Tax issues for social entrepreneurs in Japan

I found this article today, posted in the Japan Times Blog "Yen for Living". While it probably wont shed any new light on the subject for any Japanese social entrepreneurs reading this (although the news about Hatoyama's "new public" scheme is encouraging), at least it gives us a basic point of reference to better understand the mindset of Japanese donors/potential sponsors when we're out there looking to raise funds. Remember...working for social change in a "no-donation culture" is limiting, but not impossible! If we work together, social capital is an invaluable resource. And if we can manage to grow it with limited funds, all the more power to us...

From "Yen for Living" (March 08, 2010):

"Japanese people donate about ¥260 billion a year to charities, while Americans donate about ¥20.4 trillion, or 8 times as much. Accordingly, Japan has been called, usually by the Japanese themselves, a “no-donation culture,” which makes it sound as if the very idea of contributing to charities were something they can’t get their heads around. This is a myth, or, at least, a convenient means of explaining the lack of structural encouragement for donations. Almost every day on the news you see people collecting money for immediate, specific needs, like earthquake relief or overseas surgery for some poor sick kid, and people always give, but in those situations we’re talking small change. On a larger level people don’t give because they are not encouraged to do so.

Last month, Prime Minister Hatoyama held a news conference where he announced that he would make it easier for citizens to donate money to worthy NPOs. There are some 39,000 NPOs in Japan, but only 116 of them are recognized by the National Tax Agency. The procedure for receiving tax deductible status from the NTA is apparently quite byzantine. Hatoyama said that he has asked the concerned ministries to come up with a plan by the end of April to broaden rules that will make it possible for people to donate to NPOs. This is all part of his “new public” scheme, which is designed to expand the meaning of “public service” to include citizens who work for the betterment of society.

What’s still frustrating about this plan is that the news reports never clearly state that people will be able to deduct donations from their income tax, only that the “tax privilege system” will be broadened. The implication is that there is still something a little untoward about talking about charitable tax deductions since it suggests that people don’t contribute out of sheer selflessness."

http://blog.japantimes.co.jp/yen-for-living/tax-deductions-and-the-myth-...