It is December 2003, and it is now five full years since the Nonprofit Activities Promotion Law or NPO Law was put into effect. This law drastically deregulated the extremely strict conditions for non-profit organizations or groups to acquire the status of legal entities. The rate of approval for these applications is 99.6%, meaning that virtually all the organizations that apply for incorporated status have been approved.

The effects of this deregulation were dramatic. The number of approved non-profit organizations had reached 12,780 by the end of August 2003, and the rate of increase is growing - in the past few months about 400-500 organizations per month obtained incorporated status.

The name NPO Law, an abbreviation of the Nonprofit Activities Promotion Law, has become widely used, and consequently the concept and the word “NPO” has spread rapidly in Japan. NPOs are “the organizations which purposes are to achieve their missions, but not to chase profits” However some among them conduct business enterprises or hire paid staff in order to promote own projects continuously and professionally. Consequently, in addition to voluntary activities, the NPO concept started attracting the attention of those who concern to get involved in social issues as professionals, as well as of those looking for new ways to create jobs and restructure businesses.

NPOs also attracted the attention as “new leaders of public projects” for and on behalf of governments, with a number of local governments launching their own departments and agencies to support NPOs. Furthermore, under the positive slogan of “collaboration with citizens” governments have increasingly started to entrust NPOs with projects that governments used to work out themselves. Since there are cases that are considered as rather easygoing subcontracts, we cannot evaluate these trends without some reservation. However, it is without a doubt that NPOs are increasingly showing their presence as members of society.

As you can see, it can certainly be said that the impact brought by the birth of the NPO law is indeed significant.

On the other hand, I think that the NPO law is creating some turmoil as a result of how it was put together. In other words, owing to ambiguity of the notion of “non-profit” a considerable number of organizations that are hardly distinguishable from profit-making enterprises have come into being as not-for-profit corporations. It is very difficult to check definitely the nature of “non-profit” i.e., “not for profit making” stance.

Furthermore, not a small number of organizations are trying to manage with operating revenue in addition to funds such as contributions and subsidiaries. In cases where fees for service are set at lower levels, the more they work the more deficits they have. As a result, such organizations cannot keep up their activities without favorable supports. On the contrary, in cases where organizations can create a system to secure business income and pay necessary expenditure, a stable operating management can be established. In fact, in the field of Nursing Care Insurance (*1) related business, the number of organizations who carry on activities with business incomes is increasing.

The problem is that it is almost impossible to run a fine line between such organizations and profit-making enterprises. As a matter of fact, there are more than a few organizations whose business is same as profit-making corporations, although they have “non-profit” status and declare “our purpose is for society and our clients, but not for profits”.

One of the causes creating such a situation is the change in the name of the law to the “Nonprofit Activities Promotion Law” from the originally planned “Citizen Activities Promotion Law”. In June 1997 one executive member of the House of Councilors in the ruling party demanded a change in the name, and the law would have been rejected unless his demand was met. As a result, the word “citizen” was deleted from 107 places it occurred except for one place in the purpose clause of the law: “The purpose of this law is to promote the sound development of specified nonprofit activities in the form of volunteer and other activities freely performed by citizens to benefit society”. After it was agreed to change the name of the law to “Nonprofit Activities Promotion Law” the law was finally realized in March 1998.

As mentioned, this law has helped the word of “NPO” become well known and its concept disseminate. But on the other side of the coin, organizations that would more appropriately be called “Non-Profit Business Corporation” also joined in our field, while the image of an NPO that develops activities with the extensive participants of citizens has been pushed into the background.

So how should we view this situation? It is no longer possible to set back the expansion of NPOs. So it is time for us to build up a system in which non-profit organizations, with a number of empathetic citizens involved as volunteers, donors, or members, play a leading role in the supreme purpose of activating civil movements and hold central positions in the field of NPOs.

Organizations with a high number of citizen members have been pushing for more citizen autonomy because the more citizens get involved in operations in such organizations, the higher operational transparency.

Especially in cases where projects are sponsored or contracted by governments, as with governmental performance, we should highly evaluate organizations based on their scale of citizen involvement or effort to energize social activities. These projects should be executed with the objective of promoting the solving of social issues rather than price advantage, and it would be much fairer to treat the organizations with a low rate of citizen involvement as business corporations.

The evaluation based on the ratio of citizen involvement is a much more democratic setup from each and everyone's point of view, than the evaluation based on the technical views of specific personas or institutions. On the occasion of the 5th anniversary of the NPO Law, let's reflect the original intention and significance.