Research Project for Japanese Dormant Account Fund
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  • 1. Research Project forJapanese Dormant Account Fund
    2011 NPO ETIC. SAL All Rights Reserved.
    1
    • Table of Contents:
    Executive Summery
    Brief Overview on Dormant Account
    Case Studies from the UK, Korea and Ireland
    Japanese Dormant Account Fund Scheme
    Dormant Account Fund: Possible Uses
    Using Dormant Deposits for Tohoku Relief
    About Florence and Social Agenda Lab
  • 2. 1. Executive Summery
    NPO ETIC. SAL All Rights Reserved.
    2
    Summery
    • This project was officially launched on January 7th, and Mr.Komazaki and four skilled pro-bono workers have conducted a research on dormant account in general, as well as on the precedent cases in the world and on its surrounding environment in Japan.
    • 3. The output of this research was presented in documents by Mr. Komazaki at New Public Commons Roundtable.
    • 4. Furthermore, after the earthquake, this project has led to suggesting the use of dormant account fund for the earthquake relief efforts as well.
    Project Overview
    • Duration: 4 months from January 7th, 2011
    The definition of dormant account and its volume
    Possible scheme and opinions of stakeholders
    Research
    Questions
    Research on case studies abroad (Especially the scheme in Korea)
    Based on the scheme, put together a draft of a feasible scheme
    Share the draft with stakeholders and receive feedbacks
    Process
  • 5. 2. Brief Overview on Dormant Account
    NPO ETIC. SAL All Rights Reserved.
    3
    • A dormant account is a low-balance savings account which has shown no activity (deposits and/or withdrawals) over a long period, other than posting of the interests and/or service charges.
    • 6. The definition of a dormant account (the length of time during which the account showed no activity, etc.) depends on each country and its law. There are many cases in which the definition is different amongst the banks as well.
    • 7. Statute of limitations usually does not apply to dormant accounts, and the deposits can be claimed by their owners or beneficiaries at any time.
    • 8. In Japan, after ten years of showing no activity, the dormant deposits are counted as the banks’ profit.
    • 9. There are movements mainly in the developed countries to use the deposits as a fund for providing social and public services, and the establishment of a scheme of dormant account fund and the protection of the depositors’ rights by law is in progress.
    • The key findings after researching on the precedent cases in the UK, Korea and Ireland
    NPO ETIC. SAL All Rights Reserved.
    4
    3. Case Studies from the UK, Korea and Ireland
    The background: there were protests against the banks that were counting the savings in dormant accounts as their profits, which led to movements for using it to provide social services.
    Due to the public opinion, England and Korea developed an IT system that enabled the individuals to search for the dormant accounts online, making it easier to manage them. This system hasn’t been developed in Japan yet.
    There was a case in the UK that has established a dormant account fund even though such IT system did not exist in the first place
    Therefore, it became clear that establishing a dormant account fund in Japan is possible, as the condition in Japan is rather similar to the cases in the world before the creation of such funds
  • 10. 4. JapaneseDormant Account Fund Scheme
    • Build a reference system that works across financial institutions so that the rights of credit holders are protected and it becomes easier to search for dormant accounts
    • 11. Build a management foundation regulated/supervised by Financial Services Agency with the citizens as the main actor
    • 12. Provide special tax benefits to the financial institutions, and raise funds in donation for the managing foundation
    Financial Services
    Agency
    Alliance
    【 Merits for the Financial Institutions】
    Tax Benefits,
    Lower management fees for dormant deposits
    Regulate/Supervise
    Regulate/ Supervise
    NPO Bank
    Citizens
    Dormant Deposits Management Foundation
    Opening an
    account
    Child Consultation
    Center
    Financial
    Institutions
    Donation from Formant Account Fund
    DV Prevention
    Center
    Return of Dormant Account
    Intermediate
    SupportCenter
    Data Synchronization of Dormant Accounts
    Dormant Deposits Index Reference System
    University
    Reference to Dormant Accounts
    Management of
    Dormant Accounts
    Legend
    Financial Institution
    Money Flow
    Governmental Institution
    Regulation
    Supervision
    Related to Dormant Account
    5
    NPO ETIC. SAL All Rights Reserved.
  • 13. 4. JapaneseDormant Account Fund Scheme
    • Japanese version of dormant account fund will be implemented on a basis of making financial loans
    • 14. In order to provide the funds effectively for social sector, it would be productive to make alliances with NPO banks, institutions that provide intermediary supports, Universities, child consultation centers, etc.
    • 15. It would be optimum to implement the fund for both services that require immediate action as well as for services that require careful and nurturing care
    Alliance partners
    Uses
    Dormant Account Fund
    Final beneficiaries
    Purposes
      Single-parent
    Entrance fee for children
    NPO Bank
    Medical services for people
    without insurance
    Foreigner
    Interest-free
    Loans
    Services that
    require
    immediacy
    Consolidating debts
    Heavy
    debtor
    Moving cost(e.g. protection
    from domestic violence)
    DV Prevention
    Center
    Interest-free
    Loans
      Single-parent
    Japanese Dormant
    Account Fund
    Intermediate
    Support Center
    Interest-free
    Loans
    Social
    entrepreneur
    Supporting social
    entrepreneurship
    University
    student
    Services that
    require
    nurturing care
    Expenses for studying
    abroad
    University
    Interest-free
    Loans
    Grad
    student
    Designing and operating a
    research program
    NPO ETIC. SAL All Rights Reserved.
  • 16. 5. Dormant Account Fund: Possible Uses
    Example: Using the fund for children from care homes to receive University education  
    • The total number of children in care homes is about 30,000 and their university entrance rate is only 10.8%, which is very low compared to the national average of 53.9%
    • 17. The living expenses of an average University student excluding tuitions in 4 years is about 6 to 7 million yen
    • 18. By lending 30 billion yen from dormant account fund, all the children could receive University education if they wish
    Current state of children’s care home
    Expenses required for entering an University
    Expenses required
    ・Tuition: At least 2.5 million yen(public University)
    ・Living expenses: 6-7 million yen/4 years
    ・Other expenses:fees to take entrance exams, etc.
    ・Assumption: the tuition is supplemented by receiving scholarships
    Data
    ・Number of Children: 29,753 (2009)
    ・Average years living in a care home: 4.6 years
    ・Percentage of children entering Universities: 10.8% (National Average:53.9%)
    ・Main reason of the low entrance rate: financial
    ・Every year, about 6,500 children leave care homes upon graduation from high schools
    Loans of 6 million yen/ person are needed
    Assumption: 3500 children from care homes wish to
    enter Universities at national average rate of 53.9%
    Assumption: the tuition is supplemented
    by receiving scholarships
    30 Billion Yen




    people
    is enough to fund all the children from
    care homes who wish to study at Universities
    Required funding is
    About 21 billion yen
    *If living expenses of 6 million yen/4 years has to be earned by doing part-time jobs, the children will have to work for more than 150 hours per month at 800 yen per hour 
    References:
    http://www.e-stat.go.jp/SG1/estat/List.do?lid=000001068770
    http://www.mhlw.go.jp/stf/shingi/2r98520000011cpd-att/2r98520000011dad.pdf
    http://www.crc-japan.net/contents/notice/pdf/h20_0722.pdf
    NPO ETIC. SAL All Rights Reserved.
  • 19. 5. Dormant Account Fund: Possible Uses
    • Dormant Account Fund can be established in Japan under three conditions:
    ①the depositors can easily find their dormant accounts through a online reference system
    ②the banks receive tax benefits
    ③transparent external foundation manages the fund
    • The operation risk can be held down by mainly investing the fund to institutions such as NPO, banks and Universities, and using it only for relatively small loans.
    • 20. The total amount of dormant deposits that are counted as profits by all the financial institutions is estimated to be about 100 billion/year. If 40% of it is set aside for reclaims by the depositors, 60% of it is surplus. The fund can create a large social impact even if we could only make a use of half of that 60%, which is 30 billion.
    • 21. Services that require immediate action or nurturing care can only be provided and should be provided on a private foundation scheme.
    • 22. The operation of the foundation has to be kept transparent under the supervision of Financial Services Agency.
    NPO ETIC. SAL All Rights Reserved.
  • 23. 6. Using Dormant Deposits for Tohoku Relief
    • After the Great Hanshin Earthquake, the recovery cost was 30 billion yen, the directly incurred cost was 10 trillion yen and the reconstruction projects’ cost was over 16 trillion yen.
    • 24. In case of the Tohoku Earthquake, the recovery cost is assumed to be about 100 billion yen and directly incurred cost to be about 25 trillion yen. However, directly incurred cost does not include the effects from planned power outage and individual compensations. Given this fact, the reconstruction cost is estimated to be much greater than it was in the case of the Great Hanshin Earthquake.
    Recovery Cost:
    30 Billion Yen
    Directly Incurred Cost:
    10 Trillion Yen
    Reconstruction Projects’ Cost:
    About 16 Trillion Yen
    The Great Hanshin Earthquake(1995)
    Tripled
    Doubled
    Directly Incurred Cost Max. 25 Trillion Yen
    Reconstruction Cost
    Assumed to be Enormous
    Recovery Cost
    About 100 Billion Yen
    The Tohoku
    Earthquake(2011)
    NPO ETIC. SAL All Rights Reserved.
  • 25. 6. Using Dormant Deposits for Tohoku Relief
    • When the government or municipal bodies provide the fund for reconstruction, there are three main challenges
    1. Financial
    • It places an enormous financial burden on local governments
    • 26. The use of the fund is often constrained during the reconstruction period
    2. Speed
    • It takes time to reach a decision on the spending method
    • 27. The fund lacks the speed in terms of utilizing it according to the needs from the affected area that are constantly and rapidly changing
    3. Flexibility
    • It is difficult to respond to the needs of individual compensations
    • 28. There are groups of people who cannot receive the support within the framework of the existing system, including those who have lost the loved ones, those with disabilities and those who have evacuated to other prefectures
    For the recovery and reconstruction efforts, we need a fund that does not specify its use and could be used for providing varied and fine supports in a timely manner.
    NPO ETIC. SAL All Rights Reserved.
  • 29. 6. Using Dormant Deposits for Tohoku Relief
    Using the fund for providing loans for life and wellness of the Tohoku earthquake victims
    • The average amount of special loans provided by the government is 150,000 yen
    • 30. There were about 200,000 houses that were fully-destroyed after the Great Hanshin Earthquake
    • 31. If 30 billion yen from dormant account fund is to be used to provide loans, it will be possible to support all the families whose houses were fully-destroyed
    Average amount of loans
    The scale of damages after
    the Great Hanshin Earthquake
    Data
    ・The scale of the damages from the Great Hanshin Earthquake
     Fully-destroyed houses:200,000 houses
     Half-destroyed houses:260,000 houses
    Expenses required
    ・The average amount of special loans given to the disaster victims:
    100,000 to 200,000 yen
    ・The amount of financial compensations after the Great Hanshin Earthquake
    The average: 150,000 yen
    In total: 55,000 cases, 80 billion yen
     *People could apply for the compensations 10 days after the disaster for 2 weeks
    Assumption: all 200,000 families whose
    houses were fully destroyed and
    require immediate loans
    Loans of 150,000 yen/ family are required
    30 Billion Yen
    families






    Required amount of loans
    About 30 billion yen
    is enough to make immediate loans to
    all the families in needs
    Reference:
    http://www.bousai.go.jp/1info/kyoukun/hanshin_awaji/download/index.html
    NPO ETIC. SAL All Rights Reserved.
  • 32. 7. AboutFlorence and Social Agenda Lab
    • Mr. Komazaki was born in 1979 and entered Keio University in 1999. While he was enrolled in the University, he managed various technologies as business.
    Yoshiaki Ishikawa /
    NPO ETIC. SAL
    Hiroki Komazaki /
    NPO Florence, CEO
    • In SAL (Social Agenda Lab), teams that consist of skilled pro-bono workers provide research services to social entrepreneurs, in order for them to effectively and fundamentally solve problems in the society. SAL focuses on research because when tackling social problems, it is crucial to identify their structures, to draw possible solutions and to secure resources by assessing and reporting the value of the social services accurately.
    • 33. After graduation, he encountered a problem in Japanese society in which it was still very difficult to have a job while raising children. He then decided to establish an NPO called Florence which provides community-based care services for children.
    • 34. As a social entrepreneur himself, he felt the need of a system that can bring money to private organizations providing social services. Thus, when he learned that there was a movement in Korea which aimed at mobilizing the money from dormant accounts, he started looking for a possibility of doing the same in Japan.
    NPO ETIC. SAL All Rights Reserved.