日本語   JCIE Japanese Language Site

Issue 17
October 30, 2003

•Funding Challenges Facing Japan's Nonprofit Sector

•Does the Work of Small NGOs Make Any Difference?—The Experience of the UK

•Funding Challenges Facing Japan's Nonprofit Sector

by Toshihiro Menju, Chief Program Officer, JCIE

Nearly ten years have passed since nonprofit organizations (NPOs) in Japan became the focus of increased media attention in the wake of the Great Hanshin Earthquake of 1995. There have been various efforts to foster the growth of the nonprofit sector since then, including the initiation of nonprofit management courses at universities.

Despite these developments, the state of the nonprofit sector in Japan is still quite fragile. In general, NPOs rely on government funds, contributions from private foundations and individuals, and income from profit-generating activities for their funding. Among Japanese NPOs, there are specific categories of organizations that receive a relatively larger share of government funding and, as a result, have been building up their organizational and staff capacity. These categories are healthcare-related NPOs, for which a funding mechanism has been set up as part of the nursing-care insurance system, and NGOs involved in international cooperation, which can receive funding from the Ministry of Foreign Affairs, Japan International Cooperation Agency (JICA), and Japan Bank for International Cooperation (JBIC). Although some NGOs in the field of international cooperation boast a large number of full-time staff, the reality of the situation is that it is yet extremely difficult for individuals to pursue a career at an NPO or NGO, given that the average annual salary of a full-time NGO staff member was about 2.5 million yen (approx. $22,000) as of 1999. As this is the case for NGOs in the relatively well-established category of international cooperation, it is easy to see that the situation is much worse for NPOs in other fields, where about half of the organizations are typically run on a volunteer basis.

While other financial resources besides government funds exist in the form of grants from foundations and individuals, there has been little growth in this funding area as a result of low interest rates and the stagnant economy in Japan. Moreover, there are cases where organizations are established based on funding from a foundation and continue to rely on that one foundation for the development of their operations, but then become defunct once the foundation support comes to an end. This scenario also applies to those organizations that depend on government funding.

The one area that is showing evidence of growth is a field of organizations that carry out activities with the potential for generating a profit and therefore come close to functioning as community businesses. The nature of this area lies on the border between nonprofit and for-profit, as the recipients of the services provided can serve as a source of direct income. If an appropriate niche can be found within society, this field could represent a new "business" opportunity for nonprofits.

However, if this borderline field is the only one within the wide range of nonprofit activities that can be expected to experience significant growth, the role of the Japanese nonprofit sector as a third sector complementing the public and private sectors can be described as weak at best. While numerous NPO support centers aimed at fostering volunteer and nonprofit activities have been established by local governments in regions throughout Japan in recent years, there is much more that needs to be done in order to encourage the successive development of NPOs that can maintain long-term personnel. Currently, there is little evidence of government efforts to establish a "third sector" in Japan. In order to promote substantial growth, there needs to be a fundamental change in the administration's mindset toward the nonprofit sector. NPOs should be treated not simply as a low-cost agency for administering public services but as a crucial third pillar of society, which would entail helping to strengthen the financial base of individual nonprofits. Without this change, it will be difficult for the nonprofit sector to experience growth under the existing support system. If we look at organizational support systems for NPOs in other countries, there are certain aspects that point to possible areas of improvement in Japan. For example, in the United States, not only private foundations but also federal grant-making agencies have program officers who are grant-making professionals and who constantly monitor trends and developments in the nonprofit sector in an effort to foster effective NPOs.

On the private level as well, grant-making activities in the United States are significantly different from those in Japan. In addition to making project-based grants, many U.S. foundations will provide continued capacity-building support (i.e., support for personnel and other operational costs) in certain cases where they feel it is merited by an organization's record of achievement. In Germany, there recently has been a significant increase in the establishment of foundations that are serving as important funding sources for nonprofits. This foundation boom is a result of the establishment of the Law on the Modernization of Foundation Legislation in 2002, which makes it easier for wealthy individuals to establish private foundations aimed at supporting nonprofit activities. In 2002 alone, 789 new foundations were established.

If we are to place solid expectations on NPOs to generate positive change in Japanese society where the need exists, it is crucial that attention is directed toward building an effective system for fostering the growth of the nonprofit sector.

Does the Work of Small NGOs Make Any Difference?—The Experience of the UK

Phillida Purvis, Links Japan

Over recent years the government in the UK (through the Department for International Aid) has appeared to emphasise and fund the work of larger NGOs and undervalued the work of smaller international NGOs. In 2001/2 �7 million was allocated to 130 organisations through the Civil Society Challenge Fund, the main instrument for supporting the work of smaller NGOs) compared to 54 million pounds through Programme Partnership Agreements with less than 20 large NGOs, such as Oxfam, ActionAid and Save the Children. The overall number of civil society organisations which DfID supports has dropped in this period from 229 to 130. They have argued that only the, mainly rights-based, work of the big NGOs has a serious impact on the alleviation of poverty, by measurably empowering local people. Now smaller NGOs have come together to call for changes in DfID's approach. They claim that their strengths are diversity of approach; empowerment of minorities, often overlooked by larger development partners; specialist knowledge on specific issues and areas around the world; innovativeness and responsiveness; identification and trust in relation to targeted areas of the UK public and focused and locally-oriented advocacy work. The criticisms by smaller NGOs of their government's policy include the following points: their views are not given the attention they deserve in the consultation process; they are not given access to relevant data; private contractors are used to vet their proposals; there is insufficient inclusive discussion on privatisation and development; DfID will not back small, stand-alone projects and its rights-based approach is too universally applied.

An example of the evidence of benefit to be gained from specific knowledge and commitment to particular communities by smaller NGOs can be seen in the work of the members of the UK One World Linking Association, (UKOWLA) which may have some resonance with Japan. These members include towns, schools, local authorities, faith groups, diaspora groups and other community-based organisations which have links with communities in Africa, Asia, Latin America and the Caribbean. To give an example, the Marlborough Brandt Group of the rural town of Marlborough in the west of England has had a link with the Muslim fishing village of Gunjur in the Gambia since 1981. The link runs various development projects in Gunjur and makes school resources with artefacts hired out to schools and also organises teacher training days with development education value. Every year there are exchanges between young people in both communities and about 700 people have now been involved in these. The key feature of this link is that the benefit has been entirely reciprocal—the Marlborough community has learned as much about the Gambia, and ways in which their own lives might be improved, such as in care of older people and disposal of waste, as the people of Gunjur have about life in England. This small group in Marlborough has more knowledge of this community in the Gambia than the government can possibly have. This and the first-hand contacts with people of the Gambia must be more compelling to children in the schools of Marlborough, as a tool of development education, than literature produced by government or even the big NGOs, however skilfully.

UKOWLA supports everyone involved in these sorts of people-to-people exchanges. It facilitates the expression by the Southern partners of their perspectives on linking and in doing so advocates clear principles in the relationship between the Northern and Southern partners. These principles include sharing of control and decision making, reciprocity and inclusion of as many people in the link as possible. UKOWLA collaborates with other agencies in both the North and South which have similar goals. It is also the lead agency for BUILD (Building Understanding through International Links for Development) a coalition of development organisations and NGOs from North and South, representatives from the private sector, politicians and others, which aims to bring North South community links into the mainstream for public education in the UK. BUILD is currently engaged in a programme of mapping links in the UK, setting up an all party parliamentary group on connecting communities and producing a Handbook of Good Practice in linking.

Another very good example of the special role which can be played by smaller NGOs can be seen in the work of diaspora groups. These are the communities in the UK which immigrated from Africa, the sub-Continent, the West Indies and many other areas of the world, most recently the Balkans and Afghanistan. When these immigrants have established themselves in Britain and are settled into employment they are best placed of all to expand the personal links with the areas of the world from which they came and become the channel for two-way people to people links, support and learning. Another type of smaller organisation who, in comparable ways, are in a special position are the faith-based groups in the UK. An example is the UK Jewish Aid and International Development (UKJAID). Their mission is to deliver a Jewish response to international cooperation and development issues. Their support is not necessarily, and in fact not often, given to Jewish communities around the world but they work with Jewish donors in the UK first to identify areas where support is particularly needed, for instance in cases of disasters or other emergencies, and appeal directly to the Jewish community in the UK for support.

Japan's NGO community, where organisations tend to be smaller in size than big international NGOs, might be interested to see if the British government will after all recognize the diversity and tailored approach of smaller NGOs and the value of their specific knowledge and commitment to the communities with which they identify both in the developing world and in the UK. If so, greater weight will be given to them in the future in the aid policy consultation process and greater financial commitment must follow.

Please send comments/inquiries to grassnet@jcie.or.jp.