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No. 10 April 2005

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•Tsunami Response Showcases NGO Progress and Challenges

•Japanese International Development NGOs Reach Critical Stage

•American Investment Firm Launches Innovative Funding Scheme

•New Organization Fights AIDS and Other Communicable Diseases

•Reconciliation and Civil Society: Lessons from History

•Nonprofit Sector Reform—A Step Forward?

Tsunami Response Showcases NGO Progress and Challenges

The December 26, 2004, tsunami produced an immediate outpouring of support and sympathy from around the globe. The response of Japan's civil society, though not as widely reported as the governmental and corporate response, was remarkable in terms of its scope, speed, and flexibility.

In the face of this tragedy, Japan's governmental, private, and civil society sectors were among the world's leaders in mobilizing resources. The Japanese government acted with unprecedented speed, committing $500 million for emergency assistance within a week. Corporations in Japan responded quickly by announcing both financial and in-kind donations, and according to the Japan Business Federation (Nippon Keidanren), corporate donations totaled more than $61 million as of February 22. In addition, a February 4 report by the Japan NGO Center for International Cooperation (JANIC) calculated that 31 Japanese NGOs had raised close to $60 million for relief efforts. By mid-March, that number had climbed above $100 million.

The response of Japan's civil society sector highlights topics raised in other articles in this issue. On the one hand, the strength and speed of its response attest to the growing capacity of Japan's NGOs to provide services to communities in need and its ability to complement governmental responses. In addition, new funding mechanisms, particularly those engaged in humanitarian relief, made possible a rapid response that would have been unthinkable a few years ago. On the other hand, the fragile financial environment for the nonprofit sector in Japan continues to hinder its ability to operate in emergency situations overseas.

Within days, Japanese NGOs had dispatched personnel to evaluate needs and capacities, rebuild shelters and sanitation facilities, provide emergency and preventive medical care, and distribute basic necessities. For example, the Japanese Red Cross Society dispatched one staff person to Sri Lanka and one to Indonesia within the first two days, and a 13-person health care team was sent to Indonesia on December 29, only three days after the tsunami. In the first two and a half weeks after the tragedy, the Japan Platform—a consortium of humanitarian relief organizations—allocated close to $3 million to six NGOs to dispatch teams to Indonesia, Sri Lanka, and India.

In the face of large-scale natural disasters, flexibility is often as important as speed, and many were surprised at the level of flexibility Japanese NGOs exhibited. In one case, Peace Winds Japan—which began its relief activities in Aceh by distributing emergency provisions—decided that, as basic needs were being met by other organizations, their resources would be put to better use by paying villagers to begin rebuilding their communities, providing much-needed labor and restoring the dignity of those people whose lives had been destroyed.

In Japan, as in many countries, large-scale and grassroots fundraising efforts mobilized extraordinary amounts of money from ordinary citizens. Online and personal appeals for funds in many cases exceeded targets, and music and sporting events were organized with all proceeds going to organizations directly involved in the relief effort. In addition, corporations such as Nomura Securities, NTT DoCoMo, and Panasonic introduced matching gift programs—a rarity for employers in Japan—as a complement to their other monetary and in-kind donations.

There has been some concern, though, that the outpouring of support from corporations and individuals for this incident may mean a reduction in private donations for other causes over the next year. Also, despite the speed and creativity demonstrated by Japanese NGOs in response to the tsunami, the inhospitable legal and financial environment continues to challenge their ability to respond to emergencies. Recently, there has been some progress at the national and local levels in developing funding mechanisms for select organizations engaged in humanitarian relief efforts. Still, many Japanese NGOs with a presence in the areas affected by the tsunami are not able to meet the complex criteria for receiving tax-deductible donations in Japan.

In February, the Coalition for Legislation to Support Citizens' Organizations (C's) proposed legislation to allow temporary tax deductibility for contributions for humanitarian relief activities over the next three years. If the legislation passes, Japanese NGOs working on tsunami relief will be able to raise crucial funds much more smoothly. In the longer term, passage of the bill could give Japanese NGOs greater access to funds, further expanding their role in international relief efforts.

Japanese International Development NGOs Reach Critical Stage

In recent years, NGOs in Japan have increasingly focused on developing countries in Asia and around the world, coinciding with a similar expansion of governmental attention to Asia. While external relations had until recently been the exclusive domain of the central government, NGOs are beginning to change the way Japan interacts with the rest of the world. As their societal roles have grown, they have reached a critical stage in their development, and while they are becoming increasingly accepted in Japan, they still face significant challenges.

NGOs working on developing country issues first became active in Japan in the late 1970s with the influx of refugees from Indochina. New international development NGOs were established throughout the 1980s and 1990s, peaking in the mid-1990s. Since then, their roles have evolved, and the organizations themselves have become more embedded in Japanese society.

JANIC, an umbrella organization for international development NGOs, publishes a national directory, which in 2004 listed 226 organizations that meet its criteria as international exchange and development NGOs. These organizations engage in a wide range of activities related to 103 countries, spanning the fields of education, rural development, children, public health, and women. (See figure.)


Source: JANIC, 2004. Directory of NGOs Concerned with International Cooperation, p. 352-361.


While the emergence of this critical mass of organizations holds considerable promise, the environment for NGOs in Japan is far from hospitable, and international-oriented NGOs continue to face significant challenges.

Grassroots Interest

On the positive side, interest in international development NGO activities seems to be rising throughout Japan. In 2002, for example, as part of broader education reform, education for international understanding was introduced into the curriculum at some primary and secondary schools, creating opportunities for people from NGOs to come into classrooms and talk about their own experiences working with developing countries. Because this new course is being used to deepen the understanding that many young people have of NGO activities, it is producing a potential reservoir of new support for NGOs.

In recent years, Japanese university students, who have tended to be interested primarily in the United States and Western Europe, began displaying deeper interest in developing countries in Asia and elsewhere. University programs dealing with international development are being set up throughout the country, and their enrollment is reported to be roughly 35,000 students per year. As a result, there are more recent graduates seeking employment in international development, which is fueling the competition for jobs in NGOs and other relevant organizations.

More recently, local communities in Japan—which have also tended to focus on exchange with the United States and Western Europe—have become more interested in developing countries, particularly in Asia. People throughout Japan are increasingly exposed to international issues through contact with foreign students, workers, and visitors in their towns. At the same time, sister city relationships with Asian countries have grown, and there are now more than 300 with Chinese cities alone. These informal interactions, as well as an increase in travel around Asia, have helped deepen Japan's understanding of its neighbors. In some instances, these interactions have inspired the formation of civic groups to help developing countries, and some have even grown into full-fledged NGOs.

Cross-Sectoral Partnership

The gradual acceptance of NGOs in Japan is also evidenced at the governmental level by the exploration of partnership between NGOs and the public sector. The Japan International Cooperation Agency (JICA) and the Japan Bank for International Cooperation have begun to encourage public participation in international cooperation activities and have sought to deepen linkages with NGOs. For example, the NGO-JICA Consultative Committee was established in 1998 to explore potential NGO input into JICA activities as well as to foster mutual learning. JICA and JANIC cosponsor training activities that aim to deepen understanding of the roles of NGOs as partners in implementing international development projects. One achievement of the committee has been the creation of joint training courses for JICA and NGO staff that enhance mutual understanding and explore potential collaboration.

Another important and innovative national-level partnership involves the Japan Platform, a new funding system established in 2000 to facilitate humanitarian relief delivery in response to natural disasters and refugee emergencies overseas. It is difficult for NGOs to anticipate when and where humanitarian assistance will be needed, particularly in cases of natural disasters. When disaster strikes, large amounts of money need to be mobilized immediately for travel, supplies, and security. However, the Japanese government tends to be slow in making funding decisions, and few Japanese NGOs have the financial resources to shoulder such expenses up front.

In response, the Japan Platform was organized to mobilize and coordinate humanitarian aid funding from the governmental and corporate sectors. It pools funds from the Ministry of Foreign Affairs and corporate donors so that they are readily available when an emergency occurs. An advisory committee then distributes funds to 18 member NGOs, which provide humanitarian relief overseas. In the 2003 fiscal year, the Japanese government contributed ¥2.7 billion ($25 million) to the Japan Platform for assistance following the earthquake in Iran and for humanitarian activities in Iraq, and an additional ¥180 million ($1.6 million) was raised from corporations and individuals. Okayama Prefecture offers a unique and exciting example of a partnership between a prefectural government and humanitarian assistance NGOs. A mid-sized prefecture with a population of two million, it has proven that international-oriented NGO activity is growing not only in urban areas but also in smaller towns throughout the country. In April 2004, the prefectural government, encouraged by locally based humanitarian NGOs, passed a resolution to facilitate social contributions for international service.

One pillar of the new resolution was a decision to collect and store emergency supplies for use by Okayama NGOs when they respond to humanitarian emergencies overseas. The prefecture purchases some goods and collects others from towns, residents, and businesses throughout the prefecture. It then provides storage facilities for the supplies in a warehouse at the Okayama airport. The supplies are provided to NGOs quickly when they respond to an emergency. This system proved vital to the NGOs that provided humanitarian assistance to areas affected by the December 2004 tsunami.

Similarly, volunteers from Okayama Prefecture dispatched by the Japan Overseas Cooperation Volunteers (JOCV) program, which is operated by JICA and resembles the American Peace Corps Program, submit requests for specific items—such as medicine, educational materials, and other resources—to the prefectural government, which collects the items from Okayama residents and businesses and gives them to the JOCV volunteers.

Fundamental Challenges

Despite these promising new developments, Japan's international-oriented NGOs still face several fundamental challenges. The term "NGO" is becoming more familiar in Japan as the number of organizations continues to grow and their activities expand in scope, but ignorance about what "NGO" actually signifies still prevails. According to an opinion poll conducted in 2001 by the Association for Promotion of International Cooperation, 64.7 percent of respondents did not know much about the activities of NGOs; 33.2 percent had a vague idea; and only 2.1 percent felt confident in their knowledge of NGO activities.

Why is the level of interest so low? One reason may be the lack of public relations efforts by NGOs. Another may be the underlying social tendency in Japan to regard government as solely responsible for looking after the public interest, hindering public acceptance of the legitimacy of NGOs. This points to a need for Japanese NGOs to focus on building public trust.

The danger that emerges in a climate in which Japanese nongovernmental involvement overseas is not entirely understood or appreciated was starkly illustrated by the domestic response to the April 2004 kidnapping of three Japanese citizens in Iraq. While none of the three were working for NGOs, they were engaged in nongovernmental work in a violent conflict zone. Upon their return to Japan, they were met with a wave of public criticism for ignoring government warnings and not assuming appropriate responsibility for their actions.

Another obstacle to further development is the lack of sufficient financial support for NGOs and the adverse effect this has on staff professionalization. In 2002, the total income for the 226 organizations listed in the JANIC directory was ¥26.67 billion (approximately $242 million), but close to half of the organizations brought in less than ¥20 million ($18,000). These smaller organizations are typically struggling just to survive.

In addition, most of Japan's foundations and other funding mechanisms do not provide funds for capacity building. Without ample institutional funding, NGOs experience considerable difficulty attracting professional staff and have to rely on volunteers and part-time employees, preventing them from adopting more strategic approaches to organizational development. Currently, there are only about 1,000 full-time staff working for international-oriented NGOs in Japan. Of those, more than three quarters earn less than ¥4 million per year ($36,000), and about one quarter earn less than ¥1.5 million ($14,000) per year.

Finally, generational and experience gaps have given rise to differing perceptions within and between NGOs, making it difficult for the sector to develop clear directions and methods of operation. According to JCIE Chief Program Officer Toshihiro Menju, there is a significant generation gap between the people who established their own NGOs in the 1970s and 1980s and the younger generation of NGO staff. Many members of the senior generation did not start out with particular expertise in international development but based their work on their own firsthand experience working with local communities in developing countries. As a broad generalization, these NGO leaders are not necessarily interested in seeing their organizations expand or become more institutionalized, and this is often reflected in their organizations' remuneration structures.

On the other hand, many NGOs have younger staff who have studied international development in universities or graduate schools. They place importance on increasing the organizational and financial capacity of NGOs and seek an appropriate salary for their professional work in the nonprofit sector.

In addition, according to Menju, there have recently been a growing number of cases of retirees engaging in NGO activities. For many, their priority is more on using their own skills and experience after retirement than on receiving an adequate salary.

The next few years will be critical for international-oriented NGOs in Japan. On the one hand, new opportunities for international interaction, increased understanding of the importance of NGOs, and innovative partnerships strengthen the likelihood that the sector will continue to grow at a rapid pace. On the other hand, if the institutional and societal challenges facing NGOs are not addressed in a comprehensive manner, their capacity for growth may be undermined.

American Investment Firm Launches Innovative Funding Scheme

Voyager Management, an American investment company, has recently begun contributing 1 percent of the profits from funds it manages to Japanese nonprofit organizations through a program operated by JCIE. The arrangement, referred to as the Social Entrepreneur Enhanced Development Capital Program (SEEDCap Japan), offers an innovative new model for nonprofit financing.

A mid-sized company that acts as a "fund of funds," aggregating funds and investing them for small and mid-sized hedge funds, Voyager Management receives an incentive fee of 10 percent of the earnings on what it invests on behalf of several Japanese corporations. It then gives 10 percent of that amount—equivalent to 1 percent of investment gains—to JCIE for SEEDCap. JCIE, in turn, solicits applications for funding from Japanese nonprofit organizations, and a selection committee, which includes representatives from the Japanese investor companies, chooses the recipients.

SEEDCap was conceived by Ken Shibusawa, president of the investment advisory firm Shibusawa & Company and a descendant of Meiji-era business leader Ei'ichi Shibusawa, one of the founders of Japanese philanthropy. After graduating from an American university, he worked at JCIE, several U.S. investment banks, and a major hedge fund before becoming an independent consultant in Tokyo. Shibusawa was inspired to create SEEDCap "to be a bridge between two worlds—the financial world that is driven by economic returns and the world of highly motivated social activities."

By addressing the interests of three sets of stakeholders, SEEDCap provides an alternative financing model for the civil society sector in Japan, where funding can be especially difficult to obtain. Investors take part because their investments yield solid financial returns, and, as an added benefit, they also realize a social return without bearing the direct cost of donations. Meanwhile, investment companies like Voyager Management are able to make social contributions with the confidence that their donations will be properly managed and distributed; at the same time they can better attract socially conscious investors. Finally, nonprofit organizations receive much-needed funding.

The first SEEDCap grant of several million yen has been awarded to OurPlanet-TV, an independent media portal established in October 2001 that operates as a nonprofit organization. OurPlanet-TV seeks to capture the stories of ordinary Japanese by presenting Internet broadcasts from their viewpoints on issues such as human rights and the environment. Viewers help produce the content of much of the programming, which consists of professional and amateur video and audio clips. By providing a forum for viewers to share their opinions, OurPlanet-TV hopes to encourage greater interaction with the media.

A second SEEDCap round is planned for 2005. Organizers eventually hope to increase the number of participating investors and to involve them more deeply in the program.