Friday, July 8, 2011

Japan Easing Towards Nonprofit Groups

Note: This is a summary of an article from an outside news organization.  To read the full article, click on the links in this post.

It's no secret that Japan has a negative view of nonprofit organizations.  During natural disasters, such as the recent tsunami or the 1995 Kobe earthquake, the government advised relief organizations to keep away.  Those that came anyway found that it was almost impossible to get anything done.  This is because the country lacks a long history of private philanthropy.  Support for those in need is supposed to come from the family, and nonprofits are viewed as interfering.  And with restrictive laws in place, life for nonprofits in Japan is very difficult.  All this is about to change, however, according to a story in The Economist.  Well, at least for the most part.

On June 22, a law was passed in Japan that will allow nonprofits to get tax relief much easier.  Currently, only 223 of the 90,000 NPOs in Japan have a special tax status.  To put this in even greater perspective, that number is at 160,000 in the UK and 1.8 million in the US.  The new law will drastically change the way the current cumbersome process is handled.  Now, municipal authorities will handle the certification process instead of the national tax agency handling certification.  This is a big deal, as the latter views most NPOs as a detriment to the country's finances.  Other changes include:

  • The so-called "public support test" will be scrapped, removing a huge burden for nonprofits eligibility.
  • Contributions will be nearly 50% tax-deductible.  This is an increase from the current 10% level
When the law comes fully into effect, it will be a huge boon for any future disaster relief efforts.  The way nonprofits are viewed by Japanese officials may never change, but this law will at least make it easier for them to operate in times of need. 

If you want to read the full story, head on over to The Economist.

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