Activists on the Move in Japan

New law helps citizens’ groups win acceptance they’ve long craved

The 700 or so participants at a recent non-profit conference here did not act much like revolutionaries

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Japan’s Non-Profit World

as they chatted in the hallways and packed into the meeting rooms.

Panel topics were the familiar staples of such conferences everywhere: accountability, advocacy, fund raising, managing volunteers. The books that were snapped up during the break included such non-incendiary works as primers on non-profit management and a Japanese translation of Ten Basic Responsibilities of Nonprofit Boards.

But nearly all of the citizen activists in attendance are in fact engaged in a hard-fought campaign that is likely to transform Japanese society in fundamental ways. Their goal is to break the central government’s near-monopoly on formulating public policy. Ordinary citizens will then have a greater role in shaping the nation’s social and economic priorities, the activists predict, and burgeoning non-profit organizations will be able to introduce alternative viewpoints into public debates — and win greater public support for their causes.

A decade ago, such activists might have been branded as misfits or radicals, antagonistic to government, industry, and the norms of Japanese society. But respect for NPO’s — as the citizens’ groups have taken to calling themselves, appropriating the American abbreviation for non-profit organization — has soared in the last five years.

Events of the past year in particular have infused the activists with new hope. A law that took effect last December has not only conferred legal recognition on grassroots groups but has also given them more legitimacy in the eyes of the public.

“NPO’s were regarded as exotic, unique, different, strange, and bizarre entities,” notes Yoshinori Yamaoka, who directs the Japan NPO Center, in Tokyo, which sponsored the conference in Sendai, located some 200 miles north of Tokyo. Indeed, many people applied those adjectives to their leaders and staff members as well, he says. But the term “NPO” has become a household word in Japan, and such groups — and their workers — are finally gaining the social recognition they have long craved.

Their task remains formidable, however, given the weakness of Japan’s non-profit world in comparison with its powerful business sector and dominant central government, which together have engineered the country’s wondrous post-war economic transformation.

“The government still thinks it’s the sole arbiter of the public good,” observes Tadashi Yamamoto, president of the Japan Center for International Exchange, which has played an important role in nurturing non-profit activities virtually since its creation in 1970. Traditionally, major policy directives have flowed from the ministries in Tokyo to governments of Japan’s 47 prefectures, and eventually to the local level — with very little opportunity for public comment. “Both bureaucrats and the public have grown accustomed to that system,” says Mr. Yamamoto.

Large, wealthy non-profit groups do exist in Japan — but only under the strict supervision of the central government. These “public-benefit corporations” include hospitals, schools, foundations, and religious and social-service organizations, all created under the jurisdiction of a particular ministry. Such legal status is generally limited to organizations with millions of dollars in assets — and approval is sometimes delayed for years or ultimately denied for seemingly arbitrary reasons.

Although public-benefit corporations find it much easier to get foundation grants or government contracts — and some are entitled to offer tax deductions on a portion of the donations they receive from individuals or corporations — the narrow criteria have discouraged smaller, poorer, and more-independent groups from applying.

Grassroots organizations, the vast majority of which still lack legal status, labor under many handicaps. Not only do their donors receive no tax benefits, but all revenue is taxable. They are unable to rent or own property, open bank accounts, obtain telephone service, lease office equipment, or conduct any transactions that involve contractual obligations. Those arrangements have to be made by an individual — often the founder or another board member — on the organization’s behalf. The death or incapacitation of such a person can spell catastrophe for the group.

Despite those hurdles, thousands of Japanese citizens have formed or joined grassroots groups to tackle issues like environmental degradation, historic preservation, child abuse, human rights, or improving the lives of the elderly or disabled. But many groups have found it difficult to attract the kind of support they need to mount effective challenges to government policies. And because most are run by volunteers who snatch time from their jobs or families, the groups have worked in relative isolation, focusing on their immediate issues, with little connection to those of their colleagues.

For such groups, the “Law to Promote Specified Non-Profit Activities,” which took effect last year, has been a watershed event that has significantly weakened the central government’s control over their activities. Approval of non- profit legal status in most cases can now be granted by the prefectural governments and is no longer subject to bureaucratic whim or delay. Approval must be granted within four months to any organization that meets the eligibility criteria — which are much less rigorous than the requirements that public-benefit corporations have to meet.

Registered NPO’s can now own, rent, or lease property and equipment in their own names, open bank accounts, and receive contributions — though such gifts still earn the donors no deductions.

Not all non-profit groups are pleased with the new law. “Groups that struggled to get their [non-profit] status under the old laws don’t want to make it easier for others to get the same status,” notes Hideto Kawakita, who publishes the “NPO Management Review” and consults with groups that want to improve their management. Many of the older groups with close ties to government ministries are unsettled at the prospect of seeing the universe of non-profit groups expand, he says.

Government bureaucrats have mixed reactions to the growing influence of voluntary organizations. While some see the groups as unschooled upstarts that have no business interfering in policy decisions, others recognize that the government alone can no longer provide all the services that the Japanese public has come to expect. They view voluntary groups primarily as potential contractors.

City and prefectural governments in particular have been more accommodating toward grassroots organizations — which they see as key players in mobilizing volunteers to help share the burden of caring for an aging population. Several governments have been instrumental in establishing non-profit centers to inform, advise, train, and promote local organizations. About a score of such centers have been created around the country, offering much-needed facilities to impecunious NPO’s.

Some sessions at the recent conference here in Sendai, for example, were held in the Sendai-Miyagi NPO Center — a former school building that the city has converted into a center than can be used by local non-profit groups. The facility, which opened in October, makes available office cubicles, conference rooms, a library — even a day-care center — as well as computer terminals, photocopiers, and other equipment.

But while non-profit groups may relish such attention, they must accomplish more than merely providing services previously carried out by the government, many leaders say.

“We’re in a critical situation now because local governments are trying to use NPO’s to outsource their work,” says Akira Matsubara, leader of a coalition of organizations that lobbied for the NPO law. “But that’s not real empowerment and does not create a truly independent sector.”

The Coalition for Legislation to Support Citizens’ Organizations, which Mr. Matsubara heads and which is commonly known as C’s, aims “to support NPO’s that can be independent of local governments” by helping them get resources to finance their activities and to develop projects on their own initiative, he says.

Philanthropy is still a fairly small part of that picture. Japan’s foundations for the most part have offered little support, both because the country’s recent economic recession has curtailed their grant making and because many grant makers have preferred to give to organizations that are more in the mainstream.

And the Japanese public, by and large, expects the government to provide social services and is not accustomed to supporting private efforts. Private donations, in fact, constitute less than 3 per cent of non-profit groups’ revenues; 45 per cent comes from the government, and the rest is earned income, according to the Johns Hopkins Comparative Nonprofit Sector Project.

C’s is now helping to marshal public support for legislation that would entitle donors to tax deductions for their donations to the new category of NPO’s. Currently, the government has granted that privilege to relatively few of the established groups. And some leaders fear that it may try to reserve any deductibility for organizations that work closely with the government while denying the benefit to those that are truly independent.

Backers of the NPO bill agreed last year to drop tax-deductibility provisions from it on condition that the Diet, Japan’s national legislature, reconsider the issue again within two years. But some observers predict that the tax-benefits provision will be difficult to obtain.

“It would represent a loss of control by the bureaucrats over resource-allocation decisions,” says Mr. Yamamoto. “The government thinks it knows better than amateurs” about what priority to give various social needs.

Earlier this year, however, more than 30 members of the Diet created the Parliamentary League to Support NPO’s for the purpose of obtaining favorable tax treatment for donations and taking other measures to strengthen the non-profit field. More than 200 Diet members have joined the league.

And 28 citizens’ organizations last summer formed a coordinating committee to work toward improving tax and other legal structures to facilitate non-profit activities.

Eventually, as more groups receive non-profit status, the groundswell in favor of tax incentives will become overwhelming, predicts Robert Pekkanen, a political scientist at Harvard University who studies civil society in Japan.

Psychological changes may be more difficult, Mr. Pekkanen adds: “The biggest change that has to happen is to change the mentality of NPO’s, which still look to the government to provide everything.” Even groups that want little to do with government bureaucrats still expect the government to provide them with NPO centers, he says.

The NPO centers and other institutions are critically important at this stage, many observers believe, because non-profit leaders urgently need to improve their professionalism. The centers can meet only a part of this growing need, and much of academe is only just starting to offer courses in non-profit management.

Several programs have therefore been established that send Japanese non-profit practitioners to be interns at U.S. organizations. The Japan Foundation’s Center for Global Partnership, for example, has started a pilot NPO Fellowship Program, which brought two Japanese activists to the United States for several months this year. One woman worked at the United Way of New York and at the New York Community Trust, while the other worked in Washington at the National Committee for Responsive Philanthropy.

“The law passed last year has been opening up more opportunities for NPO’s to be active on a wider level,” says Ema Shimada, a program associate at the center. “But lots of organizations don’t have sufficient capacity to raise the level of their activity.”

Another organization, Japan-U.S. Community Education and Exchange, sends 30 to 40 Japanese as interns to American non-profit groups annually in a program that started in 1996. And this summer it also sent a dozen Americans to spend a month working at Japanese non-profit organizations.

Not every leader in Japan’s non-profit world looks to the United States for inspiration; others have visited Asian and European countries searching for models that might be adapted to their country.

Even the NPO law — however much its passage has been hailed as a victory for citizens’ groups — is of more symbolic than practical significance to many grassroots groups, which have been slow to register under its provisions.

Since the law took effect last December, more than 1,400 groups have applied to register as non-profit organizations. By the end of October, 885 of those had been approved and four rejected.

But many small groups have no intention of registering — at least until the law is amended to provide for tax-deductible gifts. Some don’t want to comply with the requirements, which include holding regular board meetings and submitting annual financial statements. Others may not be able to muster the 10 members the law requires.

Of the organizations that have sought registered status, according to a survey by C’s of about 400 applicants, the primary reason was to win the public’s trust — a motivation claimed by 85 per cent of the groups. But a majority of the applicants also said they hoped to get contracts or subsidies from their local governments, which often prefer to give to registered groups.

Non-profit groups increasingly face competition from for-profit companies, which have started seeking government contracts to provide certain services. Local press accounts also describe cases in which companies have started separate non-profit organizations to angle for such business — trying to capitalize on the increasing favor with which much of the Japanese public now views non-profit organizations.

Although grassroots organizations have been increasingly active in Japan for the past couple of decades, the event that vaulted voluntary groups to the forefront of public consciousness was the earthquake that destroyed much of the city of Kobe in 1995 and killed more than 6,400 people.

While the national and prefectural governments appeared paralyzed with indecision and red tape in the face of the disaster, volunteers from across Japan poured into the area and — organizing themselves without waiting for instructions — began digging out victims, setting up makeshift shelters, and offering comfort that government seemed unable to provide.

In the hours, days, and months that followed the quake, more than a million volunteers from across Japan poured into the area. The Japanese public also responded by donating cash and supplies worth more than $1.5-billion.

“People saw the importance of having institutions like NPO’s, which helped out very quickly, while the government reaction was slow,” says Mr. Yamaoka, of the Japan NPO Center. The positive publicity created political support that resulted ultimately in the non-profit law, which passed by a unanimous vote of the Diet.

Yet some observers see the public favor as ephemeral.

“People don’t understand how important NPO’s are in daily life,” Mr. Yamaoka observes. “If nothing serious is happening — no floods or earthquakes — NPO’s are not paid very much attention.”

Strengthening non-profit organizations to the point where they can help shape national policies is only part of a broader effort that is needed to create a truly participatory democracy in Japan, says Kazuaki Okabe, a Japanese journalist in San Francisco.

“There’s very little public participation by citizens in government processes, and very limited disclosure by the government,” he says. For example, city-council meetings normally are closed to the public, he notes, and it is very difficult for ordinary citizens to address such meetings or get issues placed on their agendas.

“We should open up government for more participation by citizens,” Mr. Okabe says. “Otherwise, conflict and suspicion will continue.”

Some efforts are already under way. Freedom-of-information legislation passed this year will require government agencies to make public various documents that they now can conceal, for instance. And the Ministry of Education is decentralizing decisions about which textbooks and other materials to use in schools, which will soon become matters for local communities to decide.

Despite the long road ahead, advocates for a stronger, larger, more influential, and truly independent non-profit sector are amazed at the distance they have traveled.

Says Mr. Yamamoto: “We could never dream of this situation even five years ago.”