Size of Assets and Grant Programs

Size of assets and grant programs

Size of Assets

“Assets” here refers to the “Net Assets” in financial statements.

Assets of public interest incorporated foundations under the old Civil Code Article 34 are maintained through the investment management of marketable securities, stock and bonds, etc. Their book value was recorded in their accounting reports until FY 2005, but in 2006 the accounting rule for PICs was revised to use market value or fair value in accounting records. Since this change was still in progress during FY2011, some foundations announced results based on the use of new accounting rule, while others used the old rule in their accounting.

In Group B, 703 of 771 foundations, or about 91%, have shifted to the new standards, while others followed the old standards. Therefore, calculation or comparison cannot be made on the same basis for such data as total assets and/or ranking of assets. The following analysis is based on the two different standards.

At the end of FY2011 (March 31, 2012, with a few exceptions) the total assets of 771 foundations in Group B is approx. \2.5657 trillion. Table 1 and Figure 3 show the distribution by the size of assets, with these 771 sorted into five ranks. Foundations with assets worth less than \1 billion were 352 of 771, or 46%. Only 57 foundations, or 7%, had assets worth \10 billion or more, and the combined value of their assets accounted for 53% of the total.

In FY 2005, when the old accounting standards were applied 100%, foundations whose assets were worth less than \1 billion constituted 49%, almost equivalent to the rate in FY2011. On the other hand, those with assets worth \10 billion or more were 3%, or 21 foundations that was less than half the percentage of FY2011; and their combined value stood 33%, which means a little more than half the percentage of FY2011. The new accounting standards can clearly demonstrate the division of two extremes between the majority of small- and medium-scale foundations and the limited number of large-scale foundations.

Table 2&3 show the comparison of top 20 foundations in the U.S. and Japan, where the differences in the total are as large as 14 times. For reference, their ranking in FY2010 is shown in the table.

Table 1 & Figure 3. Size of Assets and Total Assets of Foundations (Group B)


Table 2, Top 20 Foundation in Japan(Total Asset)     (Fiscal 2011)


* Excluded The Nippon Foundation (Total asset: \268,181 billion) and JKA (Total asset: \54,811 billion),

Table 3, Top 20 Foundations in the U,S,   (Total Asset)


* Converted at the rate of 1 dollar = 82,15 yen (as of March 31, 2012)

Size of Grant-making programs

Distribution of fund is the amount of money endowed by grant-making programs in the form of grants, scholarships, and awards, etc. Annual distribution funds in FY2011 by Group B foundations were \62.0 billion in total. Table 4 and figure 4 show the amount of funds distributed by the number of foundations by size of annual grant spending.

Those 771 foundations were sorted into 5 ranks, where 573 foundations, 74% or nearly three fourths, spent less than \50 million in grants. Only 16 foundations, or 2%, spent \500 million or more. The amount of their spending was \27.1 billion, which made up 44% of the total.  In about half of the  foundations’ yearly grant expenditure was less than \25 million.

Table 5 shows Japan’s top 20 foundations by annual grant distribution, and Table 6 shows the U.S. top 20 list. Compared their total amount of spending, the U.S.-Japan difference is as large as 29 times.

Table 4/Figure 4, Distribution of Foundations by the Size of Yearly Grant Expenditures in 5 Ranks


Table 5, Top 20 Foundation in Japan (Yearly Grant Distribution)  (Fiscal 2011)


* Excluded The Nippon Foundation (Total spending: \ 203.86 billion) and JKA (Total spending \ 51.17 billion)

Table 6, Top 20 Foundation in the U,S, (Yearly Grant Distribution)


* Converted at the rate of 1 dollar = 82,15 yen (as of March 31, 2012)

Nippon Foundation and JKA

The Nippon Foundation and JKA, both established under the PIC Laws, were not included in this analysis,  The Nippon Foundation started originally in 1962 as the Japan Shipbuilding Industry Foundation under the auspices of the Japanese Motorboat Racing Law, revision of which enabled the industry’s revenue to be used for public interest activities (Article 19), Although the foundation had a character of a public interest incorporated foundation under the old Civil Code Article 34, it was more like a special corporation defined under the Motorboat Racing Law, In this context, the Japan Shipbuilding Industry Foundation had been excluded from our study, However, in pursuant to the 2007 revision of the Motorboat Racing Law, its public interest promotion business utilizing the motorboat gambling revenue was passed to the designated entity of “shipbuilding promotion association” ordered by the Minister of Land, Infrastructure and Transport, Since then, the foundation’s name has not been stated in the law, According to the new system, the foundation cannot be classified as a special corporation,

Similarly, the JKA Foundation (Japan Keirin Association) started originally as the Nihon Jitensha Shinko-kai, literally Japan Bicycle Promotion Association (Special Corporation) and Nihon Kogata-Jidosha Shinko-kai, literally Japan Compact Car Promotion Association (Special Corporation), supervising keirin race and auto race, respectively, In the 2007 revision of the Bicycle Racing Act and the Auto Racing Act, two organizations were integrated into Nihon Keirin Zaidan, literally the Japan Keirin Foundation, then renamed to the JKA in 2008,

The Nippon Foundation has the asset of \268,2 billion and the annual grant distribution of \20,4 billion, The size is so huge that its asset accounted for nearly 10% of the overall total, while the amount of grant expenditure was 27%, Enormity is the size, including such figures in the study would cause inconsistency with the effectiveness of the previous data, The JKA also has the asset as large as \54,8 billion and the grant expenditure of \5,1 billion, far exceeding in the size from the previous surveys,

Considering the above facts, this study excluded these two foundations from statistical analysis,

Additionally, the JRA (Japan Racing Association) is another example that makes use of gambling revenues for philanthropic activities, JRA’s revenues greatly exceed those of motorboat racing, keirin and/or auto-racing, Similar to other public gambling industries, the JRA must render part of its revenues to social welfare programs, but first the revenues go into the national treasury in pursuant to the Japan Racing Association Law, The money is then allocated as the general account expenditure to private sector welfare services through the Health Ministry,
Thus the JRA is also excluded from the survey, On the other hand, the National Horse Racing Welfare Foundation was subject to the survey and analysis, because it was established by horse owners who voluntarily offered part of their prize money for the purpose of social contribution,

Changes over the Years

The changes over the years can be traced about 90 foundations, who have maintained grant-making programs with annual expenditure of \50 million or more and were accompanied by the data for the past 24 years straight, As mentioned before, however, two different types of accounting standards have been in use since FY 2006, Total assets, for example, were \815,5 billion in 2006, \703,8 billion in 2007, \659,9 billion in 2008, \719,8 billion in 2009, \705,1 billion in 2010, and \702,5 billion in 2011, The figures vary substantially due to the reflecting use of market-value accounting, where the figure of 2011 total assets is almost 1,7 times larger than that of 2005,

Accordingly, yearly comparison is impossible as to the book value accounting data,

It can be seen that combined assets of 105 foundations have generally continued to increase since 1988, but after 2000 they have been leveling off. Combined grant spending began to fall in 1994, but the inclination of the phenomenon has been gradual after 1998. It is obvious that the extraordinarily low interest rate on savings accounts that has been long prevailed in Japan seriously hampers many grant-making foundations that have been obtaining their main fund resources from interest on bank deposits. Some foundations report that they have had to suspend grant programs for a few years due to financial constraints.

Figure 5 shows the yearly changes of total assets and grant-making expenditures, added by the yield curve for 10-year government bonds,

Total assets presented a constant growth in general, but the trend turned flat in the first decade of 2000s, Total amount of grant distribution started to decrease in 1994 with some yearly ups and downs, but the decline slowed down in the ‘00s, As to the size of grant expenditures, foundations whose annual spending was lowered from \5 million or more to less than \5 million counted 13 in the previous survey (in 2011), while 33 foundations reduced their distribution of funds according to the 2012 survey, Some of the 1,321 foundations who responded to the 2012 survey have decided to suspend or terminate their grant-making programs, The decreasing trend has remained for the past few years, which reflects Japan’s prolonged ultra-low interest policy, Japan’s grant-making foundations are facing serious financial challenges,

Given that foundations meet the costs of operation by using the interests or incomes accruing from the utilization of their funds, their decline of the total dispensation of grants after 1997 was not so sharp compared with a drastic drop of the GB yield curve, Actually, foundations have made every effort to maintain the level of grants, by introducing resources from their donor company’s cash flow, or by using the portion of the managed assets, However small it may appear, the gap between the yield curve and the dispensation of grants is the testament of their effort,

Figure 5, Yearly Changes of 90 Foundations with the Data for 24 Years


Ratio of Grants in Overall Cost

In addition to grant programs, most foundations engage in study or/and research, the so-called private program, on their own account, Figure 6 shows the ratio of grants in the overall expenditure including research and study activities, The subjects of the analysis were Group B’s 725 foundations, who responded with valid replies about the expenditure of their programs,

The study reveals that 9% of 725 foundations directed 100% of their funds for grants; i,e, the majority dealt with other kinds of activities in addition to the grant program, But as a whole, building grants/endowments is the central focus of those foundations; 50% of them spent 70% or more of funds in their grant programs,

Figure 6, Ratio of Grants in the Overall Expenditure