1. Experiences from Japan
Charity Law and the enabling legislation
Yoshiharu Shiraishi (JACO)
Peer Learning Event, London
2th July 2012

2. 2
Main Issues
1. Recent changes of CSO legal system in Japan
2. The issues on CSO legal environment
3. Advocacy campaigns initiated by JACO
4. Major advocacy campaigns and its achievement
<Legislation>
5. Major advocacy campaigns and its achievement
<Taxation>
6. Other processes of JACO’s advocacy campaigns

3. 1. Recent changes in Japan
regarding CSO legal system

4. 4
Japanese CSOs Basic Institutional Structure
General Non-profit Public Interest Corp.
Non profit
Labour’s Unions 5,293
Corporation 22,141 (Civil Code Org. +22,783)
Since 2008 Since 1896
Small business Specified Non-profit Approved
cooperative Corporation 44,291 SNPC 232
Since 1998 Since 2002
Public Charitable
Trust
Since 1923
Consumers‘ Private School Corp. 7,884(since 1949)
Social Welfare Corp. 18,537(since1951)
cooperative 182,601(since1951)
Religious Corp. etc.
The Relief and Rehabilitation Corp. 163(since 1995)
Management Unions
of Condominium Medical Services Corporation
46,510
Since 1950
F
Mutual benefit Public Benefit
Source: Ministry of Finance (website), National Tax Agency (2009)

5. 5
PIC legislation reform
Registration process of PIC
1896-2007 2008-present
Public Interest Corporation Public Interest Corporation
(22,783) (5,206)
Permitted by Authorized by
Government Authorities PIC Commission
2001-2007
General Non-profit
Intermediate Corporation Corporation (22,141)
Registered at Registry Office
Registered at Registry Office

6. 6
SNPC legislation reform
Registration process of SNPC
1998-2002 2002-present
Approved Specified
Specified Non-profit
Non-profit Corporation
Corporation (260)
Certified by Prefectural Gov. Authorized by
1)
& Registered at Registry Office Prefectural Government
Specified Non-profit
Corporation (45,280)
1) Up until 2012 March, qualified by Certified by Prefectural Gov.
National Tax Agency & Registered at Registry Office

7. 7
Next stage
At present Next step?
Public Interest Corporation
Authorized by PIC Commission Charitable organizations
General Non-profit Corp.
Authorized by
Registered at Registry Office Charity Commission
Approved SNPC
Non-profit Organizations
Authorized by Prefectural Gov.
Certified by Prefectural Gov.
Specified Nonprofit Corp. or Registered at Registry Office
Certified by Prefectural Gov.
& Registered at Registry Office

8. 8
Regulation for PIC & Approved SNPC - 1
Public Interest Corporation Approved SNPC
Governing law Act on Authorization of Public Interest Act on Promotion of Specified Non-profit
Incorporated Associations and Public Activities
Interest Incorporated Foundations
Authority Public Interest Corporation Commission Prefectural Governor
Type Association & Foundation Association
Necessity of Indefinite duration Once every 5 years
extending status
Activities 22 indicated1) 20 indicated1)
Political & Prohibited Prohibited
Religious
activities
Profit making Permitted to some extent Permitted to some extent
activities
Residuary assets Cy-pres doctrine (It must be used for the Cy-pres doctrine (It must be used for the
distribution charitable activities) charitable activities)
1) Charitable activities and specified non-profit activities to be registered are shown on Page 8 and 10

9. 9
Regulation for PIC & Approved SNPC - 2
Public Interest Corporation Approved SNPC
The least (Association) 10 or more
number of 2 or more
members
Qualification of (Association) (Association)
members Unfair qualification constraint Unfair qualification constraint
Amount of (Foundation) Not applicable
endowment 3 million yen or more
Decision-making Association ： General Meeting General Meeting
body Foundation: Board of Councilors
Association ： Board of trustees Board of trustees
Executive body
Foundation: Board of trustees
Supervising Auditors (more than1) Auditors (more than1)
body
Disclosure Required Required

10. 10
Taxation for PIC & Approved SNPC - 1
Public Interest Corporation Approved SNPC
Corporation No tax on earning from business related No tax but impose a tax on 34 types of
income tax to charitable activities. profit earning business, related or not
related to charitable activities.
Withholding No tax Tax imposition
income tax of
interest etc.
Deemed 50% of gross income (51% or more, 50% of gross income or 2million yen,
Contributions depends on the condition) chose either larger one of the two.
would be
capped at…
Income/ Not levied deduction levied
dividends
revenue Tax
Donation of Deductible from inheritance property Deductible from inheritance property
bequest

11. 11
Taxation for PIC & Approved SNPC - 2
Public Interest Corporation Approved SNPC
Donation Tax Donors can choose either tax deduction, Donors can choose either tax deduction, ie
Benefit for ie “deduction from income”, or tax “deduction from income”, or tax credit, ie
donors (private credit, ie “ deduction from income tax”. “ deduction from income tax”. If donors
person) If donors choose tax deduction, they can choose tax deduction, they can deduct
deduct their taxable income up to 40% of their taxable income up to 40% of total
total income. If they choose tax credit, income. If they choose tax credit, they can
they can save their payable tax up to save their payable tax up to 25% of
25% of income tax and up to 10% of income tax and up to 10% of prefectural
prefectural and municipal tax. and municipal tax.
Donation Tax Be given preferential taxation treatment Be given preferential taxation treatment
Benefit for to some extent
donors
(Corporation)
The size of expenditure and employees salary
Expenditure (billion yen ） Employees Salary (billion
yen ）
Public interest Corp. 20,338 3,679
Specified nonprofit 738 112

12. 2. The issues on
CSO legal environment

13. 13
The issues on CSO legal environment - 1
The most questionable of legal system at present is as follows;
In general
1. CSO legal system is quite confused due to the existence of too
many different types of legal entities.
Related to PIC legal system
2. Application procedures for initial registration, annual reporting
form and etc. are too much complicated and burdensome.
3. Expenditure Ratio between program expenditure and general
administration costs on public interest activities is restricted.
4. Regulation on idle assets is not flexible.

14. 14
The issues on CSO legal environment - 2
Related to GNC legal system
5. The operation of GNC covers non-profit activities, mutual
benefit activities and other activities.
6. There is no limitation to the purposes of activities or their
specifics, except non-profit principle.
7. GNC law has been too much affected by technical aspects of
the new Companies Law.
Related to legal system of SNPC approved & SNPC not approved
8. Authorization requirement of Approved SNPC is restricted due
to the taxation breaks applicable to them.
9. Taxation system of Approved SNPC is very similar to the one for
PIC, but legal basis of governance is not necessarily strong.
10.The number of SNPC counts more than 45,000 but most of
them are grass root-type organizations.

15. 3. Advocacy campaigns
initiated by JACO

16. 16
Advocacy related bodies in JACO
Legislative Committee CSO legal system study panels
Taxation Committee Department of Research
Research projects
Compliance Committee
Symposia / seminars
Accountancy Committee Questionnaire/public comments
Working group Executive office
JACO
General public PIC Commission
Media Government agencies

17. 17
Advocacy on PIC legal system
National Government Public Interest Corporation Commission
CSO legal system study panels
Executive board members
7 members
Executive Office
Executive office
Advocacy team
Legislative Committee Department of Research
15 members
Research projects
Executive office Symposia / seminars
Questionnaire/public comments
JACO

18. 18
Advocacy on PIC taxation system
National Government Public Interest Corporation Commission
Taxation Committee
Executive board members
15 members
Executive Office
Executive office
Advocacy team
Research project JACO

19. 4. Major advocacy campaigns
initiated by JACO
<Legislation>

20. 20
Advocacy on regulatory body (2004)
JACO’s advocacy on regulatory body initiated in
2004 towards PIC legal reform.
1. Regulator: independent body
2. Key functions: clearly identified public benefit,
monitoring and compliance, supporting charities.
3. Board members: academics and specialists from
the private sector
4.Executive office: recruit lawyer, accountant,
practitioner, etc. in executive office
5. Council organization: setting up council
organizations in each prefecture

21. 21
Advocacy on regulatory body (2004)
6. element for judgment: purpose, activity,
governance, but not performance results.
7. charitable activities: suggested lists of charitable
activities.
8. etc…
October 5, 2010
In fact, Japanese version of
Charity Commission has been
established in 2008
JACO held mass media round-table conference

22. 22
Mr. Ohta’s testimony at the Diet (2006)
On April 17, 2006, Mr. Ohta (President & CEO of
JACO) testified his opinion on the coming charity
law reform at the special legislation committee of
the House of Commons (which was deliberating
about the draft of new charity laws) on behalf of
the charitable sector of Japan. April 17, 2006
In fact, his opinion was
supported by the majority
of the committee members
and was reflected into the
new charity law. Mr. Ohta testified at the diet of Japan

23. 23
Advocacy on PICC’s role & function (2010)
1. Improve procedures more speedy and flexible.
2. Disclosing regulatory cases.
3. Reforming authorization law related to financial
criteria, authorization process and guideline.
4. etc…
September 27, 2011
In fact, the Commission started
to improve the process of
authorization. Also the PICC
started to provide consultation Democratic Party conducted hearings
with Mr. Ohta and other experts.
service for applicants with JACO.

24. 24
Changes in organization number

25. 5. Major advocacy campaigns
initiated by JACO
<Taxation>

26. 26
Advocacy on taxation system (2010-2011)
1. Review of tax deduction for capital gains on the
assets donated to PICs.
2. Review of tax deduction for inheritance property
donated to PICs.
3. Review of tax deduction for donors who
provided PICs flow founds.
4. Tax deduction by introducing Planned Giving
Trust.
5. Special tax relief related to charitable
contributions for the Great East Japan
Earthquake & Tsunami

27. 27
Advocacy on taxation system (2010-2011)
6. Introduction of new selective donation tax
benefit (deduction from income or deduction
from income tax) for individual donors.
7. Requested for repealing the public support test.
8. etc…
In fact, items no. 4, 5 and 6 were materialized in
the new taxation framework in 2011.

28. 6. Other processes of
JACO’s advocacy campaigns

29. 29
Relationship with policy makers
National Government
(Reflecting CSO legislation and taxation framework)
General Meeting New Public Commons Roundtable
19 members including Mr. Ohta 11 members including Mr. Ohta
(Making high level consensus) (Making high level consensus)
The expert panel on public service
Steering Committee
agreements between government and CSO
6 members
10 members
(Support meetings and
working groups) Working group on disclosure and
facility to offer information
14 members
Working groups Working group on earthquake support
system
Multi-stakeholder Forum on Social 6 members
Responsibility for a Sustainable Future New Public Commons Roundtable

30. 30
Other relationship with policy makers
National Government
(Reflecting CSO legislation and taxation framework)
Congressional
representative
JACO Advocacy Team

31. Thank you!