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:
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.
Return to the NGO Page
Comments and suggestions:
Hari Srinivas - email@example.com