The Japan Times さんに取り上げて頂きました
Wednesday, May 19, 2010
NPOs’ social roles still in stage of infancy
Firm financial footing, corporate collaboration, incentives key
By NATSUKO FUKUE
When he set up a nonprofit organization 35 years ago to sell organic vegetables, Kazuyoshi Fujita never expected his pursuit would grow into a big business.
Advocating environmentally friendly foods, his NPO, Daichi wo Mamoru Kai (the Association to Preserve the Earth), is now a company with annual sales of \16 billion and 200 employees.
Fujita’s business is one of the growing number of “social enterprises” -financially independent civic activities with social aims.
According to the Ministry of Economy, Trade and Industry, people engaged in social enterprises in Japan number about 8,000, with their businesses boasting annual turnover of \240 billion as of 2008. But the figure is a lot smaller compared with the annual turnover of ￡27 billion (about \3.6 trillion ) in Britain, where social enterprises are more active.
Japan hopes to expand the market to \2.2 trillion by 2012, according to Minoru Yonekura, deputy director general for regional economic and industrial policy at METI.
Prime Minister Yukio Hatoyama also openly supports the civic sector. In a campaign pledge for the 2009 general election, he said lending “indirect support to civic and NPO activities is exactly the role politics should play in the 21st century.”
But experts and social entrepreneurs say many Japanese NPOs have to improve their management and business skills to survive because they are supported by unpaid volunteers and are heavily dependent on government subsidies.
“Passion and conviction are not enough” to succeed as a social business, said Fujita of Daichi wo Mamoru Kai.
“Perhaps not all NPOs need to be business-oriented, but it’s good to be financially independent,” he said, adding that Daichi receives no subsidies.
He argues that it’s a minimum requirement for social entrepreneurs to make their work financially sustainable to maintain and motivate skilled employees.
“Many NPOs are not properly managing their finances and labor forces,” Fujita said, adding Daichi used to be among them.
During the first five years, he was not receiving enough salary to support his family, he said. “My annual salary in 1979 was \300,000.” Daichi turned the NPO into a company in 1977.
Thanks to growing interest in safe foods, health and the environment, however, sales of organic produce have increased steadily in the last 30 years, he said.
Another social enterprise with a successful business model is Tokyo-based Florence, which dispatches staff to homes to care for sick children.
Users are required to pay a monthly membership fee ranging from \5,000 to \20,000, depending on the service, which also covers the cost of the first service for the month. For subsequent visits, the charge is hourly.
Florence provides the service at a lower price to single-parent households. The project is supported by donations.
“I don’t particularly feel any difference between running an NPO and a profit-making company,” said Florence founder Hiroki Komazaki, who used to run an information technology firm. “We have an office and hire staff. We can’t starve them. We have to give them paid leaves and bonuses.”
To secure enough revenue for projects, Komazaki, who also serves as a civic adviser to the Cabinet Office on social enterprises, actively collaborates with the corporate sector.
In 2006, the NPO joined developers to help build an apartment complex in Chuo Ward, Tokyo, whose lower floors will be occupied by a pediatrics clinic, day care center and kindergarten.
“The developers know about housing complexes and we know about child care,” therefore the cooperation created a synergy effect, he said.
Florence also collaborates with the Japanese arm of U.S.-based consulting firm Bain & Co., which offers strategic consulting for businesses to cut costs.
Komazaki said consultants from Bain use 1 percent of their work to provide professional skills to organizations with social goals.
Under pro bono services, for example, lawyers can help NPOs draft bylaws or IT consultants can create systems, he explained.
Komazaki said it also benefits Bain & Co. because the young consultants are motivated by participating in socially rewarding activities.
But unfortunately, he said, the gulf between NPOs and the corporate sector is “as deep as the Mariana Trench.”
“Businesspeople think NPOs are amateur, and NPO members are allergic to the business sector,” he said. “But actually (NPOs) can be good business partners.”
Kaho Matsumaru of Room to Read Japan, which collects donations to establish schools and libraries in poor Asian and African countries, also says there should be more interaction and collaboration between the corporate and civic sectors.
Room to Read is a U.S. organization established by former Microsoft executive John Wood.
“In the U.S., an employee of Goldman Sachs works full time at Room to Read as a volunteer for a year,” but Japanese companies will not send their workers to an NPO, Matsumaru said.
Credit Suisse Japan offered free office space in Tokyo for Room to Read Japan, but Matsumaru said it would be a great help if the corporate sector provided skills and human resources to NPOs.
Similarly, the government also doesn’t see NPOs as partners, said Komazaki of Florence.
“But they can outsource some of their public services to NPOs” to cut back on government expenses, he said.
“Public service projects are all given to government-supported administrative corporations, so there is no competition and their productivity tends to be low,” he said.
But Komazaki noted that the Democratic Party of Japan-led government is showing interest in developing the civic sector. The government has organized round-table conferences among government officials, experts on social enterprises and citizens’ group representatives to promote NPO activities.
The government is also studying tax incentives for businesses to cooperate with NPOs, under which half the value of donations from businesses to NPOs would be deducted from corporate income tax.
This is a common practice in the U.S. and U.K., Komazaki said.
“This will be a good incentive for companies” to make donations to NPOs, he said.
Fujita of Daichi also said the situation for NPOs overseas is different because of the charity culture and tax incentives.
“NPOs in the U.S. and Europe attract professionals who have the skills to work for a big corporation or government,” Fujita said, adding that staff at NPOs can work there for a long time because of financial stability. “I hope Japanese NPOs will also grow . . . and change society.”