I first learned about the system governing American Nonprofit Organizations (NPOs) in 1990.  I would later go on to study this system in depth.  However, at the time, I was living in Japan, and major changes were occurring within Japanese civil society.  New types of volunteer activities were emerging [i];  Japanese volunteers were identifying social problems closely related to their daily lives and attempting to resolve these problems on their own.  For example, young mothers who were not happy about governmental nursery programs provided for their children established their own nursery programs on a nonprofit basis.  Housewives, after noticing that spring water in their town was contaminated by filthy water discharged from households and factories, initiated a movement to propose an alternative lifestyle that would coexist with nature.  Nevertheless, these voluntary organizations were excluded from the existing Japanese NPO system, which limited their activities as well as their legitimacy.

The Japanese NPO system categorized nonprofit organizations into six groups: social welfare corporations (shakai fukushi hōjin), private schools (shiritsu gakko), religious organizations (shukyo hōjin), medical corporations that operate hospitals and clinics (iryo hōjin), foundations (zaidan hōjin) and other nonprofit corporations (shadan hōjin).  These NPOs were regulated by different laws depending on their areas of activity.  Foundations and shadan hōjins are exceptional in that they are both regulated by civil law. 

 

One of the problems with the system was that applicants who wanted to obtain NPO status were required to go through relentless government scrutiny.  Applicants were also required to have a large endowment.  For example, in order to obtain the legal status of a social welfare corporation, an endowment of three hundred million yen (around three million US dollars in the mid-1990s) was required, an amount that small- to medium-sized volunteer organizations could never afford.

 

As a researcher, I observed the rise of volunteer activities in Japan and the challenges volunteers faced.  Then I heard from one of the volunteer leaders that in the American NPO system, volunteer organizations could easily obtain the legal status of an NPO with much less government intervention and with no endowment requirement. Seeking further knowledge about the system, I decided to come to the U.S. to study it firsthand.  I wanted to know what  types of social institutions would encourage a wide range of citizens to participate in discussions of and activities  for the public interest.  My original plan was to stay in the U.S. for only one year.  However, I soon became deeply involved in the activities of NPOs, and I extended my stay to seven and a half years[ii]. 

 

During my time in the U.S. in the 1990s, American NPOs were increasing their commercial activities, especially in the area of human services.  NPOs were aggressively introducing fee-for-service systems, improving operation systems to increase efficiency, and introducing advertisement systems to attract more “customers.”  Their activities were focused and creative.

 

By chance, however, I experienced a completely different side of American NPOs.  The NPO I was working with was providing social services in a typical inner-city neighborhood: economically distressed and plagued by serious crime.  We had no way to "sell" services, and very few residents could afford them anyway.  Thus we were dependent on government funds, which were decreasing every year.  Low wages and a dangerous working environment made it difficult to attract a well-trained staff, which added another challenge to our activities.  It seemed that NPOs in the U.S. were becoming increasingly stratified, reflecting the difference in social and economic status of their target citizens. 

 

NPOs’ commercialization and stratification was causing skepticism in American society concerining how ”nonprofit” or "public" they really were.  C.D. Merrett, a specialist on nonprofit studies, responded to this dynamic by raising the following questions: “Why is the nonprofit sector being touted as a replacement for the welfare state?” and “Is there sufficient social capital―the willingness of people to donate their time and money in a community for nonprofit organizations to expand social services with less state funding?”[iii]

 

I went to the U.S. hoping to find a new model for Japanese NPOs.  Instead, what I found was that American NPOs themselves were at a major crossroads.  They were faced with profound questions such as what kind of responsibility citizens bear for the public interest, where the boundary between for-profit and nonprofit activities is, and how society should support nonprofit activities.

 

After coming back to Japan, I realized that both existing and new Japanese NPOs were facing the same challenges, although the dynamics and responses were different.  

 

Looking back, I believe that the rise of new volunteer activities in Japan as described at the beginning of this article was an outcry for participation by those who were excluded from the public sphere in Japan.  The difference was that while in the U.S. some NPOs seemed reluctant to commit to the cause of the public interest, Japanese volunteers forcefully asserted their right to contribute to the public interest.  The volunteer movement in Japan led to the introduction of the Specified Nonprofit Organizations Law in 1998.  This law enabled small- and medium-sized voluntary organizations to obtain the legal status of an NPO Corporation without requiring a large endowment or complicated procedures .  The movement to introduce the Specified NPO Corporation system stemmed from criticism of the increasingly bureaucratic nature of existing NPOs, as well as the exclusive networks they maintained to protect their spheres of influence.  Naturally, Specified NPO Corporations are supported by people who are distinct in their lifestyles, beliefs, and political viewpoints, which adds diversity to Japanese NPO activities.  At the same time, this dynamic created a rift between Specified NPO Corporations and other existing NPOs; this rift occurred within the already fragmented NPO system in Japan.

 

As in the U.S., the boundary between for-profit and nonprofit activities is now being blurred in Japan.  In 2000, in the area of long-term care for the elderly, the Long-Term Care Insurance (LTCI) system was introduced.  Before its introduction, public social services had been provided only by government or NPOs.  LTCI, on the other hand, allowed both NPOs and for-profit organizations to participate as service providers while government withdrew from the task of service provision.  Existing NPOs and Specified NPO Corporations operating in the system are required to provide services in a cost-effective manner.  They are also faced with the challenge of surviving the competition with for-profit service providers.

 

In this regard, I am currently conducting interviews to compare the behavior of for-profit and nonprofit service providers in this new environment.  What is intriguing is that many for-profit providers are small in size and are initiated by health care professionals such as nurses, licensed care workers, physical therapists, and so forth. They operate the organizations not to pursue profits, but to provide services in the way they believe best for the benefit of their clients.  Most of them only chose to incorporate as for-profit organizations because it was easier than obtaining nonprofit status. 

 

In the U.S., the boundary between for-profit service providers and NPOs is blurred a result of the commercialization of NPOs.  On the other hand, in Japan, the boundary is blurred not only due to the pressure for NPOs to operate cost-effectively, but also due to for-profit organizations acting as if they were NPOs. 

 

More drastic changes are foreseen regarding responsibility and boundary issues.  The Japanese government is planning to change the entire NPO system.  The first draft of the new NPO system was released at the beginning of March 2006.  According to the draft, only foundations and shadan hōjins are going to be categorized as Public-NPOs and provided with the privilege of tax exemption.  Other NPOs are categorized as quasi-NPOs, that is NPOs representing less of the public interest.  Quasi-NPOs will be taxed while governmental subsidies, which have been provided to them for many years, will be decreased or completely withdrawn.  By changing the system, it appears that the Japanese government is attempting to decrease its responsibility for supporting NPO activities.  Under the new system, the boundary between quasi-NPOs and for-profit organizations will be further blurred, while private organizations, including for-profit organizations, Public-NPOs, and quasi-NPOs, are expected to undertake the primary role of serving the public interest.   

 

Social institutions of each country are unique in that they originate in, and are limited by, the historical and cultural context of the country.  Given this, it is amazing that NPOs in the U.S. and Japan still find themselves facing many of the same challenges.  Such similarities imply that there are common obstacles that all countries must face during the process of establishing a civil society.  By looking beyond the superficial differences and recognizing such commonalities,  we become more aware of the advantages and disadvantages of our own country's system.  Hence we must come up with original ideas to deal with the issues in our own country, rather than looking for outside models , as I  initially attempted to do.  Thus far, that is the most important thing I have learned  through my experiences living and working in the U.S. and Japan.

 

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