Foundations by the Year of Establishment

As of the end of 2011, there were 2,871 general incorporated foundations and 9,610 general incorporated associations, which organizations were given legal status under the new PIC laws. (source: “The number of registrations of general incorporated foundations by type of activities (2008-2011)”, “The number of registrations of general incorporated associations by type of activities (2008-2011)” , Legal Affairs Bureau).

These organizations were also the subject of analysis. Group A included 503 public interest incorporated foundations, 28 public interest incorporated associations, 69 general incorporated foundations, and 6 general incorporated associations (as of March 31, 2012). In the 69 general incorporated foundations, 47 entities transformed from PICs under the old Civil Code Article 34. In 22 general incorporated foundations that were established after the enforcement of the new PIC laws, 12 entities transformed to public interest incorporated foundations as of March 31, 2012.

The statistical data was gathered on the year of establishment. Transitional foundations were counted according to the year of previously recognized foundations, whereas transfer registration juridically involves liquidation of the foundation under the old Civil Code Article 34 and the establishment of a new foundation.

[Group A] Grant-making foundations are shown in Figure 2 by the year of establishment (bar graph), with the cumulative numbers (line graph). As shown in the graph, many grant-making foundations were established in the late 1980s. More than half of the total foundations were founded in the 1980s and later.

The annual total number of new establishments, however, began to decline in 1991 with a sharp drop from 1993. The declining trend states that both companies and individuals have lost financial strengths indispensable to set up a new foundation because of the collapse of Japan’s bubble economy and the prolonged economic stagnation thereafter. Another hindrance has been the government’s super-low interest rate policy, under which sufficient revenue cannot be expected for the sustainable programs even if a new foundation is established. Additionally, it was likely that competent government agencies withheld their authorization process toward the systematic reform of the legal framework of PICs undertaken in December 2008.

The new PIC laws made incorporated foundations easy access to obtain authorization; for example, the requirement for substantial assets was reduced to \3 million. At present, a rapid growth in number cannot be expected due to the prolonged low interest rate environment. Taking advantage of extended tax breaks for PICs (especially, tax incentives for contributors), new types of grant-making foundations are emerging, which do not carry their fund money but manage to support programs based on donations that cover their funding and operating expenses. In 2011 a network committee* was established. This new form of community-based grant-making foundations are thought to increase in the future.

Though the number is limited, individual- or family-sponsored grant-making foundations are also notable.

* Shimin Fund Suishin Renrakukai (literally, Civil Fund Promotion Liaison Committee) was launched on June 15, 2011 initiated by 10 civil fund entities.

Figure 1. Trends in Foundation Establishment