Developing Japan's Non-Profit Sector and
Constructing a New Civil Society

by Yoshinori Yamaoka

The Japanese System of Incorporation and the Concept of NPOs

The original concept of non-profit organizations (NPOs) first came into existence in the context of America's culture and social system. Since Japan does not share that same culture and social system, strictly speaking we do not have NPOs. NPOs can be defined as organizations which are generally (1) "not for-profit," (2) "independent from the government," and (3) "have a foundation in the legal system." Yet Japan lacks organizations which fulfill these three conditions. Organizations which fulfill (1) and (2) include various citizens' activity groups which are not incorporated, and others such as juridical foundations (zaidan hojin) and juridical associations (shadan hojin) fulfill (1) and (3) but are established with approval from the government. As for those which fulfill (2) and (3), there are countless corporations and limited liability companies. However, organizations which fulfill all three conditions do not exist in the current Japanese system.

The Japanese system of incorporation is regulated by civil law established in 1898; it is a law that goes back 99 years. After World War II, in order to transform itself into a new democracy, Japan changed its constitution in 1947. However, with the exception of some areas such as family law, civil law from the pre-war period was not changed. A system of incorporation which at that time was already 50 years old continued into post-war Japanese society. Simply put, this means that in this system of incorporation, for-profit corporations can be established with only certification by a notary public and registration with the regional legal affairs bureau, whereas public interest organizations must obtain approval from the competent government ministry and/or agency. Furthermore, organizations which are neither for-profit nor particularly public interest-oriented do not fall into any specific category and therefore lack regulation. This has resulted in innumerable cases where non-profit or public interest-oriented organizations have been established by special laws according to specific policy goals. For the most part, these organizations are subject to heavy government supervision, in keeping with the vertical divisions of authority of the ministries.

For this reason, non-profit organizations that wish to become incorporated must follow the framework of the government administration. It is extremely difficult for non-profit organizations to freely conduct activities and yet become incorporated. It is to this difficulty that I refer when I say "Strictly speaking we do not have NPOs." However, many Japanese organizations are aiming to become NPOs and engage in not-for-profit activities. While perhaps not fitting the narrower definition, I would like to take a broader approach and call these organizations NPOs in this paper. Many of these independent organizations are neither incorporated nor receive special tax treatment, and while some are incorporated under the supervision of the competent ministerial authorities, others take on the form of for-profit companies just for convenience's sake. Despite the restrictions of the system, the number of Japanese organizations trying to become NPOs is rapidly increasing.

The Goals of the Japan NPO Center

Within this context, the Japan NPO Center was established to develop the non-profit sector in Japan. The inaugural meeting took place on November 22, 1996, so it has been just five months since the Center's inception. The Center is a non-profit citizens' group but is not incorporated. Its mission is to strengthen the social foundation for the development of the entire NPO sector throughout all regions and fields of activity, and to establish equal partnerships with the government and corporate sectors. To this end, the Center is performing the following five functions:

  • First, the Center serves as an information center for NPOs. We would like to collect information on the major NPOs in each field and region and, if possible, have individual organizations register themselves with us voluntarily, so that any interested party may access this data. We would also like to collect information on the support given to NPOs by companies and regional government bodies. Thus, by organizing and processing this information, we may provide this data to interested individuals and organizations. The current state of NPOs is generally unknown in Japan, and this kind of activity aimed toward making NPOs more visible in society is indispensable. However, there is no need for the Center to accumulate all information. With information bases already forming in various fields and regions, it is important to make use of those existing resources.

  • Second, we provide consultation and coordination. In establishing NPOs and developing activities, or developing company and government NPO support programs, we give advice, provide necessary information, and introduce relevant individuals and organizations. The role of connecting NPOs seeking support with funders becomes important.

  • Thirdly, the Center is a networking base for people and organizations. This Center itself was based on a network of interested parties across the country. However, we would like to expand the membership and exchange of information between members to nurture connections among people and organizations across fields, regions, and the non-profit sector, deepening cooperation and creating partnerships not only domestically but abroad as well.

  • Fourth, we promote staff exchanges and training opportunities. We began a basic NPO course in February and March of this year, covering the fundamentals of NPOs, and the first annual Japan NPO Forum is being planned for June 1997 in Yokohama. Both NPO representatives and individuals involved in private and government support of NGOs will attend this inaugural event. This kind of exchange and training opportunity will not be limited to Tokyo. We will pursue collaboration with organizations from regions throughout Japan so that various cities will be able to host similar events.

  • Our fifth function, as a think tank, is to conduct survey research and produce policy recommendations. This kind of survey research is a recent phenomenon in Japan, and there are few results thus far. We plan to collaborate with universities and research institutions to carry out necessary research that will strengthen the social foundation for NPOs. This will not only be independent research. If the opportunity arises to conduct meaningful work commissioned by companies and government bodies, we would gladly do so.

The five activities listed here are closely connected and perhaps a bit too ambitious. However, during this period of NPO growth in Japan, I think it is important that we actively link these elements and, for the time being, be open to anything else that is necessary. In that case, the Center will basically devote itself to being a "producer" organization and will form project teams with outside organizations as necessary. Before long, this sector will mature , and as various organizations capable of providing infrastructure are established, the Center will focus accordingly on those activities that we feel are most important. We believe that it is best if the Center itself not become a large organization, but create links with established organizations as they become independent and grow. At any rate, we have taken the first step with the establishment of the Japan NPO Center.

Toward the Construction of a Civil Society

In Japan, during the current Diet session, three so-called "NPO Bills" have been presented by the various parties. If they deliberate on this bill during the session that runs through mid-June, the parties might pass the "law to promote citizens' activity," proposed by the three parties of the ruling coalition, but it is unclear when this law would become effective. This would introduce a system of non-profit incorporation that would remove citizens' activity groups from the framework of competent governmental ministry control. The establishment of NPOs would take place in towns, cities, and prefectures in a certified and basic manner. In comparison to the current "public-interest corporation" system (zaidan hojin and shadan hojin), this procedure should be simple and more transparent. This new system of non-profit incorporation will correct the defects of the aforementioned current Japanese system of incorporation. At last, under this system Japan will also have the opportunity to create entities similar to the original NPOs. However, the ruling coalition's current bill is limited in terms of the scope of targeted organizations, and the jurisdiction of government agencies is still strong. Compared to what we citizens' groups have earnestly desired and proposed over the past few years, the results are not at all satisfying. Nevertheless, we can positively say that the desires of citizens' groups are being recognized.

In January 1995, following the Great Hanshin Earthquake, volunteer activity swelled and debate over legislation ensued, creating a great opportunity for the Japanese public to learn about the importance of NPOs. Now, in every region of Japan, citizens, governments and companies are expecting much from NPOs. As the industrial and bureaucratic societies face obstacles and prospects for success in these arenas dwindle, only the expectations of NPOs will survive and continue to increase. Responding to these increased expectations, and calmly considering both the merits and demerits of this new system of incorporation, we would like to strive toward building a new civil society in Japan so that Japan can contribute to world peace and prosperity. This surely is the invaluable role which the Japan NPO Center should play.

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