existing in other charitable and for-profit institutions; (3) new methods of fundraising; (4) managing volunteers and finding new sources of human capital; and (5) leadership. Developing better tools for organizational learning does not imply that Japanese charitable organizations are not learning. Instead, it just makes learning more systematic, more dynamic and more durable for withstanding volunteer turnover. Stakeholder analysis The first issue entails examining the interests of stakeholders. While stakeholders of for-profit organizations generally disagree over how profits are divided (i.e., employees, shareholders, corporate responsibility charitable gifts), stakeholders of non-profit generally disagree over the purpose and mission of the organization. As the need and interest in Japanese charities has risen slightly in the 1990s, so has the number of stakeholders. Existing charities must carefully reassess the interests and needs of each of these groups. For example, SVA’s stakeholders include volunteers, individual and corporate donors, its clients, other charities with whom it has relationships, the local governments of Thailand, Cambodia, and Laos where SVA provides services and the United Nations. Volunteers may have different expectations and reasons for their service. Some believe in the cause, while others enjoy the feeling associated with giving. Individual and corporate donors may or may not believe in the cause. Instead, tax incentives may be driving their donations, or in the case of corporations, they may wish to improve their image. Other charities may want to benefit from their international status and network. Government agencies may welcome the role played by SVA because it allows them to reduce its spending on providing similar services directly. The fact that the interests of these stakeholders differ is not so much a problem as how these interests are managed. Having a systematic process for analysing these interests periodically can facilitate better decision


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making, better marketing campaigns, and better utilization of the network of charitable and government agencies that have an interest in maintaining the viability of these service providers. For instance, understanding all of the reasons for volunteer involvement can allow SVA or other similar organizations to better target potential volunteers. Understanding why donors give can allow SVA to establish more targeted marketing campaigns rather than pursuing generic fundraisers. Understanding that other charitable organizations and government agencies may benefit from SVA’s existence and success can allow SVA to better utilize these contacts. However, knowledge of stakeholder interests may require charitable organizations, such as the case studies discussed, to make tough decisions. For example, there is a limit to the number of services any one charity can provide. While for-profit organizations have the discretion to downsize or divest unprofitable business units or product lines, there is a negative stigma associated with a charitable organization making similar decisions. This suggests that charitable institutions must either have a plan regarding the boundary of services it will ever offer, or they must work to change this stigma. The result may be that charities cannot satisfy the interests of all stakeholders. This can be communicated tactfully by how the organization defines its mission, its geographic scope and the allocation of its limited resources. An example of where the number of stakeholders is growing quickly is ICRSA. Its original mission was to assist Indo-Chinese refugees to assimilate and be accepted into Japanese society. However, as immigrants come from more and more countries, it is possible that assimilation may not be what they want. These refugees may wish to retain their native language and culture. Using ICRSA’s services to better learn their native language in addition to Japanese has occurred with some Cambodian refugees. The reason being that the extreme communist and military party, Khmer Rouge, which ruled between 1975 and 1979, prohibited Cambodians from speaking their native language. This has led to a need for volunteers who are skilled enough to provide these services. However, if all immigrants requested this, it would be impossible for ICRSA to satisfy their needs. Since complete assimilation is not always the objective of refugees, ICRSA has acquired the new responsibility of developing programmes that eliminate racial and ethnic discrimination. The Japanese view some of these refugees as just labourers rather than as equal citizens. The government is ill equipped to address these issues because, until recently, Japan had been a relatively homogeneous society. On the other hand, a comprehensive stakeholder analysis may indicate stakeholders are no longer interested in all of the services the charity provides. This would make it easier for the charity to discontinue providing these services. For example, the public has become less supportive of SVA’s involvement in Southeast Asia because of the rise in poverty in Japan. Thus, some stakeholders would welcome SVA emphasizing a more domestic

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policy. In doing so, SVA could alleviate some expenses. Alternatively, SVA can learn from its for-profit counterparts and export their educational products to these areas and allow local charities or the government to disseminate them. In summary, a comprehensive stakeholder analysis allows charitable organizations to make better decisions, make better use of its resources and better target potential volunteers and donors. Best practices As is the culture in Japan, there are many interlocking relationships among charitable institutions. For those that are incorporated, there are additional ties with government due to the criteria for incorporation and the requirement that charities continue to be monitored after incorporation. Of course, charities also have ties to corporations due to their donations. An important aspect of organizational learning is the ability of a firm to incorporate established best practices. In other words, ‘Why reinvent the wheel.’ Charitable organizations can better utilize these networks by learning why and how their network partners are successful. Of course, any practice must be adapted to fit the culture and objectives of the charity. For larger charities, such as SVA, that have offices in multiple locations, they can learn best practices from within. While this may sound simple, for-profit organizations have even learned that internal communication is not always optimal. One reason is that employees or, volunteers in this case, do not always know what they should be communicating. It may not occur to a volunteer in one office who has learned a more efficient way for delivering a service, that another volunteer at another office does not have this information and may find it useful. Therefore, before being able to implement best practices, the organization must train its volunteers on what to look for and what types of information are worthy of communicating. New methods of fundraising As noted in the section on stakeholder analysis, it is possible that by better understanding the interests of donors, charitable organizations can improve their marketing campaigns. In the case studies section, it was also noted that Japanese charities do not generally conduct fundraising in the same way as their North American counterparts. It is possible that some of these methods can be adapted and tailored so as to be consistent with Japanese culture. More aggressive use of the media, telethons, larger fundraising dinners and more direct mail campaigns are some alternatives. In 1987, the Japan Center for International Cooperation (JANIC) was created to promote collaboration among participating charitable organizations and to increase the number of supporters (JANIC, 1996). Through this collaboration, it may be possible to hold joint fundraisers or advertising campaigns whereby resources can be pooled.


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Managing volunteers and finding new human resources As mentioned in the case studies section, many of the active volunteers in Japanese charitable organizations are middle-aged women. Most volunteers also have full-time jobs and only have a limited amount of time to help. The fulfilment they get from giving as well as their belief in the cause motivate these volunteers. Additionally, as noted with CVA, volunteering provides a friendly work atmosphere. Given this environment and the motivations of volunteers, it can be difficult to be strict in this type of environment regarding the quality and amount of work that is performed. Using organizational learning techniques, charitable organizations can do what their for-profit counterparts have learned to do – design the job to promote individual growth. In other words, give volunteers a new reason to enjoy donating their time. Have specific job assignments and roles that are tailored to particular types of skill, then market these positions to volunteers who already have these skills or who are very interested in learning them. Make the work challenging, but not impossible or overwhelming. Structure tasks so that they can be completed within the limited time volunteers have to devote, or design the tasks so they can be completed at home. Aside from better utilizing and developing the talent of volunteers, charitable organizations can acquire new human resources by utilizing their networks of corporate, government and other charitable entities. For instance, invite corporations to give more than cash, such as donating the services of its accounting department to help charitable organizations with their budgets. Government agencies, while reducing their spending on services that can be provided by charitable organizations, could nevertheless donate office space for meetings or events, or donate outdated equipment and supplies. They can also promote volunteer opportunities within their agency, especially to employees who have prior experience in delivering these services. Lastly, charitable organizations can pool their redundant resources and share the responsibility for such activities as accounting, marketing, fundraising, and gathering research. Strong leadership Leadership is equally important in charitable organizations as it is in forprofit organizations. Strong leadership is required to manage multiple stakeholders, to maintain a cohesive vision, to set goals, to motivate volunteers and donors and to develop a strong culture. Leadership may come from an individual, or a group of individuals. The leader plays an important role in aggregating information, analysing it, and then articulating a vision and goals for the future. Due to the volunteer nature of charitable organizations, leadership succession and transition is very important. Thus, strong leaders also have a plan of how others can follow

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in their footsteps once they are gone. Empowering volunteers and developing a decentralized organizational structure may aid the transition from one leader to another. Japanese charities have rich organizational cultures which leaders can draw upon and further cultivate to fulfil their organization’s missions. For example, SVA encourages its members to share its rich history through several reports about the events and actions in its history. This method of storytelling is critical to organizational learning. To improve in the future, organizations must understand their past. There is also a path-dependent nature to organizations in that their past constrains what they may do in the future. Thus, a very conservative, slow-to-change organization is not going to become the most innovative charitable organization overnight. Organizational ‘myths’ bond members together by providing them with a shared understanding, language and pattern of action.

Conclusion The learning approach described in this chapter overcomes some of the limitations of both non-profit and strategic management theories because instead of being strictly interpreted they have been combined and adapted to be appropriate for Japanese charitable organizations. Japanese charities are facing changes in their external environment, the needs of their constituents, the types of constituents they service and the availability of resources. Thus, this is an ideal time for them to implement organizational learning techniques in order to stay economically viable. Japanese charities also operate within a unique network of relationships between government and corporate partners, which can be drawn upon to subsidize their own internal strengths and weaknesses.

Notes 1 Exchange rate in this case is $US1 = 110 ¥. 2 ‘Shanti’ means peace in Sanskrit.

References Bryson, J. M. (1995) Strategic Planning for Public and Non-profit Organizations: A Guide to Strengthening and Sustaining Organizational Achievement, (rev. ed.), San Francisco: Jossey-Bass Publishers. Dahlman, C. J. (1979) The problem of externality, Journal of Law and Economics, 22, 141–162. DIHS [Dentsu¯ Institute for Human Studies] (1996) Minkan hi-eiri so¯shiki NPO to wa nanika [What is a Non-profit Organization?], Tokyo: Nihon Keizai Shimbun Sha. Glynn, M. A. (1996) Innovative genius: A framework for relating individual and organizational intelligences to innovation, Academy of Management Review, 21 (4): 1081–1111.


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Grant, R. M. (1996) Toward a knowledge-based theory of the firm, Strategic Management Journal, 17, 109–122. Indo-Chinese Refugee Settlement Association [ICRSA] (1988) Yuai [Friendship], Newsletter, Yamato; Kanagawa: ICRSA. Japan Center for International Cooperation [JANIC] (1996) Data Book on Japanese NGO ’96, Tokyo: JANIC. Jenkins, R. (1987) Theoretical perspectives on the transnational corporation, 439–459, in Goddard, C. R., Passe-Smith, J. T. and Conklin, J. G. (1996), International Political Economy, Boulder, CO: Lynne Reiner Publishers. Kogut, B. and Zander, U. (1992) Knowledge of the firm, combinative capabilities, and the replication of technology, Organization Science, 3 (3), 383–397. Kogut, B. and Zander, U. (1993) Knowledge of the firm and the evolutionary theory of the multinational corporation, Journal of International Business Studies, 24 (4), 625–645. Leonard-Barton, D. (1992) Core capabilities and core rigidities: A paradox in managing new product development, Strategic Management Journal, 13, 111–125. Mahoney, J. T. and Pandian, J. R. (1992) The resource-based view within the conversation of strategic management, Strategic Management Journal, 13, 363–380. Nakane, C. (1970) Japanese Society, London: Weidenfield and Nicolson. Nonaka, I. (1994) A dynamic theory of organizational knowledge creation, Organization Science, 5 (1), 14–37. Oster, S. M. (1995) Strategic Management for Non-profit Organizations: Theory and cases, New York; Oxford University Press. Porter, M. E. (1980) Competitive Strategy, New York: The Free Press. Senge, P. (1990) The Art and Practice of the Learning Organization, New York: Doubleday. Shoichet, R. (Fall 1988) An Organization Design Model for Non-profits, Non-profit Management & Leadership, 9 (1), 71–88 So¯to¯shu¯ Volunteer Association [SVA] (1996) Asia, Kyosei, NGO [Asia, Coexistence and NGO], Tokyo: Akashi Shoten Publishing Co. — (1998) Annual Report, Tokyo: SVA. Spender, J.-C. (1996) Making knowledge the basis of a dynamic theory of the firm, Strategic Management Journal, 17, 45–62. Teece, D. J. (1982) Towards an economic theory of the multi-product firm, Journal of Economic Behavior and Organization, 3, 39–63. Trebing, H. M. (1987) Regulation of industry: An institutional approach, Journal of Economic Issues, XXI (4), 1707–1733. Williamson, O. E. (1975) Markets and hierarchies: Analysis and antitrust implications. New York: The Free Press. Williamson, O. E. (1985) The economic institutions of capitalism. New York: The Free Press. Yamamoto, T (1995) Emerging Civil Society in the Asia Pacific Community, Tokyo: Institute of Southeast Asian Studies and Japan Center for International Exchange. Yao, D. (1988) Beyond the reach of the invisible hand: Impediments to economic activities, market failures, and profitability, Strategic Management Journal, 9, 59–70. Zimmerman, B., Lindberg, C. and Plsek, P. (1998) Edgeware: insights from complexity science for health care leaders, Irving, TX: VHA Inc.

9

The government–non-profit relationship in contemporary Japan An emerging local government–nonprofit partnership in Miyagi Deborah A. Auger

The centrality of the government–non-profit relationship in the lives of non-profits The character and quality of the relationship between government and nonprofit sector organizations has been a central issue at the heart of civil society disussions not only within the USA and other Western nations (Boris and Steuerle,1999; Salamon, 1999; Ross and Osborne, 1999), but within both developed and developing nations throughout the world (Kramer et al. 1993). Among the world’s most developed countries, contemporary government– non-profit relations have been marked by a set of extensive and fundamentally mutually beneficial ties across the sector boundaries. Government has engaged with the non-profit sector in an elaborate pattern of ‘partnership’ arrangements that have clearly contributed to the non-profit sector’s dramatic growth and development in the last half of the twentieth century (Salamon, 1999). In the USA, as an example, government has been the source of a steady supply of relatively unfettered funding for non-profit operations (through tax exemption, tax credits, grants), has advanced nonprofit sector growth through use of relatively unrestrictive incorporation policies, and has contributed to non-profit capacities and prominence as social problem solving institutions of civil society by engaging together in public service provision via collaboration and contracting arrangements. While questions periodically are raised in the USA and elsewhere about potential adverse consequences for the independence of the non-profit sector of such intensive governmental linkages, in general, the worst fears of critics have not been realized. While tensions continue to exist, government has been seen as advancing a ‘partnership’ with non-profits that, by and large, is more an ‘enabling and supportive partnership’ than a hostile and controlling one.1 Aspirations for true partnership as part of the civil society struggle in Japan As Japan’s non-profit institutions struggle to assume a larger role in society, questions surrounding the essential character and quality of the govern-

The government–non-profit relationship now

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ment–non-profit relationship have moved to centre stage. Historically, Japanese government has been no ally to the non-profit sector. Yet passage of the landmark NPO law in 1998 (see the discussion in Chapters 4 and 5 in this volume) has been said to mark the beginning of a new stage in the development of civil society institutions in Japan (Civil Society Monitor, 5, September 1999; Pekkanen, 2000). Its enactment raises the hope that new, more positive arrangements are possible. Indeed, the development of such a genuinely enabling and supportive partnership with government institutions has become part of the core aspirations of Japan’s emerging non-profit sector (Yamaoka in Civil Society, 1999, p. 31); its achievement deemed essential to non-profits’ assumption of a significant role in the governance process in the future (Tadashi, 1999, p. 123). This chapter begins to explore the evolution of the government–non-profit ‘partnership’ in contemporary Japan. It examines what is known about the character and quality of the government–nonprofit relationship as it was manifest in the behaviours and practices of government officials in the period prior to passage of the 1998 NPO law. And taking passage of the 1998 law as a departure point, it traces the ensuing efforts of government officials in one local government, Miyagi Prefecture Government, to craft a new post-NPO-law relationship with its nascent non-profit sector. Taking a grassroots, local level perspective, this chapter asks, to what extent do Miyagi government official’s post-1998 actions and behaviours constitute a marked departure from past patterns of practices of government? What do recent local government actions and policies reflect about potentials for a new and more favourable local government posture toward local NPOs? Examination of the Miyagi experience suggests that in contrast to the controlling and hostile ‘partnership’ evident in the pre-1998 period, a new more enabling and supportive local government–non-profit partnership might well be in the process of being forged.

Recent history of the government–non-profit relationship in Japan prior to the 1998 NPO Law Until very recently in Japan, the idea that government might engage with NPOs in a genuine partnership manner was inconceivable. Strongly embedded cultural traditions of public sector ‘superiority’ served to vest enormous power over societal matters in its governmental institutions, ¯ ta in Yamamoto, 1999a ). And especially in its government bureaucracies (O within Japan’s centrally controlled, bureaucracy-centred government, the government’s posture toward non-profits was virtually uniformly marked by two elements: 1) scepticism and hostility toward the growth and development of the non-profit sector, and 2) efforts to tightly dominate and control those NPOs which were granted permission to come into being as formal legal enterprises.

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A restrictive regulatory framework and unfettered bureaucratic powers Prior to the 1998 NPO law, Japanese voluntary groups faced governmental imposition of a highly restrictive regulatory framework which made securing incorporated legal status extraordinarily difficult (Amemiya in Yamamoto 1998a). The framework has been characterized as ‘one of the most severe [non-profit] regulatory environments in the developed world’ (Pekkanen 2000, p. 116). Bureaucratically-established application requirements mandated submission of a complex and exhaustive set of documents, and instituted excessively demanding eligibility requirements designed to discourage emerging groups from seeking legal status. Groups faced arbitrarily set (and near impossible to meet) financial baseline requirements that they demonstrate an endowment of 300 million yen and maintain a 30 million yen annual operating budget; and other mandates that they be overseen by a board comprised of ‘publicly esteemed individuals’, with the decision as to whether individuals met this standard left to the determination of the reviewing government official. Most importantly, government bureaucratic officials wielded, under these arrangements, virtually total discretionary authority to approve or deny non-profit legal status. Extensive application materials describing an organization’s goals, mission, proposed activities and detailed financial plans were required to be submitted to the national or prefectural-level bureaucratic agency holding jurisdiction over the service area in which the NPO was working. There these materials were subject to intense and insulated bureaucratic scrutiny, without any objective review standards to constrain the bureaucracy’s review powers. Application review processes, not atypically, took up to a year for government agencies to complete. In the case of NPOs working in more than one prefecture, or working in service areas in the domain of more than one governmental ministry (e.g., social services and education), review processes proved longer and even more challenging, as applications needed to pass independent scrutiny by multiple ministries or multiple prefectures. To understand the weight of power this vested in bureaucratic hands, it is important to understand how critical the acquisition and maintenance of formal legal recognitions by the bureaucracy has been for NPOs capacities. Under the Japanese Civil Code, organizations operating without formal governmental approval have no legal standing in society (Yamamoto, 1998b, p. 104). Without legal standing, non-profits lack the ability to rent office space, hire staff, open bank accounts, purchase vehicles or even secure a telephone listing in the organization’s name. These functions must instead be carried out by a benevolent individual willing to carry out these tasks for the group. Should that individual move or leave the organization, a new ‘steward’ must be located, phone numbers changed, lease agreements rewritten, vehicles reregistered, new bank accounts established. Such changeovers impose major costs and disruptions and drastically impair


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the effective operations of unincorporated groups. Further, unincorporated groups have been (and remain) generally ineligible to receive funding via government or private sector contracts or grants. In light of this, bureaucratic control over the approval process vested government agencies with enormous leverage over the substance and actions of petitioning NPOs. Furthermore, under the pre-1998 regulatory framework, even approval of hard-won legal status did not significantly insulate groups from governmental powers. Japanese NPOs remained subject to continuous, ongoing bureaucratic scrutiny and intervention. NPOs were required to submit, both at the beginning and end of each fiscal period, highly detailed accounts of their activities and finances. These were closely monitored and questioned by the designated bureaucratic oversight authority, with the NPO vulnerable to revocation of its legal status at any time, if government bureaucrats disapproved of its activities or management of its internal affairs (Yamamoto, 1999b). Patterns of bureaucratic domination and interference Evidence suggests that the relatively unfettered powers wielded by the government bureaucracy over NPOs in the period prior to 1998 have given rise to pervasive patterns of governmental domination and interference in the affairs of non-profit entities. Bureaucrats have tended to use their onerous review and approval powers to shape NPOs in ways that ensured NPOs missions were not independently drawn, but would instead reflect the programmatic priorities of reviewing government agencies. Kawashima notes: Mission statements, corporate objectives, strategic and financial plans are scrutinized by the granting authority . . . the authority concerned tends to ‘suggest’ alteration to the policies of the application hoping that the newly born organization would fit in with its own agenda. (Kawashima, 2000) Other scholars go so far as to characterize government actions as routinely enforcing a hierarchical patron–client relationship designed to ensure consonance of aims and activities between government and the NPOs which they oversee (Yamamoto, 1998b, p. 120). Moreover, there is ample evidence to suggest that, rather than attempt to build up the internal leadership capacities of non-profits and ensure that they are independently and capably staffed, Japanese governmental agents have routinely used their powers to usurp the organizations’ leadership potential. Employing both oversight leverage and promises of funding, government overseers have prodded NPOs to fill up their staff positions with retired former officials from the reviewing authorities’ own government

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ministries – officials who could be trusted to inject the government’s perspectives into the non-profit’s character and commitments. (Amenomori, 1997) This practice of securing NPO placements for retired government officials – known in Japan as Amakudari, or ‘descending from the heavens’ (reflecting notions of bureaucratic supremacy) – has proven well documented and extensive throughout Japan (Yamamoto, 1998b, p. 108) Administrative reforms of the past decade that imposed ceilings on the number of government employees permitted in each governmental ministry served to further accelerate this practice. A context of deepseated bureaucratic mistrust and hostility toward NPOs These practices were manifestations of a historically prevailing bureaucratic posture of scepticism and mistrust of NPOs as institutions (Yamamoto, 1998b, 59). In part, the public authorities’ attitudes are reflective of elements of Japanese culture and tradition which accept the idea of inherent governmental pre-eminence and sustain government bureaucrats’ vision of ‘the overwhelming superiority of officialdom’ (see Imada in Yamamoto, 1998a), even as evidence accumulates that citizen confidence in government bureaucracy continues to erode. The common Japanese term for ‘public’, ko¯, for example, has embedded within it references to both ‘government’ and ‘hierarchy’, and is without any inference of civil society or private institutions. These forces bolster a perspective adopted by government agencies that ‘the public interest’ is essentially synonymous with government’s interests (see Furukawo in Yamamoto, 1998a), and that the proper role of bureaucratic officials is more akin to that of public mentors than public servants (Neary, 1992). In combination, these notions validate the bureaucracy’s scepticism about the value and contributions of an independent non-profit sector, and provide a justifying framework for NPO subjugation on the grounds that NPOs are needful of government’s paternalistic direction and advice. (Yamamoto, 1998b, 114) Moreover in at least some measure, the controlling demeanour of government agencies is also attributable to bureaucratic wariness and hostility stemming from government authorities’ association of the current NPO movement with previous citizen movements that were critical of government. Though far broader and less singularly politicized, the current NPO movement, in the eyes of many governmental actors, is seen as having its roots in the consumer, environmental and community development movements of the 1960s and 1970s (Yamamoto, 1998b, p. 132; Kawashima, 2001, p. 11), movements that were overtly ideological, confrontational and challenging of government aims and authority.2 These bureaucratically-held associations have contributed to a sense among governmental agents that they need to assert directive control over NPO activities so as to avert their use to mobilize threats to governmental powers and prerogatives.


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Predominance of a paternalistic and controlling government–non-profit partnership in the pre-1998 period Employing a highly restrictive regulatory framework, then, government authorities established a set of prevailing patterns and practices that reinforced a hierarchical relationship with NPOs. Fed by an ethos reflecting both scepticism and mistrust of the non-profit sector, the government–nonprofit relationship became one of government domination and control. NPOs were not heralded but disrespected; their independent capacities were not built and supported but instead usurped by government. Under the practices common in the pre-1998 period, NPOs were treated like, and compelled to function as, virtual subsidiaries of government agencies. Rather than engaging in an enabling and supportive partnership with NPOs (McLaughlin and Osborne, 2000), Japanese bureaucrats tended to advance a ‘partnership’ that was overwhelmingly a controlling and paternalistic one.

The new 1998 NPO Law and new possibilities for NPOs The new NPO law put into effect in December 1998 was viewed as landmark legislation in this regard, dramatically loosening the restrictive governmental regulatory framework and allowing NPOs to be incorporated without the detailed bureaucratic approvals that marked the period before its passage. Its genesis and nature are discussed extensively in earlier chapters in this volume. A streamlined government approval process undercut delays as a source of bureaucratic leverage by mandating governmental approval or denial of NPO legal status within two months of receipt of an NPOs application. Moreover, the law reduces the levers of control available to bureaucrats to dictate the missions and staffing of independent NPOs by eliminating detailed ongoing oversight reviews (Yamamoto, 1998b, p. 119). However, uncertain in the aftermath of the new legislation is whether government officials will truly embrace not just the procedures but the true intent of the legislation. In the words of one set of key observers: The key issue for the future of the non-profit sector in Japan is whether the prevailing system of state control will be replaced by a . . . system more encouraging to the formation of independent and private nonprofit institutions outside the tutelage of the state. ¯ ta in Yamamoto, 1998a) (Atoda, Amenomori, and O The real set of questions, in other words, have a broader dimension: whether government officials will exhibit a marked departure from the attitudes and actions of their counterparts in the pre-1998 era; whether they will take actions designed to recognize, foster, and build the capacities of an independent NPO sector; whether they will eschew the paternalistic and

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controlling partnership to which they have become accustomed in favour of a genuinely supportive and enabling government–non-profit partnership.

Efforts toward a new government–NPO partnership in Miyagi? A case study of implementation Taking a grassroots, local government perspective on these questions, the remainder of the chapter reviews the local government–non-profit relationship as it was experienced in one prefecture of Japan, Miyagi Prefecture, in the aftermath of the NPO Law’s passage. Covering the period immediately following the law’s enactment, the case study details local government activities and policy actions with regard to Miyagi’s NPO sector initiated in the period from Spring of 1998 to Summer of 2001. The case was compiled through review of reports and formal documents, and from a limited set of interviews with key NPOs and government officials involved in these efforts. While it is far too early for definitive judgements, the case of Miyagi seems to point toward possibilities for a more positive future for the government–NPO relationship, and may reflect the emergence of a new, more enabling and supportive local government–non-profit partnership model in Japan. Prefecture actions in the post-passage period In Miyagi in 1998, local government officials wasted no time in responding to the national NPO reform initiative. In efforts catalysed by the Prefecture’s Governor Shiro Asano and the Vice Director General of the Prefecture’s Administrative Environment and Lifestyle Division, Ms Michiko Higuchi, (efforts which began even before the law took effect in December), the prefectural government embarked on a path decidedly more proactive and far-reaching in its reformist impulses than would have been expected given the history of the government–NPO relationship in Japan. Over the next three years, the prefectural government undertook a multifaceted set of public initiatives involving outreach and engagement of its NPO organizations, creation of formal mechanisms for promotion of NPOs, and the use of prefectural policies and resources to help finance NPO undertakings, and efforts to create an institutional infrastructure to build and strengthen the capacities of Miyagi’s NPO sector. Miyagi’s strategy for outreach and engagement of NPOs Immediately following passage of the NPO measure in March of 1998, Miyagi government officials embarked on an effort to secure a deeper understanding of its local NPO sector – to identify the scope of its activities, to collect information about the priority needs of NPO and voluntary groups, and to gather NPO opinions on what government might do to help


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the sector to flourish in the post NPO law era. Rather than solicit predictable opinions from a restricted set of 60 or so ‘insider’ and ‘government-friendly’ NPOs as would likely have happened in earlier periods, prefecture officials instead initiated a broad gauged effort to identify and solicit views from the broadest possible spectrum of voluntary sector groups in Miyagi. In early-1998, prefecture officials undertook an extensive outreach effort to locate not only incorporated NPOs and NGOs, but the whole host of unincorporated organizations and citizen groups in the prefecture. Using available lists, and soliciting help from municipal governments and previously identified NPOs, they assembled contact names and addresses for nearly 4000 domestic and international voluntary sector groups operating in Miyagi. Throughout May and June, government officials conducted a kind of ‘needs assessment’ outreach survey which asked the groups contacted to describe their mission and the kinds of programmes and activities in which they were engaged – information government officials used later to help document the ‘social contributions’ of the voluntary sector in Miyagi, as a way of educating bureaucrats and the public about the sector’s value. Most importantly, however, the survey sought information on what these groups needed in order to prosper and, in stark contrast to government’s normal ‘mentoring’ posture, specifically asked voluntary sector actors what the prefecture government should do to help support the growth and development of Miyagi’s voluntary sector organizations. The survey was mailed to 3972 groups and nearly 60 per cent responded with information and advice. Other dimensions of Miyagi’s NPO outreach and engagement strategy were in evidence as well. Officials recognized the need for more in-depth information on problems and new approaches than they had been able to obtain via the mail survey. Furthermore, in light of the ill-understood nature of NPOs and the ‘government knows best attitudes’ with which local government authorities (both at the prefecture and in its municipal-level offices) had tended to regard their NPO counterparts, Miyagi officials made a conscious choice to try to foster open dialogue and more egalitarian, direct, face-to-face government–non-profit exchange. Between June and October, prefecture officials sponsored a series of local ‘NPO Forums’. Again reflecting a desire for broad engagement of the NPO community, officials opted not just for a single session in the prefecture capital of Sendai, but held seven forums at different locations throughout the entire region. The forums had the stated aims of highlighting the obstacles that were impeding the development of a vigorous NPO sector in the region, and uncovering ways to forge an effective grassroots NPO– local government partnership. But they also had the unstated aim of breaking down barriers to misunderstanding across sectors, and symbolically bringing NPOs into a more parallel stature with government. The NPO forums brought together in roughly equal measure NPO/NGO/

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voluntary sector actors and prefectural/municipal government officials, along with a smaller contingent of interested corporate representatives. The forums engaged participants in more than a half-day of ongoing face-toface discussions, and were well-attended by Japanese standards, drawing 50 to 60 individuals at each of the seven forums. Creation of a formal Advisory Body for the promotion of NPO activities in Miyagi It was clear these ideas being gathered via this outreach and NPO engagement process needed to be digested and translated into proposals for new government policies and practices. While in the past this task would likely have been relegated to bureaucratic authorities, who might have crafted the information in ways that suited government’s own aims, Miyagi prefecture officials sought instead to create a more independent, broadbased body to articulate the aspirations of Miyagi’s non-profit sector for its future. In June 1998, Governor Asano (known as an innovator and advocate of a stronger civil society sector) appointed a temporary Advisory Commission which became known informally as the NPO Promotion Committee. Though their work was supported financially by the prefecture, the Committee was afforded an unusually strong degree of independence from government. Its composition was noteworthy. NPOs were granted the largest share of appointments on the body, and those selected reflected a relatively broad cross-section of new and more independent-thinking organizations not beholden to government interests – ranging from environmental groups to social services and education, from international cooperation to disaster relief. Moreover the Promotion Committee effort was headed by a central scholar/advocate in the national NPO movement from outside Miyagi, Professor Haruyoshi Yamada of Iwate University. (Yamada’s national stature is reflected in the fact that he served nine months later as one of the two co-chairs of the National NPO Forum ’99, which brought together nearly 1000 NPO activists and leaders from throughout Japan). Among the Promotion Committee’s membership of 19 individuals, 7 were NPO leaders, 2 local university faculty knowledgeable about nonprofit affairs, 3 corporate representatives, 5 members of the prefectural assembly, and only 2 representatives of Miyagi’s governmental bureaucracy. The NPO Promotion Committee worked from June to the end of November, digesting information, developing its positions and crafting its final report. The Committee’s 30 page report, entitled ‘Proposal for Promotion of NPO Activities in Miyagi’, was conveyed to the Governor in November 1998. It contained sections describing the roles and purposes of NPOs, tracing the social and historical roots of the voluntary sector in Japan, and articulating a case for the importance of a heightened role for the sector to Japan’s and to Miyagi’s future. Drawing upon the Committee’s


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analysis of the information gleaned from the earlier NPO outreach and engagement efforts, the report outlined an extensive list of major obstacles impairing Miyagi’s NPO sector development. Among the most important and immediate of those identified were four: 1) the absence of local funding resources to support NPO efforts; 2) the absence of space for the conduct of meetings and activities; 3) lack of knowledge about the existence of other NPOs in the region and what they were doing; and 4) the lack of an institutional infrastructure through which NPOs might build their capacities to effectively manage and publicize their work. In response to those needs, the report recommended new government policies of support for the NPO sector, and urged the creation of a new central ‘support facility’ capable of responding to NPOs’ most practical and pressing current needs. The report further called for construction of a new partnership with local government, but also articulated a basic principle upon which any new partnership model with government must be founded – recognition of the unique perspectives each sector has to offer to society – their complementarities – coupled with the need for independence and mutual respect for one another’s views. Following receipt of the report, Governor Asano issued an executive pronouncement (published in Ken-sei Dayori, the formal record of Miyagi government affairs) that constituted, in essence, a philosophical endorsement of the Committee’s findings. Voicing a kind of formally sanctioned recognition of NPOs as a constructive social force in society, Governor Asano asserted their critical importance to Miyagi’s future, and noted the importance of government assistance in helping to realize NPOs potentials. Just a few weeks later, the NPO Promotion Committee structure was institutionally transformed by government charter into a permanent NPO Advisory Body to Miyagi government. And the prefecture subsequently both launched a new set of policies providing new sources of governmental financial support for NPO operations, and initiated a new process that would ultimately lead to the construction of a new ‘Central NPO Support Facility’, as called for in the Promotion Committee’s November report. New Prefectural Programmes of governmental grant support and tax exemption A critical set of needs identified by the NPO organizations in Miyagi were financial ones. NPO resource problems have proven especially severe in Japan in light of the absence of significant philanthropic resources and the fact that no major national policy of NPO tax exemption is yet in place (Yamauchi et al. in Salamon et al., 1999, p. 254). Past funding sources made available by government were designed so as to serve the government agencies’ priorities, not the NPOs priorities, and suffered from deficiencies in that they provided financial levers that facilitated government

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domination and control. Miyagi has been no exception. In an effort to respond to non-profit concerns in this area, Miyagi government took actions between 1999 and 2001 to create new funding streams – funding streams that provided support for NPO activities while at the same time allowing NPOs a greater degree of freedom from governmental control over funds’ use. It should be noted that the financial context of this time was decidedly unfavourable to initiation of any new prefectural grant and tax relief programmes. Miyagi, like other Japanese local governments, has been facing severe financial constraints – constraints that have lent powerful support to bureaucratic impulses to deny NPOs access to any new governmental dollars. Nonetheless, Miyagi prefecture officials acted over the two and a half years following the NPO Committee’s 1998 report to institute new, albeit limited, programmes of tax reduction and NPO grantin-aid support. Miyagi officials first acted in 1999 to establish a new set of NPO grantin-aid progammes. These programmes made new funds available for NPO activities, and did so in a way that removed some of the significant strings tethered to earlier government grants. Though small in scale (reflecting the as yet limited pool of incorporated NPOs eligible to participate in the programme), the new grant programmes for the first time allowed NPOs to propose projects reflecting their own organization’s priorities. The new pool of funds employed a competitive grant process in which NPO proposals were weighed not against government’s stipulated purposes but against the proposals of other NPOs. Though still very limited, this general NPO grant programme has been allocated a pool of 4.5 million yen annually (as reflected in the most recent prefecture budget) – of which NPOs could request a grant allotment of up to 100 000 yen. An additional 1.8 million yen/year in government funding was made available by the prefecture in a separate pool of NPO grants earmarked specifically to support sponsorship of NPO lectures or forums; another 1.2 million yen for new grants for youth volunteer projects; and another 1.1 million for NPO management seminars or training. Of more dramatic and potentially more far-reaching economic consequence has been Miyagi’s government’s effort to extend new tax benefits to its non-profit sector. Miyagi has taken the lead among prefectures to enact for the first time a new system of NPO prefectural-level tax exemptions and tax relief. In legislation enacted just months ago in June of 2001, Miyagi officials established a new tax policy that entitles all registered NPOs to reduced rates of payment for the prefecture’s corporate income tax. At the same time Miyagi government officials also enacted into law provisions providing NPOs with exemptions from prefectural property tax for all NPO property received through individual or corporate donation – including real estate, vehicles, office equipment and other capital items. Though nowhere near as sweeping as property tax exemptions in the USA


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and Western nations, these tax policies represent major advances in the context of Japan. Taken together, these new grant and tax intiatives represent steps toward improvement in NPO financial circumstances. They represent not only an infusion of new resources into Miyagi’s NPO sector at present, but the creation of substantial future economic potentials. Of special note is the character of these new governmental initiatives, emphasizing automatic NPO entitlement to tax benefits, and grants affording NPOs greater discretion over use of government funds. Further, Miyagi government continues to underwrite a joint public–NPO financial study group (1.5 million yen this fiscal year) to continue to explore and recommend new options for enhancing the resource base of Miyagi’s non-profits. Creation of a central NPO support facility (Miyagi NPO Plaza) under joint NPO–government partnership control At root, a central need of the NPO sector in Miyagi has been for an institutional infrastructure capable of helping to build a ‘sustainable capacity’ for the region’s NPO sector. A call for governmental assistance to help create such an infrastructure through establishment of an NPO Support Facility was one of the major recommendations in the 1998 NPO Promotion Committee document. And Miyagi government has acted to respond to the NPOs call for help, underwriting the costs of development of a 1262 square metre NPO support facility on in a separate floor of a prefecture library building in central Sendai. Three years in the making, Miyagi NPO Plaza opened its doors for operation for the first time in April of 2001. In and of itself, Miyagi government’s sponsorship of the creation of an NPO Support Center is not wholly extraordinary. The effort can be seen as part of broader nationwide movement to establish such enterprises throughout Japan (Greene, 1999). But Miyagi’s efforts are distinguished from those of many other local government initiatives along two dimensions. The Miyagi NPO Plaza encompasses a more comprehensive and multi-layered set of programmes than most facilities, reflecting a heftier set of capital and ongoing operational financial investments by the prefecture government than is typical. But an even more important and genuinely distinctive feature is that it has been – from design to administration – approached not by government ‘on behalf of NPOs’, but in partnership with them. NPOs have played a central role in deciding Miyagi Plaza’s functions and features. And at the recommendation of its jointly manned planning committee, Miyagi NPO Plaza is overseen by a joint government–NPO administrative council that grants NPOs a key role in managing the facility and setting its activities and rules of operation.

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Design of the new NPO support facility The tasks of designing the new facility were not carried out by Miyagi government, but were instead assigned to a committee that became known as the NPO Plaza ‘Preparation Committee’. Though chaired by Professor Yamada (former head of Promotion Committee), some new NPO actors were also enfranchised in the planning process. Of the seven Preparation Committee memberships, five were held by non-profit sector organizations (only one a carryover from the Promotion Committee), and one represented the prefectural government. The Preparation Committee met from spring to summer of 1999 identifying the core functions and roles of the facility. Once the basic contours had been decided upon, the Committee’s work into the spring of 2000 was supplemented by a series of additional working groups peopled predominantly by other Miyagi NPOs. The design adopted for the NPO Support Facility represented a formal response to the NPO needs identified through the earlier outreach and engagement effort, needs articulated in the Promotion Committee report – for information exchange, for meeting space and supportive services, for a system to facilitate NPO networking, and for a set of programmes capable of fostering capacity building and education about better ways to do things. The 1262 square metre Miyagi NPO Plaza which opened in April of 2001 is a newly renovated facility containing meeting rooms, open carrels and lockers made available for NPO use, along with government-provided equipment and facilities useful for helping NPOs publicize their efforts (e.g. computers equipped with internet access and desktop publishing software, xerox machines and office equipment for the production and distribution of bound reports). The Plaza also contains nine low-rent ‘incubator offices’ made available on a two year rotating basis to NPOs selected according to guidelines established by the Committee. The Plaza is further the site of a small prefectural government office offering information and free assistance to NPOs in applying for incorporated status under the 1998 NPO law. These components of the NPO Plaza facility are reflective of elements conventionally incorporated into Japan’s new support centres. But Miyagi Prefecture has also committed to support of more atypical and innovative capacity-building ventures sought by the Planning Committee. More novel dimensions of Miyagi’s NPO Plaza Arrangements Housed within the facility is a new ‘Miyagi NPO Information Network’, whose office space, equipment costs, and NPO staffing are underwritten by Miyagi government. The Miyagi NPO Network is a web-based electronic interface used to make broadly available to NPOs a whole host of information on government and foundation grant and funding opportu-


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nities, on relevant informational resource materials, and on local capacity building seminars and activities. The network provides additional links to sites containing government reports and information. It also provides a means for the region’s NPOs to exchange information about themselves – enabling them to electronically post information on their services, on sponsored events, and on volunteer opportunities in their organizations. NPOs are thereby encouraged to begin to build relationships with one another. Also fairly atypical is the NPO Plaza’s incorporation of a Research and Analysis Working Group comprised of interested faculty from the region’s universities to advise the prefecture on new developments in the NPO sector in Japan and elsewhere, and to identify ‘best practice’ models in the field of non-profit activities. The investments made by the prefecture in support of Miyagi NPO Plaza have been substantial, involving 100 million yen just for renovation of the building space alone. Moreover, six officials on the payroll of the Prefecture’s Environment and Lifestyle Division have been ‘outposted’ to serve as support staff for the facility. Yet importantly, control over the facility’s directions and policies continues to be left in the hands of a government–non-profit partnership. The facility is governed by the Miyagi NPO Plaza Administration Council – an 11 member council created at the behest of the Planning Committee and dominated by NPOs. Finally, as potent as its support for NPO Plaza has been, it is clear that the prefecture government is committed to extending its work in fostering development of the non-profit sector even beyond the efforts housed in the NPO Plaza. The Prefecture’s Environment and Lifestyle Division has created an NPO Advancement Section comprised of five of its own staff (housed in government headquarters) to collect information relevant to development of Miyagi’s non-profit sector, and to help to develop other policies and institutional structures that will advance its future role. Moreover, this past year the prefecture government initiated in-service training for its bureaucratic officials to deepen their understanding of NPO social contributions and to spur new thinking about the ways NPOs and government agencies might work together.

Conclusion: lessons from the Miyagi case study Miyagi’s actions in the post-1998 period represent a stark departure from past attitudes and behaviours of government toward the NPO sector. Rather than behaving in ways either hostile toward or dismissive of nonprofits’ value, government officials have sought to secure greater understanding and direct engagement with NPOs in Miyagi; rather than approaching NPOs in a paternalistic and domineering manner, government officials have sought to secure NPOs advice and to build their capacities. Moreover significant strides have been made toward creation of new

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institutional mechanisms at the non-profit–government interface that will prove difficult for government to dismantle. Viewed together, Miyagi government officials’ efforts represent a kind of reformed government platform toward NPOs – a platform aimed at securing a heightened awareness of and social recognition for its local NPO sector throughout local government, a platform backed by concrete investments in the creation of a more fertile governmental climate in which NPOs might grow. It is noteworthy that government authorities interviewed still characterize themselves as in the growing stage, still learning together with NPOs how to establish a more constructive working relationship. This is not to argue that all is rosy. NPOs in Miyagi have not gotten all they have wanted, nor have they yet attained the full partnership they envision. Portions of the 1998 Promotion Committee recommendations have yet to be fully acted upon by government. Miyagi has not yet provided the full freedom of information laws that would genuinely open government to NPO policy influence; no action has been taken on recommendations for broader NPO contracting and collaboration efforts on the part of government agencies; and tax exemption efforts remain highly limited in the financial resources they represent for non-profit sector work. Nonetheless the Miyagi experience represents unquestionably a reversal of direction. From a hostile and controlling partnership Miyagi officials have taken strides toward forging a more supportive and enabling local government–non-profit partnership. While it is too soon to tell for certain, Miyagi’s experience offers hope that Japan may be at the beginning of an era in which it joins other developed nations in enjoying a far more positive interface with government – one that will help the NPO sector reach its full societal potential.

Notes 1 I am indebted to Stephen Osborne for illuminating the notion of an enabling partnership, see McLaughlin and Osborne, 2000. 2 The consumer movement was seen as holding an anti-capitalist posture that posed a threat to the government’s historically close partnership with the business community – a partnership that authorities deemed responsible for Japan’s high prosperity in the postwar period prior to the 1980s; the environmental movement was disliked for challenging governmental policies on pollution and development, and for its use of disruptive, confrontational tactics (see Amenomori and Yamamoto in Yamamoto 1997; also see Amenomori 1997); the residential movement was resented for its overt criticism of insular nature of governmental decision-making and practices.


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Institutional Contexts, Policy Issues and Intergovernmental Relations in Japan and the United States (Washington, DC: Georgetown University Press, 1996). Neary, Ian, ‘Japan’, in Martin Harrop (ed.) Power and Policy in Liberal Democracies (Cambridge: Cambridge University Press 1992). ¯ ta, Hiroko, ‘Sharing Governance: Changing Functions of Government, Business O and NPOs’, in Tadashi Yamamoto (ed.), Deciding the Public Good: Governance and Civil Society in Japan (Tokyo: Japan Center for International Exchange, 1999). Pekkanen, Robert, ‘Japan’s New Politics: The Case of the NPO Law’, Journal of Japanese Studies, vol. 26, no. 1, pp. 111–148, 2000. Ross, Kathleen and Stephen P. Osborne, ‘The Voluntary Sector Compact in the UK: Enabling or Constraining Government–Non-profit Relationships?’. Presented at the annual meeting of ARNOVA, 1999. Salamon, Lester, ‘Government–Non-profit Relations in International Perspective’, in Elizabeth Boris and Eugene Steuerle (eds), Non-profits and Government: Collaboration and Conflict (Washington, DC: The Urban Institute, 1999). Salamon, Lester M., Partners in Public Service: Government–Non-profit Relations in the Modern Welfare State (Baltimore, MD: Johns Hopkins University Press, 1995). Smith, Steven Rathgeb and Michael Lipsky, Non-profits for Hire: The Welfare State in the Age of Contracting, (Cambridge, MA: Harvard University Press, 1993). Thranbardt, Anna Maria, ‘Changing Concepts of Voluntarism in Japan’, in Kathleen McCarthy, Virginia Hodgkinson and Russy Sumariwalla (eds), The Non-profit Sector in the Global Community (San Francisco, CA: Jossey-Bass, 1992), pp. 278–289. Wada, Jun ‘Civil Society Japan through Print and Statistical Data’, in Tadashi Yamamoto (ed.), Deciding the Public Good: Governance and Civil Society in Japan (Tokyo: Japan Center for International Exchange, 1999). Yamamoto, Tadashi (ed.), The Non-profit Sector in Japan (Manchester, UK: Manchester University Press, 1998a). Yamamoto, Tadashi, ‘The State and the Non-profit Sector in Japan’ in Tadashi Yamamoto (ed.), The Non-profit Sector in Japan (Manchester, UK: Manchester University Press, 1998b). Yamamoto, Tadashi, ‘Current Issues and Future Agenda’, in Tadashi Yamamoto (ed.), The Non-profit Sector in Japan (Manchester, UK: Manchester University Press, 1998c). Yamamoto Tadashi (ed.), Deciding the Public Good: Governance and Civil Society in Japan (Tokyo: Japan Center for International Exchange, 1999a). Yamamoto Tadashi, ‘Emergence of Japan’s Civil Society and Its Future Challenges’, in Tadashi Yamamoto (ed.), Deciding the Public Good: Governance and Civil Society in Japan (Tokyo: Japan Center for International Exchange, 1999b). Yamaoka, Yoshinori, ‘Recent Trends in the Non-profit Sector in Japan, Including Background on the New NPO Law’, in Civil Society, Japanese Experiment and American Experience (New York: Japan Society, 1999), pp. 25–34. Yamauchi, Naoto, Hiroko Shimizu, S. Wojciech Sokolowski and Lester Salamon, ‘Japan’, in Lester Salamon, Helmut Anheier, Regina List, Stefan Toepler, S. Wojciech Sokolowski and Associates (eds), Global Civil Society: Dimensions of the Non-profit Sector (Baltimore, MD: The Johns Hopkins Comparative Nonprofit Sector Project, 1999).


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Yorimoto, Katsumi, ‘Perspectives on Intergovernmental Relations in Japan: The Problem of Solid Waste Management’, in Jong S. Jun and Deil S. Wright (eds), Globalization and Decentralization: Institutional Contexts, Policy Issues and Intergovernmental Relations in Japan and the United States (Washington, DC: Georgetown University Press, 1996). Yoshida Shin’ichi, ‘Rethinking the Public Interest in Japan: Civil Society in the Making’, in Tadashi Yamamoto (ed.), Deciding the Public Good: Governance and Civil Society in Japan (Tokyo: Japan Center for International Exchange, 1999). Young, Dennis. ‘Alternative Models of Government–Non-profit Sector Relations: Theoretical and International Perspectives’, Non-profit and Voluntary Sector Quarterly, vol. 29, no. 1, pp. 149–172, March 2000.

10 The philanthropic tradition and fund raising for the voluntary and non-profit sector in Japan Makoto Imada

Introduction Since the enactment of the 1998 Law to promote Specified Non-profit Activities, as discussed in Chapters 4 and 5 to this volume, voluntary and non-profit organizations are becoming more popular and a recognized feature of contemporary Japanese society. Previous chapters have looked at the history and impact of this Law in general. This chapter looks at the funding of non-profit organizations and their resource needs in the new situation. In it, I will use VNPO (Voluntary Non-profit Organizations) to denote grass-roots citizens’ organizations and will use NPO (Non-profit Organizations) to talk about such organizations in their broadest sense. It is difficult for VNPOs to raise funds in Japan. This is partly because they do not have enough experience of fund raising, and partly because there is limited infrastructure to channel philanthropic money to VNPOs. The legal framework is also poor – giving to VNPOs is not tax-deductible, for example. Beyond finances, VNPOs also have other resource needs – and particularly human resources. VNPOs are always short of human resources, because they cannot afford competitive salaries, while there is not a sufficient pool of volunteers. Some critics have argued that Japan does not have a tradition of philanthropy and that it is peculiar to Christianity. I think that these arguments are false, because Japan has a creditable history of philanthropy. I will demonstrate here the history of philanthropy and volunteer activities in Japan, analyse the present situation and suggest ways to promote them further.

Financial structure of the voluntary and non-profit sector in Japan According to the Johns Hopkins Comparative Non-profit Sector Project, the operating expenditure of the Japanese non-profit sector, excluding religious and worship component, totalled $214 billion in 1995. This is equivalent to 4.5 per cent of the gross domestic product (GDP) of Japan.

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This figure rises to $236 billion, or 5 per cent of GDP, when religious worship is included. The numbers of employees in the non-profit sector is estimated at 2.1 million, whilst 21.4 per cent of Japanese people engage in volunteer activities, which effort is equivalent to 700 000 employees. More than half (52.1 per cent) of the revenue of Japanese non-profit organizations comes from fees and other payments for services. Importantly, it receives 45.2 per cent of its revenue from the public sector. Support from philanthropy (individual and corporate) accounts for only 2.6 per cent of revenue. The nature of the Japanese non-profit sector is bifurcated: established and well-organized non-profit corporations on the one hand, and grassroots citizens’ organizations, or VNPOs, on the other. The latter organizations could not be legally incorporated before the enactment of the 1998 NPO Law (discussed in more detail in Chapters 4 and 5). Among the established corporations, social welfare corporations, under the previous social welfare law, are treated most favourably under tax law. Other types of established non-profit organizations include pubic benefit corporations established under the Civil Code, private schools and hospitals established by medical corporations. Religious organizations can also be incorporated easily under religious corporation law – there are more than 180 000 religious corporations in Japan. Grassroots citizens’ organizations, or VNPOs, are very small. The Economic Planning Agency (EPA) undertook research on citizens’ organizations in 1996. This research showed that those organizations having annual budgets of 10 million yen or more are only 2.5 per cent of the sector. About a half (47.6 per cent) of these organizations have less than one million yen budgets and 21.2 per cent of these organizations have annual budgets of less than 100 thousand yen. These are the small VNPOs. Their revenue typically consists of membership fees (32.9 per cent), subsidies from local governments (24.8 per cent), contracts with local government (4.8 per cent), grants from foundations and others (7.9 per cent), donations (4.8 per cent) and other revenue (15.1 per cent). The research described here was done before the enactment of 1998 NPO Law – though 11.8 per cent of respondents answered that they intended to be incorporated, once the law had been enacted. As of September 2001, there are 4847 citizens’ organizations incorporated under the NPO Law. In the field of international cooperation, JANIC (the Japanese NGO Center for International Cooperation) made a survey on the financial structures of NGOs active in international cooperation. It analyses revenues from 1996 of 217 NGOs. As shown Table 10.1, contrary to the structure of NPOs in general, NGOs are highly dependent on philanthropic money.

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Table 10.1 NGO revenue by source in 1996 Source of revenue

Yen (millions)

Percentage

Donations Membership fee Earned income Private grants Post office saving contribution program Government subsidy and contract UN contract Others Total

8 461 3 352 1 546 784 933 1 373 250 2 561 19 261

43.9 17.4 8.0 4.1 4.8 7.2 1.3 13.3 100.0

Philanthropy in Japan before the Second World War Contrary to Western perception, Japan has a long history of philanthropy. The Meiji Restoration brought in a capitalist economy and a European legal system to Japan, but its social structure was inherited from the late Edo period. In the Edo period, especially in Osaka, one can find philanthropic activities of merchants. Among them, Gansuido¯ and Kaitokudo¯ are famous and worth commenting upon. They were both higher education institutions supported by merchants in Osaka. Gansuido¯ was launched in 1717 with donations from six merchants, and Kaitokudo¯ was launched in 1724 with donations from five merchants. The initial donations were set aside as an endowment fund and a school was operated on the subsequent investment yield. Donations were later added by many merchants, enabling them to last a long time – Gansuido¯ for 155 years and Kaitokudo¯ for 145 years. Another example is the Akita Kannonko¯ established in 1827 in Akita, by 191 merchants. Its endowment fund was invested in rice fields and the rice harvested was used to relieve poor people. After the Meiji Restoration of 1868, Akita Kannonko¯ was incorporated as a foundation under the Civil Code enacted in 1898 and still continues operating today as a social welfare corporation. Okayama Orphanage, established in 1887 by Ju¯ji Ishii, is a final example of such foundations. It was supported by many Christian business people, ¯ hara in Kurashiki City. It was incorporated as a especially by Magosaburo¯ O ¯ hara is one of the most famous foundation in 1903. Magosaburo¯ O ¯ hara Museum philanthropists in Japan and is known as the founder of O ¯ and Ohara Social Science Research Institute. The first grant-making foundation in Japan was Morimura Ho¯meikai. It was established by Ichizaemon Morimura, founder of Noritake China, in 1901, and incorporated as a foundation under the Civil Code in 1914. Thereafter, business people and corporations established many other such foundations. Among them, Mitsui Foundation (Mitsui Ho¯onkai) was


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established in 1934, and was the biggest. It made grants to social welfare activities, academic research and especially to rural development. Clearly, then, there is an important history of philanthropic activity in Japan. However, after 1940 Japan became a highly centralized bureaucratic state and philanthropic activities diminished.

Volunteer activities before the Second World War Volunteer activities in the Meiji era were undertaken mainly by Christian groups, such as the Salvation Army. Many were involved in the development of ‘settlement houses’, whilst the Osaka Prefecture organized volunteers for community care. These volunteers engaged in consultation services for needy residents in the community. This system developed into the Community Welfare Commissioners System after the Second World War. The minister of welfare now appoints them. Hence sometimes they are called ‘official’ or ‘institutionalized’ volunteers. The most notable volunteer activity before the Second World War, however, was found at the Kanto¯ Great Earthquake in 1923. Toyohiko Kagawa, came to Tokyo from Kobe, bringing a rescue fund and organized volunteers for rescue activities. In Tokyo itself, students and professors of Tokyo University volunteered for the rescue and relief of victims. After this volunteer experience, they founded a settlement together.

Foundations in Japan after the Second World War: diversification of purpose After the Second World War, because of hyper-inflation, most foundations established before the war were obliged to close or cease operating. In the late 1940s, new corporate foundations and private foundations began to be established. Most of them were foundations providing scholarships to needy students. In a war devastated country like Japan, some business people wanted to help students to start to restore Japan. In 1960, To¯yo¯ Rayon Company established a grant-making foundation – To¯ray Science Promotion Foundation. This provides many grants to scientists. Toray complained that donations to their Foundation were not tax-deductible and this was a disincentive to giving. Understanding this complaint, the then government enacted a new tax law enabling the tax deduction of donations made to certain kinds of non-profit organization – though mainly in the field of natural science and technology. Stimulated by this new tax law, new corporate foundations providing grants to researchers of natural science and technology were established throughout the 1960s. In the 1970s, the fields of interest of grant-making foundations became diversified. Mitsubishi Foundation, established in 1969 by the Mitsubishi business group, provides grants to social welfare research and innovative

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and experimental social welfare practice. The Toyota Foundation, established in 1974, was the first big multi-purpose foundation with an international programme. It was also the first foundation that hired professional programme staff. Finally, the Nippon Life Insurance Foundation was established in 1979, to provide grants to volunteer groups, or VNPOs, engaged in various kinds of youth programme. In the 1970s, many foundations of social welfare were also established. The Mitsubishi Bank Foundation was one of the first foundations focusing on international exchange, followed by the Matsushita International Foundation; the Daido¯ Life Insurance International Culture Fund specializes in introducing the literature of South East Asia to Japan. In 1985, the Japan Foundation Center (JFC) was established. It was incorporated as a public interest corporation in April 1988. The number of its membership foundations totalled 211 in 2000 – though its directory listed only 849 organizations providing grant programmes in Japan. Of these 849 foundations, 205 foundations had been established in the five years from 1986 to 1990. In 1990 alone, 54 foundations were established. New foundations declined from 1991, however, and in eight years from 1991 to 1998, only 130 foundations were newly established. In 1998, only one foundation was established. This undoubtedly reflects the national economic depression. In terms of expenditure, 615 of these foundations expended 5 million yen or more in grant making. The total assets of these 615 foundations was 1267.8 billion yen. Foundations with under 1 billion yen assets number 329 or 53 per cent of the total, while those with 10 billion yen or more comprise 19, or only 3 per cent of the total. Grants provided by these 615 foundations in 1998 totalled 47.9 billion yen. Foundations totalling (53 per cent) provided less than 50 millon yen, whilst only 11 foundations (2 per cent) provided 500 million yen or more in grants. As shown above, although grant programmes have diversified, most of the Japanese grant-making foundations were still focused on research projects in the natural sciences and technology. There are still not many foundations that provide grants for citizens’ groups or VNPOs. Among the major grant-making foundations, the Toyota Foundation and the Nippon Life Insurance Foundation do have grant programmes for citizens’ action. Toyota approved 31 million yen to 30 projects for building civil society in 1999 and Nippon Life approved 180 million yen for 279 youth projects. The enactment of the 1998 NPO Law, however, has raised interest among foundations in supporting grassroots organizations The Nippon Foundation is probably the largest grant provider for citizens’ organizations. It provided 1 382 million yen to 433 projects run by VNPOs in 1999. This is still quite a small proportion though – the total sum of grants from Nippon Foundation in 1999 was 40 903 million yen. An important source of grants for VNPOs comes from gambling. The Japan Bicycle Promotion Association was established in 1957 and obtains


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Table 10.2 NPO grants from gambling Fund source

Funds granted (millon yen)

Japan Bicycle Promotion Association Japan Small Automobile Promotion Association Japan Lottery Foundation

23 305 3 205 14 937

its income from gambling on bicycle racing. Part of its grant giving is to public purpose, non-profit corporations. Its fund source is bicycle racing. The Japan Small Automobile Promotion Association is another such organization, whilst the Japan Lottery Foundation was established in 1964. The 1998 budgets of these three organizations are shown Table 10.2. Such organizations are a very important fund source for NPOs. However these three organizations provide grant only to established incorporated organizations and not to VNPOs.

Corporate citizenship For VNPOs, corporate giving programmes have been considerably easier to access than the foundations. They are more flexible than foundations, because of the strict control and regulation by government that the latter are subject to. The importance of corporate citizenship became recognized in the 1990s. After the Plaza Accord of 1985, Keidanren (the Federation of Economic Organizations) became very active in promoting corporate citizenship to Japanese businesses. In 1999, it established the ‘One Percent Club’, modelled on American experience, to support NPOs by providing them with one per cent or more of income of member companies. Recent tax returns on corporate income tax show that business corporations expended 493.8 billion yen as donations, mainly to large established NPOs and some citizens’ groups. Admittedly, this figure includes non-charitable donations and political donations and does not include donations not tax-deductible. However, even considering these facts, the level of corporate donations is significant. Keidanren makes a survey every year on corporate citizenship activities of big companies. In 1999, it estimated the total sum of expenditure on corporate citizenship activities of 309 companies was 124.6 billion yen. The average sum expended by 309 companies was 403 million yen.

Individual giving According to the tax statistics, Japanese individuals made charitable donations of 31 billion yen in 1998. This is perhaps, less than might be expected, but there are important reasons for this.

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1 Organizations qualifying for tax deduction from individual income tax are very limited – especially as donations to religious organizations are not tax-deductible. 2 Many people are unaware of the system of tax deduction, and donations under 10 000 yen are not tax-deductible. 3 Most salaried workers and wage earners do not file their own tax return, because income tax is withheld by, and paid by, the employer – so no mechanism exists to make tax-free donations.

Government subsidy Government support is very important for NPOs in general. However, because of Article 89 of the Constitution, NPOs receiving government subsidies cannot be independent of the government. To avoid the violation of Article 89, the Japanese government has had to find ways to support NPOs indirectly. The Japan Foundation, for example, was established to promote international mutual understanding. Among its many grant programmes, some were accessible for grassroots VNPOs. Other similar ‘arm’s-length funds’ include the Arts and Humanities Promotion Fund, the Sports Promotion Fund, the Aged Society Welfare Fund and the Child Nursing Assistance Fund. Some of these Funds are easy to access for VNPOs, but not all. Finally local government does have funds to support NPOs as well. For grassroots citizens’ groups or VNPOs, they are easier to access than central governments’ funds. However, even this assistance tends to be paternalistic and to lack flexibility.

Volunteer bureaux Volunteers are an important resource for VNPOs, and since the 1960s bureaux to support this activity have developed well. In 1962, Tokushima Prefecture Social Welfare Council and Oita Prefecture Social Welfare Council launched a ‘good-will bank’. It was an organization to encourage volunteer activities and donations to volunteer activities. Further independent volunteer bureaux were then established. One of the oldest was the Osaka Volunteer Action Center, founded in 1965. In the 1970s, local social welfare councils also began to establish volunteer bureaux, or volunteer centres, inside the councils, and in 1975, the government began to provide financial assistance to these centres They now coordinate many volunteer activities in the social welfare field. The strength of the volunteer response to the Hanshin Awaji earthquake stimulated the awareness of many people to volunteering – though in fact the number of volunteers has been steadily increasing from the late 1980s. The National Social Welfare Council estimated that in 1980 there were 1 603 000 volunteers in Japan and that this number grew to 6 960 000 by 1999.


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At the same time as this growth, the fields of interest for volunteer activities began to diversify. The most popular areas now include conservation of the environment, social welfare, sports, arts and the humanities and volunteering within public facilities.

The growth of intermediary bodies Recently, especially after the 1998 NPO Law, many support centres began to be established. Some of them were established and administered by local government, some were established by local governments and administered by VNPOs through contract with local government; and some were established on citizens’ initiative. Most of them provide information on funding and other resources available for VNPOs. They also provide training courses and advice. Such centres are vital to help VNPOs to develop their resources.

Conclusion VNPOs are comparatively new in Japan. Many conservative people and politicians think that citizens’ action or citizens’ organizations are something dangerous, and hostile to the state. A change of attitude is needed. To achieve this a number of resource challenges must be faced. The first and biggest challenge for VNPOs is the need for infrastructure and support. In this context the growth of intermediary bodies, as discussed above, is especially important, in order to strengthen the VNPO sector. The second challenge is the development of the fund raising schemes of VNPOs. Many people argue that tax benefit is vital for VNPOs. This is certainly true, but other elements are important also – such as community chests, payroll donation and free mailshot delivery. If the Japanese VNPO sector is to grow and develop, then these challenges need to be faced. This requires both a re-birth of the philanthropic tradition, as detailed above, and a diversification of its other resource acquisition strategies, through both the tax system and individual giving. Such a diversification is an essential pre-condition for the growth of civil society in Japan in the twenty-first century.

Part IV

The voluntary and non-profit sector in action in Japan

11 The voluntary and non-profit sector and the community in Japan Making links and responding to needs ¯ hwa Mie O

The opening chapters of this book detailed the changes that have taken place in Japanese society over the past decade, and also the factors that have led to the growth of the voluntary and non-profit sector in Japan. In this chapter, I present a case study of the Nishisuma Danran (‘Danran’, hereafter). It shows how grass-roots voluntary and non-profit organizations are responding to these changes. It demonstrates how it has been trying to establish links with the community and to respond to the needs of people in the community.

Areas of activities by voluntary and non-profit organizations in Japan In this chapter, non-profit organizations (NPOs) refer to those organizations incorporated under the 1998 Non-profit Organization (NPO) law. As discussed earlier in this volume, there are twelve categories of activities set out in this law. Among these categories, the largest group is ‘public health, medicine, and welfare’ in which 67 per cent of the NPOs incorporated belong. The second largest group is ‘community building’ (33 per cent) and the third is ‘sound nurturing of children’ (32 per cent). Voluntary organizations work in all three of these areas. The case study presented here is of a residents’ mutual support organization that provides home-based social services. These types of organizations have increased rapidly over the last decade in Japan. The number of these organizations was 121 in 1987, and it has increased dramatically to 1674 organizations by 2000.

The history of residents’ councils in Japan In Japan, there are residents’ councils (so called ‘jichikai’ or ‘cho¯unaikai’) in local communities throughout the country. It is one of the special characteristics of Japan to have such organizations and it has a long history, that dates back to the Edo era in the seventeenth century, when the government established so called ‘gonin-gumi’ (a neighbourhood unit of

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five households which assumed shared responsibility in terms of tax payment, criminal acts and other things of community daily life). Since then they have worked as a neighborhood watch scheme, as well as the collector of taxes. After the Meiji Restoration, this form of residents’ council continued to play a complementary role to the local authorities. In the aftermath of the Second World War, the occupation forces abolished the system of residents’ councils, because they felt that it might hinder democratizing local politics. Due to this order, residents’ councils, as public organizations, disappeared. However, within five years, they began to revive spontaneously, as people developed a strong need for mutual help organizations in the community. They are no longer public organizations, but community ones – though within a community a resident automatically belongs to the residents’ council in that community. Unfortunately, the activities of these residents’ councils do not attract a lot of active members these days. Along with the high economic growth and modernization of a society, Japanese people have developed a variety of needs and interests. Social values, life styles, the form of a family have also changed as society has changed. Moreover, since many people commute a long way between working place and their home, they have little time to be active in the community. Especially in the urban areas, these residents’ organizations maintain their forms but without substantive activities. Usually they gather a small amount of members’ fee, and the only activity is to pass a monthly circular bulletin among the residents. In the worst case, residents do not even know the existence of their residents’ council in the local community.

A Case study of Danran in the local community Danran is located in the Suma Ward of Kobe, covering the area of almost 10 000 households. It is a ‘citizen’s participated mutual support service organization’ and the members provide a variety of home based services for their fellow members of the community. It has a unique history for its original development from a residents’ council in the community. As such it can offer important lessons for other such organizations in Japan. Stages of development Originally Danran was developed from an ordinary residents’ council. It has changed its form today, as an organization to respond to needs in the community. The development of Danran can be illustrated with six stages. The first stage was from 1993 until the Hanshin Awaji earthquake in 1995. The original Council had been formed as Tsukimiyama Residents’ Council. It consisted of about 1800 households and was located in the east of Suma ward in Kobe. Its welfare section had begun to deal with the welfare needs of the elderly in 1993. Until then, it had had only an annual get-together on

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‘Respect-for-the-Aged day’ as other ordinary urban residents’ councils did. However, an expansion of its membership allowed it to take up new activities. This expansion of members helped it to start its two main activities of the welfare section, namely the learning project and the gathering luncheon project. It pushed the residents’ council as a whole to develop its organizational structure to be more responsive in the community. The activities of the learning project were to provide learning opportunities for the residents in the matter of welfare for the elderly (such as learning techniques of personal care for the bed-bound and the frail elderly, experiencing how to handle a wheel chair, and visiting a local nursing home). In addition, it held lecture meetings on social welfare issues twice a year. In 1994, the residents’ council co-sponsored a film show with a neighbouring residents’ council to draw people’s attention to community matters and to promote the understanding of the need for mutual support among the residents in the community. The luncheon project had also started ‘a social lunch time’ for those people aged 65 and over. This became a monthly event with 45 elderly and 25 volunteers. They were able to obtain a grant from the local authority (Kobe municipal government). It was a remarkable progress for residents’ council to get the grant from the local authority. This was very important as it allowed it to build the infrastructure of the organization to encourage citizens’ participation in it and their mutual support of one another. The second stage (after the earthquake in 1995 to April 1998) consolidated this preliminary development of Danran. Three months after the first film show, on 17 January 1995, the Hanshin Awaji earthquake hit the area, as discussed in Chapter 3 in this volume. There was serious damage in the West part of Suma because of much old housing in the area. However, an assembly hall in Tsukimiyama remained almost intact. The members established a base in the hall and started to provide relief to the victims of the earthquake, such as serving meals at the hall and bringing meals to the elderly at home. These activities were for those who had not received any relief from the public sector. It was one of the strengths of the residents’ organization that it knew what was going on in its area and was able to respond to people in need quickly, in this case of emergency. In addition to these activities, it also provided its ongoing activities – the luncheon club was held nine times and served 800 people in the community. Some 257 people participated in the learning project. When the local council tried to build three wide streets across the community after the earthquake Danran, and other groups, opposed this development. This had a strong impact on the community, which began to feel the need for more autonomy and self-protection. Consequently, in 1997, the regulations of Tsukimiyama residents’ council were revised and the mission was clearly worded in terms of representing the local community and building a sound community feeling through its activities

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and the ideas and actions of local residents. The residents’ council also promoted a network among the voluntary and non-profit organizations in the area. One of its projects was the joint sponsorship of another film show on the theme of the welfare of the community and the significance of residents’ participation. It was a collaborative effort between local volunteers, the residents’ councils, voluntary and non-profit organizations and a local nursing home. At this film show, a survey was conducted amongst 260 participants and they were asked about their daily needs, the local services they wanted, the things that they could do for others, and their willingness to join Danran, if it were established as a community organization. The result showed that there were lots of residents who needed some help in their daily living, whilst others had some time and willingness to volunteer. This survey demonstrated a strong need for a residents’ mutual support organization. The third stage (May 1998 to February 1999) can best be described as the ‘newborn’ stage of Danran. After the film show, 60 residents got together with a key member from the welfare section of Tsukimiyama Residents’ Council and they had meetings many times to examine the possibility of forming a residents’ mutual help organization in a community. Danran was established, with a membership of 30 people, in May 1998. Its offices were rented to it, at a low rent, by a local private company. Its mission was to aim at community building and reciprocal helping. As illustrated in Figure 11.1, Danran is a membership organization. Anybody in the area who agrees to the mission and purpose of the organization can be a member. The members are divided into three categories. The first is a ‘cooperator’, who provides services; the second is a ‘user’ who has some problems in daily life and needs some services; and the third is a ‘supporting member’ who supports the organization, mainly in terms of finances. The activity area of Danran covers 200 hectares with a population of about 24 000 people in almost 10 000 households. Cooperators and users were both equal members of the organization – and sometimes people could take on both roles, receiving and giving. That meant all members were on an equal footing. In order to put this idea into practice, the organization adopted a time stock system. The purpose of this was to establish a mutual help system in the community. A ticket to the value of 600 yen was given by a user to a cooperator, in return for a service. Out of this, 100 yen went to the organization for its operational expenses. It was also a rule that cooperators should save (‘stock’) the first 100 hours they gained from providing services. This was to encourage members to save time for future use by themselves, their family or the community. At the end of 1998, there were 166 members of cooperator and user status. In terms of finance, the organization’s income amounted to 5 440 000 yen, through membership fees, charges for services, income from other business, donations and grants. Donations and grants accounted for almost


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people in the community register

register register

provide services user

cooperator

supporter

pay for a service; a time stock system

apply for a service pay for a service

ask for cooperation

coordinate

financial support

coordinate

Nishisuma Danran

Figure 11.1 The structure of Nishisuma Danran

60 per cent of total income. At this stage, then, the organization was still heavily reliant on resources other than its own income. The fourth stage (March 1999 to December 1999) can be called the ‘first expanding stage’. As the activities of mutual help expanded, a new organizational structure was necessary. The projects were divided into four sections. The first section was called the mutual support section. This was the main activity of the organization from the beginning. Its purpose was mainly to coordinate members who needed services (‘users’) and members who could provide services (‘cooperators’). Most of the services provided were assistance for home making and/or care for the elderly and the handicapped. The second section was called the social contact section. This section managed Inaba community plaza and had most contact with the local community as a whole. It operated a popular cafe´ on the first floor of the plaza on five days a week. The third section was called the lively activities section. It also targeted a wide range of the population in the community, providing opportunities to

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learn gardening, health, local history, cooking and handicrafts. The fourth section was called the volunteer at welfare institution section. This was a joint project with a local nursing home. The residents’ council had started this activity originally, and it was now taken over by Danran. In total, 25 volunteers visited a nursing home weekly to help with various tasks, and another 26 volunteers helped with the meals-on-wheels programme run once a week by the nursing home. Another remarkable activity of Danran was to make an area map, in terms of welfare-related information. The map illustrated the important spots such as hospitals, clinics, toilets designed for wheel chair users, groups of meal services, home health service organizations/institutions, child care services, institutions for the handicapped, emergency shelters, public lodgings and water tanks for fire prevention. It was another strength of Danran that residents of the community had volunteered to walk the streets and examine the resources to mark them on the map. In addition, Danran had played an important role in establishing a further new network comprising voluntary and non-profit organizations, local authorities, welfare and medical institutions in the community. It also had strong collaborative relationships with a local nursing home and the voluntary groups for the handicapped in the community. Together they planned many joint activities and put them into practice. Danran also tried to maintain good relationships with the local authorities. It had been working closely with Suma Ward office, whilst getting grants from both the municipal and prefectural governments. Last but not least, the relationship with the residents’ council was most important of all. They had a common goal, which was ‘community building by all residents’. In order to achieve this goal they shared the roles – the residents’ council being a support organization, whilst Danran was a coordinator in the community. With regard to finance, although the amount of the membership fee increased, the total income of Danran decreased from 5 440 000 yen in 1998 to 3 970 000 yen in 1999. This was due to the decrease in the amount of the earthquake-related funds, since these funds were no longer available. Therefore a key task was for the financial infrastructure to be secured, in order for Danran to become a sustainable and accountable community organization. The fifth stage (from March 2000 to September 2000) was a significant one in the development of Danran. In this period, the organization was preparing for incorporation as an NPO, under the new NPO Law. It also moved its offices to the Inaba Community Plaza, where it had more space. At this time it had 211 members of user and cooperator status, and a further 62 supporting members. At the third general meeting of Danran in May 2000, it was formally agreed by the membership that Danran would seek incorporation under the NPO Law. A key discussion was held at this time about the impact that


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such incorporation would have upon Danran. Since the law had been enacted quite recently, it was not clear what its import would be. This issue was a core one for many emerging voluntary and non-profit organizations in Japan at this time (for example, see also Chapter 12 in this volume on CS Kobe). There were three issues to consider. First, incorporation would require the existence of a robust management system, to manage the likely increased size and functions that Danran (and others) would take on. This would require more paid staff and managers, rather than simply a team of dedicated volunteers (but with limited time and expertise). Second, transparent accountability and long-term sustainability for the organization would need to be ensured. This was far more stringent than for a nonincorporated voluntary organization. Third, the changing role and nature of Danran would need to be understood by the community at large. The main role of Danran would shift from being a direct service provider in the community to being primarily a support centre for other voluntary and non-profit organizations and a coordinator of the emergent network of public, private, and voluntary and non-profit organizations. The sixth, and final, stage of the development of Danran began in October 2000 and is still continuing. This stage can be best described as the ‘renovating stage’ for Danran. In October 2000, Danran finally gained the status of an NPO corporation under the new NPO law and reorganized its structure and management to deal with the issues identified above. Its projects were divided into three main sections: the ‘mutual support section’, which consisted of home based welfare services and volunteering at institutions (service delivery function); the ‘plaza support section’ which supported its activities at the plaza, in terms both of management and of community service provision (infrastructure function); and the ‘network section’ which promoted and supported the networks of voluntary and non-profit organizations, local authorities, welfare and medical institutions, residents’ councils, other communityrelated organizations and private organizations in the community (networking function). In terms of new work, Danran initiated a joint mini-day meal service for elderly people living at home. This was based at the Plaza, which was fast becoming a hub of community activity. This service was carried out by the collaborative efforts of a local nursing home and a local authority, together with Danran. Since Danran now has corporate status under the NPO Law, it can provide home help services under the new long-term care insurance system and get reimbursement for this from the government – it could not do so without NPO corporate status. However, Danran also decided to provide services that were not included in the insurance coverage – because this new law did not in fact cover many residents’ needs. It made the decision to use the income that it raised from other services to support such work. This

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work will enable elderly community residents to continue living at home and enjoying a full life in the community.

The long-term care insurance system and NPOs The experience of Danran in relation to providing services for elderly people in need in the community is especially illustrative of a key dilemma for voluntary and non-profit organizations in Japan. Since the Long-term Care Insurance Law was enacted in April 2000, it has become a major decision for voluntary and non-profit organizations as to whether to gain the status of an NPO corporation. If such organizations do not have corporate status then they are not allowed to become a services provider under the Long-term Care Insurance Law. They may provide services that are not covered by the insurance, but then they will not be reimbursed for such work by the government – no matter how much people in the local community need them. Long-term Care Insurance is mainly concerned with services for elderly people who have high dependency living needs. The survey carried out before the establishment of Danran, however, showed the existence of a range of needs besides such high dependency needs. The issue for voluntary and non-profit organizations is clear: are they simply going to concentrate upon meeting high dependency needs in the community? If they are, then this implies the need to become incorporated under the 1998 NPO Law. If they wish to concentrate on other levels of need in the community (either instead of or as well as the high dependency needs) then incorporation under the 1998 Law is less of an issue. What is an issue, however, is how to fund such ongoing work. After becoming an NPO corporation, Danran continues to provide services both in and out of the insurance scheme – and it uses its income from the former work to fund the latter. In that way, Danran has tried to meet all levels of needs in the community.

Conclusion In this chapter, the development process of a grassroots NPO in Japan has been examined, from the beginning of its birth onwards, through a case study of the Danran organization. It was the older residents’ council that first gave the impetus to the formation of Danran. It is a sad fact that these older organizations had largely fallen into disuse, as discussed earlier. However, it is hoped that new NPOs, such as Danran, can spring from the community and provide it with a focus for self and mutual help and give the community a voice that it did not have previously. In the case presented, Danran did not remain within the frame of the older residents’ council, but rather developed a new structure, whilst keeping a collaborative relationship with the older organizations – and others. In Japanese society, this is a unique case because it is often difficult


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to revitalize residents’ councils, and it is even harder to develop new organizations from them. The experience of Danran is very instructive here, because of the way the residents’ council and Danran motivated each other to develop, and shared the responsibilities to promote the welfare of the local community. Such a case offers important lessons for the development of the Japanese NPO sector over the coming decade.

12 Supporting local groups in responding to social needs A case study of the Kobe Community Support Project Takako Ueto Introduction: Support Centres in Japan The importance of support centres, or intermediary bodies, for the emerging voluntary sector in Japan has been recognized increasingly in recent years. In 2000, there were more than thirty support centres of different types – in terms of size, range of target population, ownership and style of management. The support that these centres provide for Japanese voluntary organizations includes financial support, information dissemination, client referral, staff development services, research, social action, advocacy and networking. As such they undertake very much the role that Local Development Agencies undertake in the UK.

Overview of Community Support Centre Kobe The case study outlined in this chapter is about Community Support Centre Kobe – or CS Kobe for short. This serves the eastern part of Kobe City, targeting a population of about 200 000 people. Kobe is one of the largest cities of Japan, with a large port and a total population of about 1.5 million people. CS Kobe was established in October 1996, one year and nine months after the Hanshin Awaji earthquake. Its mission was, and is, stated as ‘independence and social inclusion of the local community’. Its prime activities are supporting new local voluntary groups to become established and supporting those already established. It also works with local government and private companies to develop support infrastructure for citizens’ activities in community. The individual projects of CS Kobe are classified into two major types: support projects and act projects. In the former, it provides a range of support and services for local voluntary groups so that they can become established and manage their own activities properly. In the latter, it organizes events and training programmes, conducts research and campaigns, and disseminates information with the intention both of

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enhancing the independence and social inclusion of the local community and of improving the infrastructure for voluntary activities.

The development of CS Kobe In January 1995, the Kobe area was hit by the Hanshin Awaji earthquake (as discussed in more detail earlier in Chapter 3 by Makoto Imada). This earthquake brought many volunteers to the area from all over Japan and, as a result, many volunteer groups were formed in local communities. Among those there was a group called Higashi-nada Community Mutual Support Network, which was mainly involved in relief-related activities. However, as time went by, people came to realize that other types of needs were emerging in the community. Some survivors of the earthquake still needed relief and care, while others began to seek a sense of independence and selfhelp instead of ‘being taken care of’ by volunteers. As a consequence of this evolving pattern of need, in October 1996 CS Kobe was established in order to help local people and groups to become more independent, whilst Higashi-nada Community Mutual Support Network continued to serve those who needed relief, healing and care related specifically to the earthquake. The development of CS Kobe can be divided into six stages. The first stage was from October 1996 to March 1997. As stated earlier, there had been many volunteers working with the earthquake survivors in the Kobe area for some time. However, most of them left Kobe after a while, because they thought that they had already done all they could do. Under such circumstances, the transition from ‘being helped by volunteers from outside the community’ to ‘helping each other in the community’ or ‘those who have been helped become those who help others’ started. This is what CS Kobe hoped to facilitate. During this period, CS Kobe received funds from the Hanshin-Awaji Community Fund and Higashi-nada Community Mutual Support Network. Its offices were set in a pre-fabricated building on vacant land that was the common property of the local residents. There were three members of staff, a local representative, a secretary and an accountant. The major projects developed in this stage were five support projects and five act projects, as defined above. Before starting support projects, CS Kobe conducted hearings with local residents in which they were asked what kinds of needs they had and what they themselves could do to contribute to the community. After identifying those who wanted to be involved in community activities – most of whom were elderly and disabled – CS Kobe helped them to form groups and set out activities that they could do in order to meet the expressed needs in the community. This is how the first five support projects were established, covering carpentry and repair work, accompanying elderly and disabled people to go to doctor’s appointments and shopping, teaching elderly people and volunteers how

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to use computers, learning sewing and needle work to sell, and assisting other local groups with their clerical and administrative work. These support groups were relatively small with only fifteen or less members. The fact that there were many elderly or disabled members also reflected the goal of CS Kobe that ‘those who have been helped become those who help’. The act projects in this stage were implemented in collaboration with other organizations such as Japanese social welfare organizations, research institutions and private companies. One of these projects sought to build a group house for earthquake survivors in the community, which was opened in December 1999. Some research was also carried out about the effectiveness of support networks both for national disasters and for citizens’ activities. Finally, CS Kobe also coordinated volunteer activities and produced a resource book for voluntary organizations in Hyo¯go¯ Prefecture. The second stage of CS Kobe ran from April 1997 to December 1997, during which time another four support projects were established. These differed from the earlier projects in the degree of support that CS Kobe provided to them. The first five support projects had needed assistance from CS Kobe in every aspect of their activities. They were supported in forming groups, setting goals, making activity plans and resource acquisition. This was necessary because community members had not known each other before they had been brought together, as a result of the community hearings sponsored by CS Kobe. However, as CS Kobe began to be covered by the media for its innovative concept of volunteering (ˆthose who have been helped become those who help’), established local volunteer groups started to come to CS Kobe for assistance. These groups had already been working in the community with their own goals and plans, and with a certain level of autonomy and independence. They needed only some assistance with information, advice about their management, and resource. The nature of these new support projects verified that the community was becoming aware of, and appreciated, the significant roles of CS Kobe as a community support centre. It also confirmed that the community needed the kind of support that CS Kobe could provide. The groups that received support under these projects implemented a wide range of activities. Among them were music therapy for elderly people with dementia, social dance for residents of temporary housing, assistance and support for the elderly living in temporary housing, and meals-on-wheels services for the elderly in temporary housing. The key issue for CS Kobe here was how to deal with the difference in the degree and type of support required for different groups. This depended on many factors, for example their financial situation, number of members, the nature of their activities and needs of the specific locality that the group was working in. These differing needs required careful assessment by the CS Kobe


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staff and sensitivity to each group’s perception of these differences so that each group was satisfied with the support it received, and felt treated fairly. During this second stage, act projects were also expanded. For example, CS Kobe provided training programmes for volunteers from private companies, supervised interns for their social work training fieldwork and started an NPO management school in collaboration with the local government of Hyogo Prefecture. These new projects aimed at enhancing the quality and quantity of human resources in the voluntary sector. Further, CS Kobe also participated in several joint research programmes, one of which was conducted on the voluntary sector in collaboration with researchers from both the UK and Japan. This joint research project was called JUK-CCC, or the Japan–UK Exchange Programme on Community Care with Citizens’ Participation, and lasted for three years. CS Kobe also became involved in new projects under contracts with Hyogo Prefecture and Kobe City governments. One of these projects was to provide information services for people who came from South America and who were living in the city. Collaboration with private companies also developed during this period. In one project, a private company provided financial support for residents of a regeneration housing project to start a local group for gardening. In July 1997, CS Kobe signed a contract with a local private company to rent its ground and to build itself a new building, with funds from five different sources. In this building, CS Kobe had its own office, and additional offices and meeting rooms for local groups to use. In terms of finance, it is best to look at the first and second stages of CS Kobe together. Between October 1996 and March 1997, it had income of about 40 000 000 yen. In this total, grants from the government and funds from private funding organizations amounted to more than 28 000 000 yen and were, therefore, the primary sources of income for CS Kobe. The period between January 1998 and June 1998 can be designated as the third stage of the development of CS Kobe. During this period, the number of support projects increased only slightly, from eleven to twelve. It also continued to provide support for its existing projects groups. However, the contents of the support changed as the groups developed. In order for the groups to become independent, they needed resources such as funds and places for their activities, and these resources had to be secured in a stable, dependable manner. Obtaining such reliable resources requires specific knowledge and skills for information gathering and negotiation, which only CS Kobe could offer. However, CS Kobe also began to train the leaders of local groups with these skills. Providing money and places for activities is very important, but it does not necessarily lead to independent and the autonomous operation of groups. What was required in this stage was to empower the groups through capacity building so that they would be able to work independently.

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Five new act projects also commenced in this stage. In one such project, CS Kobe took a role in networking and consulting for other established voluntary and non-profit organizations operating in the Kobe area. The second act project was a monthly mini-training programme in which dayto-day problems, and issues around voluntary and non-profit activities and volunteer work, were discussed by key participants. In the third act project, CS Kobe took part in nationwide programmes to train instructors who would help to set up citizens’ mutual support groups. This project was implemented in collaboration with Sawayaka Fukushi Zaidan, which is a large intermediary body operating nationwide. In the fourth such project, CS Kobe began to publish a bi-monthly newsletter Citizen Frontier as a means to disseminate information about the activities of CS Kobe and other local voluntary groups. For each issue, 2 000 copies are printed and distributed to many stakeholders all over the country, as well as to local governments and local groups. Finally, the fifth new project involved research and support activities for residents of rebuilt public housing for earthquake survivors. CS Kobe worked with JUK-CCC in order to assist with building a sense of community for earthquake survivors who had just moved from temporary housing to rebuilt public housing. This project started with a survey. One hundred households in the rebuilt public housing were given a questionnaire, in which they were asked about their current life situations, the services they needed and the things that they could do for the community. Then, the result of the survey was shared with the board members of the residents’ council. The project staff and these board members worked together to make specific plans for services and activity programmes that could be implemented in this rebuilt public housing, in order to address these expressed needs. Among these services and programmes were a cleanup programme in which all residents took turns to clean common spaces, a gym class in which anyone could participate, and social/cultural programmes such as haiku, gardening, cooking and karaoke. In financial terms, the total income of CS Kobe almost doubled during this period, from 39 000 000 yen to 72 000 000 yen. While donations and subsidies decreased, income from businesses and service contracts increased dramatically. CS Kobe was beginning to become more financially stable, independent of government and the foundations that had sponsored its birth. The fourth stage covers the period from July 1998 to March 1999. CS Kobe set out a further four support projects. The distinctiveness of these four projects, compared to the previous ones, was the diversity of the groups supported. The local groups that CS Kobe had supported before consisted mostly of middle-aged and elderly people. However, the new groups had a wide range of people as their members. For example, one group was a university student volunteer group. Another group consisted of a disabled member and university students working together in order to


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make a map of the local area that showed wheelchair accessible buildings, stores and other facilities. Still another group worked around the issue of domestic violence toward women. The size of these groups was also relatively larger than the ones that CS Kobe had previously supported. For example, the university student volunteer group had more than 200 members registered in 1998. One of the act projects that started in this stage was a very innovative project to coordinate the discussions amongst the residents’ councils of many of the rebuilt public housing projects for earthquake survivors. The survey discussed above in the third stage revealed that the residents’ council needed some support in order to play their roles effectively. Because most of the residents were elderly, it was not easy for them to carry out all the tasks related to the council’s activities. Regeneration of public housing was also something quite unique in Japan, in that all the residents had suffered from the tragic earthquake, had lost their homes, and had gone through difficult transitions from shelters to temporary housing and to the newly rebuilt public housing. They had to adjust to this new life and to start over with strangers around. This was something that no one had experienced before. Consequently, managing the activities of the residents’ council was a further, and great, challenge for them. CS Kobe therefore provided the opportunity for these residents’ councils to get together, share their problems, exchange information and ideas and give advice to one another. Through these processes, the residents’ councils became better able to deal with their problems and to find out the potential needs existing and resources available in their local communities. In this way, CS Kobe made a significant contribution to the independent management and operation of the residents’ councils. An important point to make for this stage of development is the preparation that was necessary for incorporation under the new 1998 NPO Law. CS Kobe submitted its application in December 1998 and became an NPO corporation in April 1999. The period between April 1999 and January 2000 can be designated as the fifth stage of CS Kobe. As mentioned earlier, it became an NPO corporation in April 1999. Important organizational changes also took place. The support projects and the act projects, which had previously been operated separately, now came gradually to intertwine. On the one hand, community members working under one of the act projects set up their own volunteer group – and this group began to receive support from CS Kobe as one of the support projects. On the other hand, one local group set up under a support project transferred some part of their activities to an act project. Now this group has a contract with CS Kobe to carry out their work. The activities of support projects also became even more diverse. One of the tasks frequent in this stage was to secure offices for local groups that

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wanted to operate independently of CS Kobe. However, it was difficult to find vacant offices to rent that were affordable and accessible, due to the shortage of real estate in general after the earthquake. CS Kobe approached a shopping centre in the local area. It succeeded in renting a vacant store for local groups to use. This is how CS Kobe first started to seek a potential partnership with local shopping centres. As for the act projects, the programmes under contracts with local governments expanded considerably during this period, largely due to the status of CS Kobe as an NPO corporation. For example, based on a contract with Kobe City, CS Kobe began to run a shop, Kobe Fureai Ko¯bo¯, where items made by people with disabilities in sheltered workshops could be sold. This shop not only brought income to CS Kobe but also had a significant impact on the community as a whole – in that it promoted understanding of the needs of people with disabilities and their participation in the community. Now that CS Kobe had become an NPO corporation, local governments and other organizations had more confidence in it, which resulted in more contracts with such organizations. Its property also now belonged to the corporation, instead of being registered as the personal property of an individual, as before. These are the advantages of having the status of an NPO corporation. On the other hand, there are some difficulties involved in this status. CS Kobe was now required to exercise more strict administration, such as paying corporation tax, and by making legal employment contracts with employees. This required more management resources for CS Kobe, as opposed to resources for service provision. Such resources were often hard to find, as funders can prefer to fund direct services, rather than the necessary (but unglamorous) infrastructure essential to the delivery of such services. The financial situation in this stage further improved dramatically. After CS Kobe became an NPO corporation, it began formally to recruit members and to collect membership fees. These fees were a stable source of income, if comparatively minor compared to subsidies and donations. Income from contractual work with local government also increased and contributed further to the long-term financial stability of CS Kobe. The sixth, and final, stage of the development of CS Kobe started in January 2000 and is still continuing. In this period, CS Kobe has continued to expand its support and act projects as before. One support project of particular note has been the establishment of a mutual support group. This issues its own ‘currency’ for members to use when they exchange activities and services, such as housework, gardening and shopping. A notable act project developed in this period was one to support local groups providing elderly people with services, such as mini day-care and meals-on-wheels services. These elderly people are relatively healthy and therefore not eligible for services covered by the existing Care Insurance,


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but both the local government and local community groups recognized that they too needed some support and encouragement in order to maintain independent living in the community. However, many of the existing community groups were too small to make contracts directly with the local government. CS Kobe thus made an overall ‘enabling’ contract with Kobe City to provide such services and then used these smaller groups to actually work with elderly people to meet these contractual obligations. The groups also received further support, such as exchange of information, advice about management and staff training.

The management of CS Kobe As will be apparent from the above, CS Kobe has developed remarkably as an intermediary body since 1995 and has made a tremendous contribution both to the community and to the voluntary and non-profit sector. Because such an intermediary body is a rather new concept in Japan, there have been very few exemplars to emulate and it has had to develop its own ways of managing its organization. Through the experiences of this challenge, CS Kobe has learned six core principles for the management of a community support centre. (1) Having stakeholders understand the mission of the organization and the purposes of activities It is very important that all the stakeholders of a support centre understand the mission of the organization and the purposes of its activities. This is especially so because such organizations are unusual in Japan. This can be accomplished by taking every opportunity, including daily meetings and casual conversations, to convey important messages such as ‘What are we trying to accomplish?’ and ‘What significant meanings does what we are doing have?’ Unlike private companies that manufacture or sell products, voluntary and non-profit organizations in general operate based on missions and principles that are rather more ambiguous than a simple bottom line of profit, such as ‘building an independent community’ and ‘social inclusion’. It is not always easy to set specific concrete objectives or such missions or evaluate the work done towards them. However, if the people involved are not clear about the organization’s mission and principles, they might divert from the goals set in the beginning. For this reason, everyone needs to share a clear idea about the real meaning of what they do every day. (2) Setting great value on human relations and networks Human relations and networks should be respected and always get a high priority in support centres. CS Kobe has many people come and visit it

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from the community. Among them are volunteers, people living in the area, government officials and researchers. The staff takes a role in linking these people and expanding the local human networks for community support. When people from two different groups happen to come into the office at the same time, Centre staff take a particular care to introduce them to each other. By doing so, in the future these people can contact each other and exchange information and support when necessary. That is, they can be human resources for each other. In order for the local community to become independent and vitalized, local people and volunteers need to acquire the skills of building trusting and supportive relationships. CS Kobe is seeking to facilitate such capacity building and empowerment of citizens. (3) Disclosure of information Another important principle is disclosure of information regarding the organization of CS Kobe. It takes every opportunity to share with local groups and people the information and ideas about what it is aiming to achieve and the details of what it is doing. The newsletter ‘Citizen Frontier’ is one of the means to do this. At a daily meeting with staff and volunteers, everyone’s schedule of the day is shared. Any concerns or questions can be presented, taken seriously, and discussed openly. It is hoped that this kind of practice will lead to transparency of operation by both the managers and staff of CS Kobe. Business and financial reports are also presented in the homepage of the web site of CS Kobe and are available to be read by anyone interested. Such openness and willingness to welcome evaluation and feedback from outside are vital if CS Kobe wants to maintain its accountability. This is also an essential factor in terms of empowering people involved in its work. (4) Enhancing the abilities of staff and volunteers Communication with staff and volunteers is essential for enhancing their abilities to work effectively and efficiently. It is important to make sure that everyone involved in the organization shares the same understanding about the activities of the organization. Supervision should also be provided on a regular basis. This can take several different forms such as support, advice, recognition and evaluation, depending on the situation. If supervision is given properly, staff and volunteers will feel important, which will in turn enhance their morale and motivations for their work. Moreover, staff and volunteers need to be told how, and supported to become, responsible, autonomous citizens. At meetings and seminars, or during casual conversations, they are always encouraged to think for themselves, find what they would like to work on, do it themselves and accept the outcomes of their acts.


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(5) Being willing to do what government does not do When deciding what kinds of activities CS Kobe should be doing, and what type of projects that it should support, its leaders emphasize the importance of a willingness to do what government does not do. For example, there are many elderly people who need services not covered by Care Insurance run by the government (an example was provided earlier). There are also relatively healthy elderly people who are not eligible for government services, but who nevertheless need some support to remain in the community. They are the people that CS Kobe is seeking to support. There are also some local groups that do not have access to government officials. It is one of the very important roles of CS Kobe to advocate for these groups and to mediate between them and the government. (6) Responding quickly and acting at the individual level Another thing that government is not always good at is responding quickly to expressed needs and to work at the level of individuals. However, CS Kobe understands that the voice of one person is as important as the voices of thousands. If someone comes to the office seeking some advice or trying to find what they can do for the community, staff will sit down with them and take time to listen. If what they need cannot be provided by CS Kobe, they will be introduced to other organizations that could meet their needs. What is important is to respect individual needs and hopes and to support them in the community.

Future tasks for CS Kobe There are four core tasks that CS Kobe needs to work on for the future, to underpin its work. First, support projects need further development. There are still many needs and resources unrecognized in the community. CS Kobe must both find these needs and the resources to meet them either by itself or through members of the local community. Retired people, for example, could be approached to participate in specific voluntary activities in the community. Second, it is an urgent and ongoing task to secure financial resources – for itself and for other local groups. As time passes since the Hanshin Awaji earthquake, there will inevitably be less funds available related to earthquake relief. Many local groups are now struggling to find alternative ways to raise funds. As a community support centre, CS Kobe is concerned to maintain and enhance the funding base of such local groups, and to secure adequate funds to support its own work. This requires the development of a range of grants, contracts and other income sources. It is dangerous to become too reliant upon one source of income, in case it disappears.

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Third, equal partnership with government is another important goal to work for. In the past, relationships with government have been rather unequal, with government having the most power. When voluntary and non-profit organizations made a contract with government to provide services for the community, government would decide what kinds of services would be provided, to whom, and in what way. Voluntary and non-profit organizations were expected to do as government told them to do. It takes courage, and maybe some risks, for such organizations to stand up to government. However, in the future a more equal relationship is needed, which recognizes what the voluntary and non-profit sector can contribute to the local community. This can be achieved only where such groups are not too dependent on government for their financial resources. Securing other sources of stable income is therefore an urgent prerequisite to a more equal relationship with government. Enabling this to happen is a key task for CS Kobe. Finally, it is also hoped that partnership with private companies (as discussed earlier in Chapter 6 by Kawashima) will develop in the future. There are many such organizations in the community and they can be tremendous resources for the community. They may give donations, or rent out office spaces or office supplies to local groups. Employees can also work as volunteers on their days off. It is important that the private sector and the voluntary sector do not view each other as competitors, but as partners. They should be able to support and contribute to each other. CS Kobe needs to expand its networks with private companies, as well as other types of organizations, in order to achieve this aim.

Conclusion This chapter has presented a case study of CS Kobe operating in the victim area, and the immediate aftermath, of the Hanshin Awaji earthquake. It has shown how its work has developed from its early days of victim support to a more widespread role within the community. It now acts as a key intermediary body for the voluntary and community sector in Kobe. CS Kobe is undoubtedly one of the pioneers of such intermediary bodies in Japan. As a result, it has had to struggle with many difficult problems along the way, and to which there were no ready-made solutions available. It has therefore had to learn and develop its own practice as it has itself developed. Underlying all this has been its strong belief in the potential power of every person and every community, a clear vision of an enabled and sustainable community, and the abilities of its staff to put those visions into specific achievable strategies and action plans.

Part V

Conclusions

13 Managing the Japanese voluntary and non-profit sector An agenda for the future Stephen P. Osborne, Kate McLaughlin and Taro¯ Miyamoto The opening chapter of this volume outlined the emergence of voluntary and non-profit organizations (VNPOs) in Japan and the key elements of their development. Subsequent chapters have explored: . . . .

the historical context of this sector; the process of development of the sector over the last decade; the changing social, political and legal framework for VNPOs in Japan; and the practice of management within the sector.

This concluding chapter will outline the key challenges for the sector, if it is to secure a legitimate and sustainable place in contemporary Japanese society. It will consider the context for these challenges, the challenges themselves, and key issues that need to be resolved if these challenges are to be successfully embraced. It will use these to develop an agenda for the development of the sector in Japan in the twenty-first century.

The context It is worth at this stage reiterating the key changes that are occurring in Japanese society at present, and the challenges that they pose for the VNPO sector in Japan. Three key contextual factors are important, in considering the future of the VNPO sector in Japan. These are the changing nature of Japanese society, the diversity of the VNPO sector, and the growing legal complexity surrounding it. The changing nature of Japanese society This issue was examined in detail in the opening chapter of this volume, as well as in subsequent ones. As such it needs only brief reiteration here. Contemporary Japanese society is facing an explosion of social needs – particularly relating to the ageing of its population, but also in relation to young people, people with disabilities and the environment. Whilst the

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traditional social welfare model in Japan emphasizes the hegemony of the state in meeting such needs (see, for example, Palley and Usui 1995; EspingAnderson 1997), the sheer size of this explosion suggests that this cannot continue in the future – unless it is accompanied by a massive, and extremely unlikely, growth in both public spending and taxation. The alternative for the Japanese state is to look to alternative service providers, with the burgeoning VNPO sector as an obvious candidate (see, for example, Ministry of Health and Welfare 2000). By their nature, many of these organizations have a focus on the very needs that the government must address whilst their labour costs are attractively low (though this also represents a threat to the VNPO sector and is discussed further below). Added to this growth in social need are three factors. First, there is the growing diversity of Japanese society itself, with many groups feeling that their needs and aspirations are no longer reflected by the corporatist Japanese state. Not surprisingly, many of these groups have turned to the VNPO sector to reflect and address their needs. The second factor is the crisis in legitimacy that the state itself is suffering from, as a result both of corruption and its perceived inefficiency and ineffectiveness. Finally, at the grassroots level, there has been a growth in the desire for the greater accountability of public services. Taken together, these factors have created a ‘civil space’ into which the VNPO sector has been able to move. However, if it is to successfully occupy and maintain this space then a number of key challenges need to be met by the sector. These are discussed further below. The growing diversity of the sector . . . The VNPO is a growing and transforming sector. Deguchi (2001) has well documented the growth and bifurcation of both the institutionalized VNPO sector (such as the Social Welfare Corporations) and the non-institutionalized VNPO sector (comprising the small grassroots organizations described ¯ wa and Ueto). Added to this are the in the chapters in this volume by O Japanese NGOs with a focus on human rights (Menju and Aoki 1996) and the consumer cooperative movement (Nomura 1993). As Martin Knapp has famously commented in the UK context, the VNPO sector is a ‘loose and baggy monster’. This is increasingly true also in Japan. As such it offers especial challenges in its coordination and development. . . . and of its legal forms If the Japanese VNPO sector itself is growing and diversifying, so too is the framework for its legitimization and regulation. To the pre-existing legal forms of the ‘social welfare corporation’ and the ‘foundation’ and the ‘social welfare council’, there has now been added the status of a ‘specified non-profit corporation’ under the 1998 NPO Law. The chapters by Pekkanen and by Pekkanen and Simon in this volume have in particular

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traced the political development and organizational implications of this law. Specific legislation also regulates the behaviour of the consumer cooperatives mentioned above. Finally, other, service specific legislation, such as that concerned with long-term care insurance for elderly people, also has implications for the growth and development of the sector. Conclusions The sector is thus itself expanding, and is experiencing both new demands from society and an increasingly complex legal environment. Whilst these new demands have positive connotations for the recognition of the sector, they do imply new demands upon the resources and management of VNPOs. They also raise spectres for some in the sector, of the incorporation of the independent VNPO sector within the pre-existing corporatist Japanese state. These challenges are now further discussed below.

The challenges of change for the growth of the VNPO sector The chapters in this volume, backed up by our own research work, suggest three fundamental challenges that the VNPO sector has to meet, if it is to grow and thrive in Japan. These are the challenge of engaging with the state, of maintaining its independence and of nurturing and developing its links both to the local community and to the business sector. Engaging with the state As was made clear in the opening chapter to this volume, the state has historically enjoyed an hegemonic role in Japanese society, though this has latterly been challenged both by charges of inefficiency and corruption against it and by the growing diversity of Japanese culture. This state of flux offers an opportunity for the VNPO sector to develop new relationships with the state. These relationships may embrace the development of new funding regimes, partnership in the provision of local community services and a role in the planning and development of public services. With regard to this changing relationship, there is evidence of legislative developments in this sphere, notably with the passing of the 1998 NPO Law and the new long-term care insurance law for elderly people. These developments address in part both the funding needs of the VNPO sector and its involvement in delivering local public services. Moreover, in some areas, local VNPOs are engaging in consultative forum and policy initiatives with local government (the latter is especially true in the sphere of Agenda 21 initiatives for sustainable communities). However, whilst developments such as these offer the opportunity of more dynamic relationships with government, a great deal still needs to

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happen to make this a reality. At present many relationships with government continue to be hierarchical, top-down and beset with a lack of trust on either side. These issues are returned to below. Maintaining independence If developing more enduring relations with the state offers important opportunities for the VNPO sector in Japan, it also carries a significant threat – that of the loss of the cherished independence of the sector within the prevailing corporatist model of the Japanese state. Earlier chapters in this volume have shown how the sector has developed as a reaction against the inability of the state to reflect the growing diversity of Japanese society, to meet the growing multiplicity of its needs and to respond to these emerging needs in a flexible and rapid fashion. This was the great lesson of the response to the tragedy of the Hanshin Awaji earthquake and which event triggered a significant growth spurt in the VNPO sector (this is discussed in more detail in Chapter 3 by Makoto Imada). This legacy has left the sector with a proud tradition of independence. Its loss would diminish the potential contribution that VNPOs can make to Japanese society in the future. However, maintaining it will not be easy. The Japanese state historically is used to an hegemonic role in managing its relationships with other sectors of society (Aldrich 1999). Enabling it to develop a more pluralist approach to the governance of multiple relationships will not be easy. The VNPO sector itself will need to be careful also that it does not rush to embrace new funding and security opportunities only to find that these are at the cost of its independence and assimilation into a corporate state. These challenges have a particular Japanese flavour to them. It would be wrong, though, to view them as specific only to the Japanese experience. There are lessons which can be learned from elsewhere. The experience of the transitional nations of eastern and central Europe, for example, has the potential to offer useful lessons. Here too, a burgeoning VNPO sector has had both to protect its independence and to develop new relationships with a previously hegemonic state, if of a very different flavour from the one in Japan. These experiences of the development of civil society in this region are important for Japan (for example, Osborne and Kaposvari 1997; Jenei and Vari 2000). Developing links with the local community Of equal importance to the future of the VNPO sector in Japan is the need for it to embed itself within the local communities that it serves. As the case studies by Ohwa and Ueto in this volume verified, local VNPOs have often developed through the entrepreneurial action of key individuals in the sector. Such individuals are vital to the future of the sector. However, it is


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also essential that the sector takes seriously the need to embed itself within its local communities. Independent voluntary action is a comparatively new phenomenon in Japan, as the opening chapter in this collection demonstrated. It is essential that new VNPOs establish at an early stage lines and mechanisms of accountability to the local community. Without these, the sector risks being seen as an unaccountable and un-elected rump, with no mandate for its role in society. Developing links with the business sector – and differentiating itself from it Kawashima in this volume has charted the beginnings of a relationship between the VNPO sector and the business sector. There is the potential for mutual gain here, in terms of resource and expertise. However, the danger of competition also exists for the two sectors. The emerging legal framework, especially in relation to the care insurance law, is intended to introduce competition between the VNPO and the business sectors, in search of more economical and efficient services. This poses a threat of marketization to the VNPO sector, as it seeks to show competitive advantage over the business sector. In the short term, the VNPO sector is doing relatively well in this competitive relationship to business. It has been able to use its community links to give it a competitive advantage. However, if the business sector is able to learn the lessons of this approach and adapt, then the VNPO will be forced into adopting more competitive and business oriented approaches itself, in order to survive. This will significantly undermine its distinctive contribution to Japanese society.

An agenda for the future If the VNPO sector is to engage with its changing context in Japanese society and to meet the challenges identified above then we would argue that there are seven needs that it must address. Taken together these represent a seven point agenda for its future development. Need 1: a secure and diversified funding base Not unnaturally, many VNPOs are excited about the opportunities for secure funding that such legislative developments as the 1998 NPO Law and the long-term care insurance legislation offer them. However, overreliance on these sources of funding alone would also pose a threat to the independence of the sector. If it becomes too reliant on government funding alone then it risks losing its independence and becoming an agent of government policy. This danger has long been recognized in the VNPO sectors of the Western market economies (for example Pifer 1967; Kramer 1989; Gutch et al. 1990).

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However, whilst there is some evidence of a corporate philanthropic tradition in Japan, as Kawashima and Imada in particular in this volume have demonstrated, it is a highly paternalistic tradition. Moreover, philanthropy at an individual level is not embedded in Japanese culture, whilst the Japanese tax system does encourage either of these philanthropic endeavours. If the diversified funding base that it requires is to be developed, therefore, the VNPO sector needs to work: . . .

to secure government and corporate philanthropic funding sources, whilst maintaining its independence; to secure changes in the tax system to support philanthropic giving; and to work to change the pattern and expectations of individual giving in local communities.

Need 2: partnership with the state As should be apparent from the foregoing, partnership with both central and local government is a prerequisite for the sustainability of the VNPO sector in Japan. It is an essential source of finance and legitimacy for the sector and a vital route into meeting social needs. However, the cultural tradition of the dominance of the public over the private in Japan makes this a tremendous challenge, if the sector is to maintain its independent contribution to Japanese society. This is a two edged sword. On the one hand, the sector needs to develop meaningful models of partnership with the state based upon some degree of equality and mutual recognition. It is important to recognize that the development of such partnership is a process that needs to be engaged in. Trust is at the heart of partnership, but this needs to be nurtured by recognizing the nature of this process (Ring and Van de Ven 1992; Murray 1998). One model to structure this process of developing meaningful partnership between the VNPO sector and the state is that of the ‘Voluntary Sector Compact’ in the UK (see McLaughlin and Osborne 2000; Osborne and McLaughlin 2002). On the other hand, the discourse of partnership assumes a complementarity between the roles of the state and the VNPO sector. However other more conflictual models do exist, including those of the VNPO sector as the watchdog and critic of the state (Young 2000) and as an alternative to the state (Perri 6 1997). Again it is important that partnership does not crowd out these other roles. The development of meaningful partnership with the state therefore requires the VNPO sector: .

to recognize the nature of partnership as a process and to evolve a structured approach to this process;

Managing the Japanese voluntary and non-profit sector .

.

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to develop a positive approach to building trust between the state and the VNPO sector, based upon mutual recognition of their respective needs and roles; and to become aware that partnership with the state does not preclude other relationships from developing and such relationships may require a more conflictual and/or distanced basis than partnership.

Need 3: partnership within the VNPO sector Of equal importance is the need to develop models of collaborative partnership within the sector. By its nature the sector has developed through the independent action of key individuals who have developed influential organizations. Rather less effort, though, has been put into the development of collaborative relationships between VNPOs. Such ‘networking’ is at the core of voluntary action in the Western world. It enables VNPOs to negotiate with the state from a position of collective strength, to share information about community needs, ways of working and resource acquisition and to work together to campaign for societal change. The evidence of our own research is that this dimension is lacking in particular in the Japanese VNPO sector. In order to develop this intra-sectoral partnership, the VNPO sector needs: . .

to recognize the importance of collective action and responsibility; and to develop formal and informal structures to promote collaboration and sharing within the sector.

These points are returned to below, when the infrastructure needs of the sector are outlined. Need 4: developing a relationship with the business sector – and maintaining independence from it Of similar importance is the need both to develop a relationship with the business sector and to retain a sectoral distinctiveness from, the provision of public services. The business sector can be an important source of resources and expertise for the growing VNPO sector. However, if VNPOs allow themselves to be placed in a position of direct competition with the business sector for the provision of public services and the receipt of public money (such as under the new care insurance scheme for elderly people), then it risks losing its distinctiveness and becoming prone to the marketization and ‘vendorism’ which has long been a threat to VNPOs in the West (Kramer 1989). VNPOs therefore need: .

to develop collaborative relationships with the business sector, for mutual benefit;

228 . .

Stephen P. Osborne, Kate McLaughlin and Taro¯ Miyamoto to protect their distinctiveness in the provision of public services; and to ensure that becoming involved in the provision of public services does not lead to the marketization of the sector, to the detriment of their wider contribution to society.

Need 5: the growth of key managerial skills within the sector Much of the growth of VNPOs in Japan has been driven by the vision and actions of entrepreneurial individuals, who have established VNPOs around specific needs and/or communities. Such ‘social entrepreneurs’ are necessary to the development of the VNPO sector in Japan. However their existence is not a sufficient condition for the establishment of a sustainable VNPO sector. Other skills are also necessary. These include the ability: . . . . .

to inspire other people to engage with the VNPO sector; to campaign and lobby for policy changes; to manage the scarce resources of VNPOs; to administer the resources of VNPOs, within the prevailing legislative and institutional climates; and to govern plural relationships and partnerships with other VNPOs, with the business sector and with the state.

The availability of such skills is in short supply in the sector at present. Whilst some training resources are available at the moment, such as standalone books (for example, Osborne 1997), these are intermittent and scattered. In order to address this need, the sector as a whole needs: . .

to explore avenues to develop training initiatives and programmes within the sector; and to engage with the business and governmental sectors to explore the possibility of secondment programmes which will allow the transfer of skills from these sectors into the VNPO sector, whilst not diminishing its independence.

Need 6: the growth of human resources The VNPO sector is by its nature a labour intensive sector. It relies upon the capacity of its members to contribute towards the objectives of the sector. Whilst in the Western world the sector has developed substantial human resources, through both paid and volunteer labour, this is not the case in Japan. The sector relies upon relatively scarce paid staff and volunteers. The former are only a realistic possibility where financial resources are flowing from the state to VNPOs to provide local community services – and for many small VNPOs this has only become a possibility since the legislative changes discussed above. The latter concept, of volunteering, itself is a


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comparatively new concept within Japanese society and needs to be embedded within the culture. The sector needs also to consider the opportunities that information technology (IT) offers for alternative means through which to meet some of these needs. Whilst it is no simple alternative to human capital, the appropriate development of IT resources can maximize the effectiveness of scarce humans ones. In order to address these essential human resource needs, the VNPO sector needs: . . .

.

to secure sufficient funding to meet its human resource needs; to provide training for these people in the relevant skills for their VNPOs; to work within local communities to develop the concept and practice of volunteering, and the appropriate framework to ensure the reliability and quality of such volunteers; and to explore the possibilities that IT, and other electronic technologies, offer for enhancing the contribution of human resources to the VNPO sector.

Need 7: the establishment of key infrastructure for the VNPO sector Underlying much of this agenda for the development of the VNPO sector in Japan is the need for the growth of the necessary infrastructure that can engender and support these advances. In the UK, such infrastructure is provided through the network of Local Development Agencies (LDAs). These are VNPOs whose role it is to grow and support voluntary and community action in local communities. The work they undertake includes: . . . . . . . .

enabling local VNPOs to engage with local government around key policy and managerial issues; representing these views to local government; nurturing the growth of links between local VNPOs; providing key collective resources for local VNPOs, such as photocopying, payroll and administrative support; collating and disseminating key information to the sector; offering support to the sector in key areas such as fund raising and legal status; facilitating training events on key skills for the sector; and exceptionally, being a base for the nurturing and development of new VNPOs that are providing a service to the community. (Osborne 1999)

Examples of such infrastructure organizations are to be found in Japan, such as that of CS Kobe discussed earlier in this volume, and also the Shimin 21 Forum in Nagoya. However, they are scarce. Their establishment

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is an especial challenge for the sector in Japan because it requires the growth of resources not directly related to the provision of a community service. It is notoriously hard to engage government, in particular, in recognizing such provision as a core funding issue. However, alternatives do exist. These include both engaging one of the major philanthropic foundations in Japan, such as the Sasakawa Peace Foundation, in supporting a programme for the development of such organizations and developing them on the basis of a fee-paying approach to supporting local VNPOs. This is the situation in the USA (Gray and View 1992) – though this in itself requires a certain level of financial resources to be available within the local voluntary sector and such is not presently the case in Japan. In order to address this need, therefore, the VNPO sector needs . . .

to recognize and acknowledge the significance of voluntary sector infrastructure for the sustainability of the sector in Japan; to explore different models for the provision of this infrastructure; and to engage with key stakeholders about alternative models for the funding and resourcing of this infrastructure.

Conclusions The conclusions to this chapter are easily and succinctly stated. This volume has provided an important insight into the changing societal context, organizational challenges and managerial needs for the growing VNPO sector in Japan. This final chapter has pulled together the key lessons from our discussion to offer an agenda for change and growth for the sector. None of the issues identified here are easily resolved; some may even be intractable in the short term. However, their resolution is a key task for the establishment in the twenty-first century of a thriving, vigorous and effective voluntary sector in Japan. Acknowledgements The British Council, the Daiwa Foundation and the Japan Foundation Endowment Committee all supported the research upon which this chapter is based. The authors acknowledge gratefully this support. However the contents of this chapter are the responsibility of the authors alone and do not necessarily represent the views of these bodies.

References Aldrich, D. (1999) ‘Localities that can say no? Autonomy and independence in Japanese local government’, Asian Journal of Political Science (7, 1) pp. 60–76. Deguchi, M. (2001) ‘The distinction between institutionalized and non-institutionalized NPOs: new policy initiatives and non-profit organizations in Japan’, in


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H. Anheier and J. Kendall (eds), Third Sector Policy at the Crossroads (Routledge, London) pp. 153–167. Esping-Anderson, G. (1997) ‘Hybrid or unique? The Japanese welfare state between Europe and America’, Journal of European Social Policy, (7, 3) pp. 179–190. Gray, J. and View, J. (1992) A Place at the Table: a Study of the Statewide Nonprofit Association Movement (Union Institute, Washington). Gutch, G., Kunz, C. and Spencer, K. (1990) Partners or Agents? (NCVO, London). Jenei, G. and Vari, A. (2000) ‘Partnership between local government and the local community in the area of social policy: A Hungarian experience’, S. Osborne (ed.), Public–Private Partnerships. Theory and Practice in International Perspective (Routledge, London) pp. 265–274. Kramer, R. (1989) ‘From voluntarism to vendorism: an organizational perspective on contracting’, in H. Demone and M. Gibelman (eds) Services for Sale (Rutgers University Press, New Jersey). McLaughlin, K. and Osborne, S. (2000) ‘One-way traffic or a two-way street? Can public–private partnerships impact upon the policy-making process?’, in S. Osborne (ed.), op. cit., pp. 324–338. Menju, T. and Aoki, T. (1996) ‘The evolution of Japanese NGOs in the Asia Pacific context’, in T. Yamamoto (ed.), Emerging Civil Society in the Asia Pacific Community (ISEAS, Singapore) pp. 143–160. Ministry of Health and Welfare (2000) Annual Report on Health and Welfare 1999–2000 (JICWELS, Tokyo). Murray, V. (1998) ‘Interorganizational collaboration in the non-profit sector’, in International Encyclopaedia of Public Policy and Administration, (vol. 2) (Westview Press, Boulder) pp. 192–196. Nomura, H. (ed.) (1993) A Comprehensive Analysis of Consumer Cooperatives in Japan (OTSUKI, Tokyo). Osborne, S. (ed.) (1997) Managing in the Voluntary Sector (Japanese translation) (International Thomson Business Press, London). Osborne, S. (1999) Promoting Local Voluntary and Community Action (YPS, York). Osborne, S. and Kaposvari, A. (1997) ‘Towards a civil society? Exploring its meaning in the context of post-communist Hungary’, Journal of European Social Policy (7, 3) pp. 209–222. Osborne, S. and McLaughlin, K. (2002) ‘Structuring government – voluntary sector relationships in the implementation of local “Voluntary Sector Compacts” in England’, Public Money and Management (22, 1) pp. 51–63). Palley, H. and Usui, C. (1995) ‘Social policies for the elderly in the Republic of Korea and Japan’, Social Policy and Administration (29, 3) pp. 241–257. Perri 6 (1997) Holistic Government (Demos, London). Pifer, A. (1967) Quasi Non Governmental Organizations (Carnegie Corporation, New York). Ring, S. and Van de Ven, A. (1992) ‘Structuring co-operative relations between organizations’, Strategic Management Journal (13) pp. 483–498. Young, D. (2000) ‘Alternative theoretical models of government – non-profit sector relations: theoretical and international dimensions’, Non-profit and Voluntary Sector Quarterly (29, 1) pp. 149–172.

Index

Adachi Ward Physicians Association case (1988) 81 ‘administrative guidance’ 86, 88 ageing population 103–4 Akiba, Takeshi 136 Akihiko, Kumashiro¯ 56–63, 66, 71 Akiko, Domoto 56, 65 Akira, Matsubara 61–2 Akita Kannonko¯ 190 Aldrich, D. 12 Amakudari 174 Amemiya, T. 10 Amenomori, T. 9–10, 138–44, 175 Amnesty International 81 Anheier, H.K. 102 Aoki, T. 11 Asahi Shimbun 64, 66 Asia Society 30–1 Asian Cultural Council 30–1 Asian economic crisis 12 Asian Medical Doctor Association 61 Atoda, Naosumi 175 Austin, J.E. 114 authoritarian culture 121, 123, 125, 147 Balfour, M.C. 24 Beard, Charles 29 Bennis, Warren 146 Berger, P. 16 best practices 166 Bryson, J.M. 153 Buddhism 9–10, 13–14 bureaucratic leverage 173–5 capacity-building 140, 143

CDC Kobe Corporation 44 Center for Public Resources Development 144 Centre for Employee Volunteering 111 charitable contributions 92–3, 108 charitable institutions in Japan and North America 151–2 Chigasaki Volunteer Alliance 162–3 Christianity 11, 24 Citizens’ Fund Kobe 47 citizens’ groups 43 Civil Code (1896) 76–7, 82–3, 89, 172 civil society 7–18 passim, 32, 41, 44–5, 48–9, 53–5, 78, 84, 96–7, 109, 128, 130, 139, 148, 170, 195 Coalition for Legislation to Support Citizens’ Organizations (C’s) 42, 61, 70, 113, 116, 123 Coalition NPO Team 56–63 Communism 26–7 community development 44–5 community profiles 15 Community Support Center Kobe 44, 46–7, 208–18, 229 Confucianism 9–10, 13–14 Constitution, Japanese 47, 76–7, 96, 138, 194 corporate citizenship 41, 48, 103–4, 115, 127, 193 corruption 12, 222–3 Council of Community-based NGOs 43 cultural exchanges 28–9 Daido¯ Life Insurance International Culture Fund 192 decentralization 7, 12

Index Deguchi, Masayuki 8, 24 democratic values 121, 128–9, 147–8 dissolution of voluntary and non-profit organizations 89–90 Dulles, John Foster 28 Economic Planning Agency 59, 66, 84, 88–90, 113, 189 educational corporations 83–4, 92–3, 107, 189 Edwards, Michael 147–8 environmental organizations 96 Esping-Anderson, G. 11 expenditure of the non-profit sector 188–9 Filer Commission 33 financing of non-profit organizations 142–4 foundations 13, 190–3 fund-raising 16, 142–4, 188, 195 Gansuido¯ 190 globalization 11–12, 16, 104 government need for pluralist approach by 224 role of 10–11, 15–17, 121, 124, 170–5 see also public sector reform government-operated non-governmental organizations (GONGOs) 82 grassroots organizations 146–7, 189, 192, 194 Greenpeace 63 Hanshin Awaji earthquake 10, 13, 40–9, 53–6, 62, 69, 82, 109–10, 123, 132, 147, 152, 194, 224 Harima, Yasuo 126, 133–4, 138–9 Harrison, Barbara Grizzuti 148 Haruta, Yuka 131, 134, 139 Holloway, Richard 148 Honda (company) 114 Hyo¯go¯ Prefecture 45–7 IBM Japan 114–15 ‘Ie’ concept 152 Imada, Makoto 13, 126, 128, 138, 143–4

233

Imata, Katsuji 128, 135 incorporated associations and foundations 78–80, 151, 172–3 independence of non-profit organizations 47, 137–9, 146, 224–7 Indo-Chinese Refugee Settlement Association (ICRSA) 160–2, 165 information asymmetry 154 information technology 229 infrastructure of the voluntary and non-profit sector 15, 18, 46, 195, 229–30 Inman, Jerry 127–44 passim Institute for Pacific Relations (IPR) 26–7 Institute of Public Health, Tokyo 24 International House of Japan 32–3 International Philanthropy Project 33 investigation of voluntary and non-profit organizations 88–9 Japan Air Lines 114 Japan Alliance for Humanitarian De-mining Support (JAHDS) 114 Japan Bicycle Promotion Association 192–3 Japan Center for International Cooperation 166, 189 Japan Center for International Exchange 32–4 Japan Foundation 194 Japan Foundation Center 192 Japan Networkers Conference 41 Japan NPO Center 42 Japan Society of New York 32–3 Japan Youth Volunteers Association 10 juridical personality 77–8, 85–7 Kaitokudo¯ 190 Katsuta, Tadahiro 141 Kawaguchi, K. 11 Kawai, Takayoshi 133 Kawakita, Hideto DeDe 127, 133, 140–3 Kawashima, Nobuko 173 Keidanren 33–4, 41, 59–62, 67–8, 103–12 passim, 127, 193 Kennan, George 28 Kihara, Katsuakira 129–30, 136, 140

234

Index

Kishimoto, Sachiko 131–2, 142 Knight, J. 10 knowledge-based view of the firm 155–6 Kobe earthquake 10; see also Hanshin Awaji earthquake Kobe Empowerment Center 46 Kogut, B. 156 Koichi, Kato¯ 62–7, 71 Koko, Sato¯ 67 Komatsu, H. 12 Korea 11 Kurokawa, Chimaki 125–6, 130 Kusumi, Tsuyoshi 124, 127, 135–43 passim Law to Support Victims of Disaster (1998) 49 leadership in charitable organizations 167–8 learning, organizational 156, 159–60, 164 Lee, Heeja 129 legal framework for voluntary and non-profit activity 76–97, 222–3 legislation see Law to Support Victims of Disaster; Long Term Care Insurance Law; NPO Law legitimacy 121–2, 129–33, 146 literature on the voluntary and nonprofit sector 8–12 local development agencies (in the UK) 229 Lohmann, R. 9 Long Term Care Insurance Law (2000) 8, 16–19, 116, 206, 223, 225 McCarthy, Joseph 26 Machi Communication 44–5 Maeda, Yoichi 33 managerial skills for the voluntary and non-profit sector 228; see also strategic management Manokko Corporation 44 market failures 154 Masakuni, Murakami 66–7 Matsubara, Akira 123, 127–37, 142–4 Matsumoto, Shigeharu 25, 27, 29, 32 medical corporations 84, 92, 189 Menju, T. 11

merger of non-profit organizations 91 Mitsubishi Bank Foundation 192 Mitsubishi Foundation 191–2 Mitsui Foundation 190–1 Mitsui Ho¯onkai 24–5 Miyagi Prefecture 171, 176–84 Mizota Wimalasiri, Hiromi 125–6, 129, 131 Mori, Yu¯ji 96 Morimura Ho¯meikai 190 Morita, Akio 33 Murai, Masakiyo 47 mutuality principle 13–15, 18 Nagao, R. 11 Nakamura, Junko 44 Nakamura, Takayuki 141–2 Nakane, C. 152 NEC (company) 114 neighbourhood associations 86 networking 48, 227 Neuhaus, R. 16 Nikkei Shimbun 63–6 Nippon Foundation 46, 192 Nishisuma Danran 199–207 Nishizutsumi, Yoji 130–3 Nissan Motor Company 113–14 non-governmental organizations 11, 62, 71, 141, 189–90; see also government-operated nongovernmental organizations non-profit organizations categories of 78–9 compared with for-profit organizations 150–1, 160 definition of 102 NPO ho¯jin 103, 113–16 NPO Law (1988) 8, 16–19, 34, 41–2, 49, 53–71, 78–87 passim, 111, 113, 123, 145, 171, 175–6, 192, 206, 222–5 NPO legal persons 84–6 NPO Research Forum 42 Okabe, Kazuaki 128, 137 Okayama Orphanage 190 Omron Inc. 114 One Percent Club 41, 105–6, 193 Osaka Community Foundation 41

Index Osaka Voluntary Action Association 43 Osaka Volunteer Action Center 194 Osborne, S. 15, 229 Oster, S.M. 153 ¯ ta, Mio 175 O Palley, H. 11 partnership arrangements 15–18, 113–14, 170–1, 226–7 paternalism 124, 175, 194, 226 philanthropy before the Second World War 190–1 corporate 103–14, 127, 143, 226 individual 193–4, 226 see also Rockefeller family and foundations Philanthropy Link-Up Forum 41 Pifer, A. 15 political parties 54–70 profit-making activities 91–2 public attitudes to non-profit organizations 130–2 public benefit organizations 123–4, 145, 189 public benefit tests for tax-deductibility 94–5 public charitable trusts 86 public funding for the voluntary and non-profit sector 95–6 public interest, definition of 80–1 public interest corporations 107, 113 public interest groups 82 public interest legal persons (PILPs) 78–95 public sector reform 12 radio services 45 regulation of the voluntary and non-profit sector 16, 53–71, 77–91 religious corporations 84, 92, 189 Rengo¯ federation 67 reporting by voluntary and non-profit sector organizations 87–8, 95 residents’ councils 199–200, 206–7 resource-based view of the firm 155 Rockefeller family and foundations 23–34 Rusk, Dean 28

235

St Luke’s Hospital, Tokyo 23 Salamon, L.M. 102 Sasakawa Peace Foundation 13–14, 230 Sato¯, Hiromi 130–1 Senge, P. 164 Serrano, I. 9–10 Shiina, Takeo 105 Shoichet, R. 153 six-force diagram 153 Smith, Datus 33 Smith, David Horton 146–7 social change 16, 221–2 social entrepreneurs 228 social welfare corporations 83, 92–3, 107, 189 So¯to¯shu¯ Volunteer Association (SVA) 42, 156–60, 165–8 Spender, J.-C. 156 stakeholder analysis 164–6 state, the see government strategic management 15–16, 153–4, 163–4 subsidies 194 Suemura, Yuko 133, 140–1 Sugiura, Scott 132, 135, 143 support centres for the voluntary and non-profit sector 195, 208 sustainable development 7 Susumu, Yanase 65 Takahashi, Yo¯ko 138, 140 Taku, Yamazaki 65 Tanaka, Yayoi 130, 133–4, 144 taxation and tax concessions 68–9, 91–7, 107–9, 122, 145, 147, 151, 191, 226 Teece, D.J. 154 Thranhardt, A. 9–10 3 Delta Model 153 tokuzo¯ 92–3 Tomita, Hisae 127, 139, 142 To¯ray Science Promotion Foundation 191 Toyota Corporation 68, 114 Toyota Foundation 192 transaction cost economics 154 transitional nations 17, 224 Tsujinaka, Yutaka 96

236

Index

Uemura, Hideaki 125, 127, 131, 137–8, 141–3 Ueno, Makiko 125–6, 128, 139 umbrella agencies 15 United States 15–16, 31–2, 95, 104, 170, 230 Useem, Michael 102 Usui, C. 11 vision for the voluntary and non-profit sector 122, 133–6, 146 voluntary action and volunteering 10, 13, 15, 40–1, 45–6, 49, 54–5, 106–7, 132, 167, 189, 228–9 before the Second World War 191 voluntary and non-profit sector diversity of 222 needs of 14–16 needs to be addressed by 225–30 obstacles to growth of 46–8, 223–5

old- and new-style organizations in 8 strengths of 13–14 volunteer bureaux 194–5 Watanabe, Tatsuya 131–45 passim Williamson, O.E. 154 ‘wisemen’s groups’ 34 Wolf, Thomas 146 Yamamoto, Tadashi 12, 32, 151 Yamaoka, Yoshinori 127, 130–2, 140, 145 Yamauchi, Naoto 124, 127 Yamazaki, Mikiko 135, 139–44 Yomiuri Shimbun 68 Yoshida, Rie 128–9 Yoshimi, Ray 129, 133–4, 140 Zander, U. 156

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