Few Japanese Foundations Offer Much Support to Grassroots Organizations

As non-profit organizations seek growing influence in Japanese society,

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Japan’s Non-Profit World

the country’s philanthropies by and large are observing from the sidelines.

Few foundations have supported the kinds of relatively young and poor grassroots organizations that have started calling themselves “NPO’s” — and which until recently have not been recognized as legal entities. And fewer still among grant makers have taken steps to promote the non-profit field in general.

Many of Japan’s more than 13,000 foundations were started by corporations in the past three decades and retain strong ties to their founding companies. Lots of companies, in turn, remain suspicious of the kind of citizen activism that in the past has challenged their environmental practices or other behavior. Many of the funds therefore focus most of their grants on traditional programs: scientific research and development, academic studies, international-exchange programs, or cultural projects.

“Corporate foundations have not been supporting NPO’s,” says Yoshiko Wakayama, program director at the Sasakawa Peace Foundation, in Tokyo. “The argument was, without legal status, how could you trust them? They might be fly-by-night organizations that would just take the money and disappear.”

Activists in areas like the consumer or environmental movements find it particularly difficult to attract foundation grants. “Not many grant-making organizations in Japan support progressive groups,” says Kazuaki Okabe, a freelance journalist in San Francisco who has reported on the country’s non-profit activities. Many non-profit activists themselves privately express frustration at making so little headway with grant makers.

Many foundations are highly risk-averse, exerting the tightest control over their grants. Some go so far as to adopt the practice, common in several government ministries, of not approving grants until the projects have already been completed.

Nevertheless, a handful of major foundations have tried to promote broader non-profit activities. The Toyota Foundation has a program aimed at “building a civil society,” for example, under which it makes grants that it hopes will contribute to “the formation of full-scale autonomy for citizens.” In the past decade, it has shown a willingness to make grants to diverse kinds of groups. And although many of its grants go outside Japan, the Sasakawa Peace Foundation has also taken an interest in strengthening the field as a whole.

One route has been to try to develop academic interest and expertise in the field. “Universities are realizing that non-profits are a new field in which to offer courses, but they don’t have the faintest idea what that would be,” Ms. Wakayama says. So the foundation supported work at Osaka University that eventually led to the formation last March of the Japan NPO Research Association. The association now has more than 600 members, who study various aspects of Japan’s indigenous traditions of giving and volunteering, as well as models from the United States and elsewhere.

Even foundations that look sympathetically at the non-profit movement are hard-pressed to offer much assistance, however, because their ability to make grants has eroded in the depressed financial climate. Many companies, still trying to recover from economic recession, have little money to spare for making grants. What’s more, Japanese foundations are barred from investing in anything so speculative as equities or from making investments outside the country. The result: Foundations’ endowments, invested in fixed-income securities, for several years have been earning well under 5 per cent annually.

Since many foundations spend no more than they earn, their poor investment returns have had a chilling effect on their grants.

“We’re going through an ice age as far as endowments are concerned,” observes Ms. Wakayama of the Sasakawa Peace Foundation, whose investment portfolio is growing at about 3 per cent annually.

One small foundation in Tokyo is unusual both for its grant-making interests and for its primary source of income. The Ohdake Foundation, set up in 1972, has supported consumer, environmental, peace, and population issues, mostly working on joint projects with such organizations as Consumers Union of Japan, Greenpeace Japan, and the Information Center for Public Citizens. Its $150,000 annual budget is covered by rental fees on fifth-floor office space in a building in downtown Tokyo.

One of the foundation’s projects, called Nonprofit Japan, has involved setting up an English-language Web site to provide information about the country’s non-profit activities (http://www.igc.org/ohdakefoundation).

In addition, several community foundations have been established to solicit donations for distribution to grassroots groups within a specific geographic area. The Osaka Community Foundation was the first, set up in 1991 by the Osaka Chamber of Commerce and Industry.

Additional funds were set up following the devastating earthquake that leveled much of the city of Kobe in 1995. The outpouring of money and volunteers following that quake focused public attention on the importance of non-profit organizations and helped pave the way for passage last year of a law that confers on them legal status.

That law did nothing to change the government’s close supervision of foundations, however. Their incorporation and operations are still contingent on the approval of individual government ministries responsible for their area of interest: The Ministry of Foreign Affairs registers and supervises international-development foundations, for example, while health-related foundations fall under the jurisdiction of the Ministry of Health. The resulting close bonds between a foundation and its supervising ministry do not foster independence — particularly since foundations often end up hiring retired ministry officials.

Ultimately, some observers believe, Japan’s Civil Code will need to be overhauled to integrate foundations with other non-profit institutions — and to free them from their close dependency on government ministries. But few people see that happening any time soon.

“It’s a very difficult process to change the Civil Code,” notes Ms. Wakayama. “We haven’t had the foundation earthquake.”