The regulation of fundraising has been a long-standing and evolving issue for Korean nonprofit organizations (NPOs). From 1949 to 1995, the government prohibited most fundraising campaigns to protect citizens’ property rights – permitting them only for special causes, such as national defense or a domestic or international disaster. Although these restrictions were relaxed in 1995, the government still required transparency reports on solicitations and lowered allowable administrative expenses from 5% of the amounts raised to 2%.

From 2006 to the present, additional modifications have been in force:

• On an annual basis, qualified NPOs must register with the government in order to fundraise.
• They must stop their campaigns once their objectives have been accomplished.
• They must submit solicitation completion reports within 30 days of the campaign ending

Over this period, fortunately, the government increased the cap on administrative expenses from 2% to 15% as a new measure to encourage a culture of giving in Korea. Despite these sequential relaxations, issues remain. There is no central administrative organization for nonprofit organizations in Korea, such as the Canada Revenue Agency, the Internal Revenue Service in the US, or the Australian Charities and Not-for-profits Commission. As it stands, Korean NPOs must submit different reports to different governmental organizations – the National Tax Service, local governments, and the government organizations for which each NPO registered.

Moreover, the government has recently proposed revising the Registration of Solicitation Act to strengthen its monitoring and supervision quality of solicitations and donors’ rights – triggering a debate on the government’s role and effectiveness in such matters. The National Tax Service estimates that about US$13 billion was raised in Korea in 2018. Of this amount, only 4.3% has been monitored by the government under the Act. Such limited coverage makes it ridiculous to strengthen the existing system in the government’s proposal. The proposed modifications also include the requirement that NPOs provide donors with the whole accounting records demonstrating how their donations were used upon each donor’s request. Failure to comply could result in fines or imprisonment.

A more constructive way forward would involve establishing a single, centralized governmental system to monitor and regulate NPOs and promote their transparency – akin to the CRA or IRS. Unnecessary and ineffectual modifications can only increase the administrative loads and transaction costs of NPOs. A more helpful step would be to remove the 15% cap on administrative expenses relative to the funds raised – something particularly onerous for small organizations raising small amounts – and allow NPOs to make autonomous but transparent decisions about overhead.

is a professor and former dean of the School of Social Welfare, Yonsei University, in Seoul, South Korea. (Photo of Seoul, South Korea, is courtesy of Yeoul Shin and Unsplash.)

Click for next story in the Asia-Australia policy series.

The use of regulation to silence charities in Australia’s political arena is an increasingly important issue. The charity brand – with its broad public trust and ability to activate passionate, grassroots volunteers and utilise social media – is the envy of politicians who are hampered by legacy political parties that have little trust, few members, low funding and perceived remoteness from the community.

Read Myles McGregor-Lowndes’ article from 2020: “The Spectacular Tale of a Crowdfunder Gone Wrong: Lessons for Canada from Australia.”

A series of tax court rulings enabled Australia to break free from the assumption in English law that advocacy couldn’t be charitable. This assumption was replaced with reasoned and modern jurisprudence that was enshrined in legislation. However, political forces unrelentingly seek to curb the voice of charities using other points of regulation – most recently, by using protest laws, as well as electoral laws for third party and foreign funding registration. These new administrative-based restrictions are often not open to judicial or other effective scrutiny. They draw upon the general public’s beliefs about foreign state influence in domestic electoral laws, or about civil disobedience possibly leading to community inconvenience or perhaps anarchy. And they draw upon public misconceptions about charities and their supposed role as passive handmaidens applying balm to society’s deserving poor, relying on virtuous volunteers and the funds that magically flow into charity coffers – ignoring any need for organizational reserves, paid staff, fundraisers or speaking their missional truths to power. Such misconceptions provide fertile ground to discredit any “pretender” who doesn’t fit the mould.

The role of charities in a liberal democracy has never been more important. They need to be trusted and facilitated, not because of ‘Lady Bountiful’ narratives but because of their authentic expression of the positive values of civil society in a pluralist political environment.

On so many levels, the public trust that the charity sector enjoys is critical to each organization’s ability to achieve its mission. Whatever is required to protect the public voice of charities is a sector responsibility. But the task will fall to engaged individuals, specific organizations and coalitions of interest.

is Emeritus Professor at The Australian Centre for Philanthropy and Nonprofit Studies, QUT Business School, Queensland University of Technology. McGregor-Lowndes is on . (Photo of road in Australia is courtesy of Joshua Hibber and Unsplash.)

Click for next story in the Asia-Australia policy series.

In Australia, the relationship between government and the nonprofit sector remains patchy and one-sided in my opinion. I see this umbrella situation as being as much a policy or regulatory issue as something more concrete, like harmonising fundraising regulation or clarifying the right of nonprofits to advocate. Various initiatives at the state and federal level to frame a compact with the sector have ultimately, become politicised or unresourced and withered. Ultimately, while great in intent, they have not moved beyond talkfests and brave statements, despite engagement efforts and dollars spent to inform a changed power differential between government and the sector.

A better and more productive relationship between government and the sector that lasts beyond a political cycle may only come from some innovation and vision by the bureaucratic arm of government and from strong peak bodies in the sector – the Community Council for Australia being one example. Roundtables have come and gone, but they have not been representative of both the government and nonprofit sides. I believe a blueprint with a key topic or milestone achieved for each of the next five years may be one strategy, provided the government of the day cares enough to dedicate sufficient funding and secures bi-party support for a 10-year strategic conversation and action plan. Some of this may evolve from the existing work being led by the Community Council of Australia or from the pioneering collective thinking by the Charities Crisis Cabinet set up to think and act more together in response to COVID-19. But this initiative may not be able to focus on the single issue of establishing a new and enduring form of government-nonprofit ethos. And focus is needed.

Research and engagement will be essential planks, especially to explore different cultures and approaches internationally and to envision and test different strategies. This process will require thought leadership and authentic commitment. I believe it to be of such importance that it should be led or informed by former prime ministers and involve leading business, policy and nonprofit minds internationally. As an experiment, framing a two- or three-country benchmark might raise interest and commitment.

is an Associate Professor and the Director of The Australian Centre for Philanthropy and Nonprofit Studies, QUT Business School, Queensland University of Technology. Scaife is on and . (Photo of Sydney, Australia, is courtesy of Photoholgic and Unsplash.)

Click for next story in the Asia-Australia policy series.

In my view, the most important policy or regulatory issue affecting China’s nonprofit sector is the need to revise the Charity Law – the basic law for the sector. Since its enactment in 2016, the Charity Law has played a significant role in regulating stakeholders in the field and providing the legal framework for developing the industry. However, it’s been demonstrated that certain insufficiencies, such as provisions for tax relief and deductions, need to be addressed. Such revisions wouldn’t be a quick fix: they would need to be reconciled with the need to promote the development charitable organizations and other stakeholders, to be consistent with existing laws and regulations, and to be enforceable in the complex tax system.

What should and can be done is for the National People’s Congress of China and its Standing Committee to launch the process to revise the Charity Law? This initiative has been on the agenda of the legislative body’s work plan, and has received the attention of academics. Public support from practitioners in the nonprofit sector will add valuable weight to the process, especially if it’s a combined effort led by the legislative body with the participation of the entire nonprofit community.

is an Associate Professor at the School of Public Policy and Management, Tsinghua University, in China. (Photo of the Forbidden City, in China, is courtesy of Ling Tang and Unsplash.)

Click for next story in the Asia-Australia policy series.

For many countries, the regulatory agency for nonprofit organizations is a single body, such as a government ministry, tax authority or commission.

Japan’s regulatory framework is the most complicated in the world. Here, there exist many kinds of laws for corporate entities, with multiple agencies involved in nonprofit regulation. School corporations, social-welfare corporations, public-interest corporations (PICs), medical corporations, specific nonprofit corporations, and others are regulated differently. Moreover, because accounting standards and regulations differ across such organizations, it is very difficult to conduct accounting accurately and comprehensively across the sector. Of these nonprofit entities, only PICs have been substantially authorized by the Public Interest Corporation Commission. Reform in 2006 was intended to encourage PICs to be more active, but that objective has not been attained. The culture among PICs has not changed. Given Japan’s very low interest rates, they continue to focus on preserving their endowments. As a consequence of this, for example, the response of Japan’s philanthropic sector to the COVID-19 pandemic has been meager – confined only to medical corporations.

In my opinion, unifying Japan’s nonprofit legal system is not realistic, even over several decades. But as a preparatory step, the nonprofit sector in Japan could and should strive toward a more collective identity as a third sector. Such a step, however, would require each of the separate types of entities acting co-operatively and collectively.

In 1994, a symposium entitled “The Emerging Civil Society in the Asia Pacific Community” was held in Osaka. That symposium triggered the creation of the Asian Pacific Philanthropic Consortium, which was short-lived, closing in 2011. But using its model, a new organization – say, the “Japan Philanthropic Consortium” – could be formed nationally to spearhead greater collaboration across a third sector. I take it as an encouraging sign that in recent years, the Osaka prefectural government has recently called for such collaboration and launched the Minto-Osaka Philanthropy Colloquium (MOPCOL).

is a Professor Emeritus with the National Museum of Ethnology and the Graduate University for Advanced Studies, in Japan. Deguchi is on . (Photo of Kyoto, Japan, is courtesy of Andre Benz and Unsplash.)

Click for next story in the Asia-Australia policy series.

The fragmented legal framework of nonprofit organizations (NPOs) in Japan hinders their performance. Most NPOs were established under the system implemented soon after the Second World War. These NPOs are categorized into six groups and regulated by different laws: foundations, charitable corporations, religious organizations, schools, medical corporations and social-welfare corporations. These conventional NPOs are usually large and highly professionalized, as they undertake complementary roles to those of the government in exchange for financial stability. A new NPO system was introduced in 1998, enabling small- to medium-sized grassroots organizations to be incorporated as specified-activity NPOs. These NPOs work and advocate for social change while suffering from financial instability. Such inconsistencies among NPOs regarding their resources, standpoints, values and norms impede their collective ability to affect society.

The Japanese NPOs have also struggled to maintain their sectoral independence and autonomy. Citizens are less inclined to support private NPOs through donations because they assume that the government best represents and serves public interests. This phenomenon, combined with strict regulations imposed on NPOs’ activities, drives NPOs to focus on routinized service-provision based on governmental contracts.

Possible paths

Practitioners and academicians in related areas have advocated for deregulation and the introduction of a comprehensive tax-exemption system, and have even proposed a reform scheme for the entire NPO system. However, change is slow.

The government is increasing opportunities for the specified-activity NPOs to receive contracts for service provision. Will these new types of NPOs eventually be incorporated into the governmental system, similar to conventional NPOs? Meanwhile, a significant portion of the specified-activity NPOs aggressively cultivate business incomes, creating another concern around their excessive commercialization.

The future of NPOs seems be intertwined with that of the country. The Japanese economy is weakening, while the birth rate is decreasing, and population is aging. The dysfunctionalities of existing institutional systems have been highlighted by the COVID-19 pandemic. The Japanese public suffers not from insufficient consensus, but rather from insufficient platforms for individual citizens to constructively share their experiences and thoughts. NPOs are in a position to promote public discourse, by cultivating their advocacy functions. This will resuscitate and enable them to contribute to the opening of a new horizon for this country.

is a Professor in the Department of Sociology, Toyo University, Japan. (Photo of Tokyo street is courtesy of Pema Lama and Unsplash.)

Click for next story in the Asia-Australia policy series.

Nonprofits in Taiwan face turbulence from two major sources: the global challenge from the pandemic and the local uncertainty from the newly passed Foundations Act. Nonprofits must respond quickly to both.

The pandemic has brought a decline in donations, an increase in administrative and overhead costs, and challenges in providing direct services to clients. While some nonprofits have reduced their operations and activities, others have explored new strategies and grabbed opportunities to scale up their digital capacities.

In October 2020, the conference of the Association of Digital Culture Taiwan (ADCT) highlighted such opportunities – including crowdfunding, online registration systems, remote working and service delivery. These ideas have not remained on the drawing board. The Child Welfare League Foundation launched the family emergency relief fund project in April last year that accepts case referrals through regular online meetings. Similarly, social workers and educators are learning and experimenting with long-distance services and education. Because these technological options are now available to service providers, they appear more willing to follow restrictions on social gatherings. Collectively, nonprofits, faith-based organizations, and foundations have reduced their in-person activities and moved their operations online to protect their employees and clients from COVID-19.

Additional Turbulence from the Foundations Act

The Act came into force in 2019 with the goals of fostering sound management of foundations, encouraging their active participation in charitable affairs, improving public welfare and preventing fraud. It distinguishes government-endowed from publicly-endowed foundations, separates and enhances their supervision, instructs authorities to introduce measures to combat money laundering and the financing of terrorism, requires all foundations to establish internal control and audit mechanisms and a higher degree of transparency, and specifies the conditions in which foundations can merge, dissolve, or have their approval rescinded.

In the wake of the Act’s enforcement, foundations are beset with the challenges of restructuring and reorganization. In some respects, the burdens are greater for government-endowed foundations. Unlike publicly endowed foundations, they need to establish comprehensive, personnel systems and submit these for approval.

Across all foundations, the Act puts boards of directors on the front line, assigning them greater legal responsibilities. Such expectations change the criteria for determining board members’ competency, could discourage people from taking up the position, and increase the potential for conflict with CEOs. In addition, administrative costs will increase, information gathering being a case in point: the Ministry of Education requires foundations to disclose and submit information at its request to be posted on the Ministry’s website. Information disclosure raises other issues: according to the Deputy Director of World Vision Taiwan, the Act’s requirements (Subpara.2, Para.3, Art. 25) could intrude upon the privacy of sponsors, donors and beneficiaries.

is an Associate Professor in the Department of Political Science and the Graduate Institute of Public Affairs, National Taiwan University (NTU), and is currently serving on the ARNOVA board. She gratefully acknowledges the assistance of Lo Ching Hua in preparing this report. (Photo of mountain in Taiwan is courtesy of Lisanto and Unsplash.)

Click for next story in the Asia-Australia policy series.

Despite Japan’s long history of charity, its institutional arrangements around the nonprofit and philanthropic sector only accelerated in the late 1990s. The NPO Law of 1998 significantly lowered the hurdles for obtaining legal status. Nonprofit corporations became able to receive tax-deductible donations in 2001. Reforms of the public-interest corporation system in 2000-2008 allowed civil society organizations (CSOs) greater freedom in their operations. Plus, increasing numbers of local governments established ordinances and other schemes to enhance their partnerships with CSOs.

In principle, these developments favoured CSOs and introduced what the sector had been seeking for years. Today, however, many CSOs see these provisions as user unfriendly and are reluctant to take advantage of them. For example, many nonprofit corporations don’t seek approval for their donations becoming tax deductible because the standards are too demanding. The number of specified nonprofit corporations has stagnated, reaching a peak in 2017 and declining since then. Reform will require the participation of diverse actors.

Ways ahead

First and foremost, policy makers must recognize the advantages that freely operating CSOs bring to society, and the need for operational standards that will realize those advantages. CSOs must speak clearly and convincingly about the problems with the existing system, backing their claims with evidence. Their potential for acting collectively has been demonstrated in the wake of the COVID-19 pandemic. In 2020, CSOs across Japan quickly organized surveys to understand its impact on the sector as early as February, gathered data, and acted as a coalition to submit an official request to the national government in early March.

Their case should be directed not simply to the government, but to citizens as well, shifting and correcting the public perception of the sector from it being a group of volunteers to it being a group of professionals whose potential for improving social conditions is now stymied.

Academics also have a role in making this case by strengthening the theoretical and empirical underpinnings of how CSOs’ more active engagement can build a better society.

It is through these intertwined efforts that the need for reform will be better known – leading the way for Japan’s institutional arrangements to become more user-friendly.

is an Associate Professor of Civil Society and Nonprofit Studies at the Graduate School of Information Sciences, Tohoku University, Japan. She gratefully acknowledges the insights of Haruya Sakamoto (Kansai University), Yu Ishida (Miyagi University), Yasuhiko Kotagiri (Tokushima University), and Takako Nakajima (Osaka University of Commerce) in preparing this report. Okada is on . (Photo of Japanese pagoda is courtesy of David Edelstein and Unsplash.)

Click for next story in the Asia-Australia policy series.