How legal reforms, global partnerships, and a new generation could shape the future of giving
Giving in Japan Today and Tomorrow
#3 What’s Next for Japanese Philanthropy?
In the first two posts of this series, we looked at where Japan’s social sector stands today—and how cracks are beginning to form in the rigid systems that have constrained it. Now, we turn to what lies ahead and the role that USJF sees for it moving forward.
“Japan’s philanthropy/social sector is at a turning point where significant growth potential is expected.” (69)
The signs of movement are real. A dormant sector is waking up. From impact investing and philanthropic advisors to corporate-NPO alliances, Japan’s civil society is slowly gaining momentum.
But if the social sector is to truly grow into a robust, risk-taking engine of innovation—as it often is in the United States—then deeper structural shifts are needed. The good news is that many of them are already in motion. We close with a short outline of the steps that USJF sees that we and other foundations can take to keep this momentum moving forward.
Rewriting the Rules That Have Long Restrained Growth
For decades, Japan’s nonprofit legal frameworks have created rigid expectations around how organizations operate. Public interest corporations, for example, have been subject to rules that require them to spend nearly all of their funds annually, maintain balanced budgets every year, and avoid accumulating idle assets.
These constraints have effectively discouraged long-term investment, experimentation, and the kind of risk tolerance that drives social innovation.
But a major reform is on the horizon. Beginning in April 2025, changes to the public interest corporation system will allow organizations to retain financial surpluses, establish reserves for future public interest projects, and simplify administrative procedures. These updates are not simply bureaucratic tweaks—they represent a foundational shift in how Japanese nonprofits and foundations can function.
“To improve the effectiveness of public interest corporations and promote private sector contributions to public welfare… reforms are proposed: allow financial balance over a longer term, permit accumulation of funds, and simplify administrative procedures.” (24)
This reform opens the door for a more agile and impact-driven sector—one that can act proactively rather than reactively.
Donor-Advised Funds on the Horizon?
Among the most influential tools in American philanthropy are Donor-Advised Funds (DAFs)—flexible, tax-advantaged vehicles that allow individuals to contribute assets, receive immediate tax benefits, and distribute grants over time. DAFs have grown rapidly in the U.S., with more than 1.28 million accounts holding over $234 billion in assets as of 2021.
Japan currently has no true DAF equivalent, but this may be changing. The 2024 revision of Japan’s “Grand Design and Action Plan for New Capitalism” includes the potential introduction of Japanese-style DAFs as part of a broader strategy to mobilize private capital for the public good.
“The mention of the introduction of a Japanese version of Donor-Advised Funds (DAF)… is promising.” (52)
While there are still design and legal challenges to resolve—such as how to manage assets, grant timing, and donor involvement—the growing interest suggests that a more dynamic infrastructure for donor participation is within reach.
In the meantime, intermediary organizations like the Japan Philanthropic Foundation are offering “Donor-Designed Funds” (DDFs). Though distinct from DAFs, these funds allow donors to specify the theme, region, or issue they wish to support. The foundation manages the funds, establishes criteria that reflect the donor’s intentions, and allocates grants based on the decisions of an independent selection committee.
“A Donor-Designed Fund allows donors to design the fund based on their desired social contribution… However, donors cannot directly advise on the recipients of grants like DAFs.” (34)
As legal and institutional models evolve, these DDFs function as a mechanism that enables donors to align their intentions with meaningful giving — channeling their contributions to appropriate and impactful recipients.
New Foundations with New Intentions
Historically, Japan’s foundations have focused on research and scholarships, often following highly specific mandates set at the time of founding. Many are constrained by legal frameworks and have faced limitations in providing flexible and strategic grantmaking. But a new generation of impact-driven foundations is beginning to challenge that mold.
- The Soil Foundation, for example, was founded by entrepreneur Tetsushi Hisata to provide seed grants for nonprofit startups — addressing the chronic shortage of early-stage funding in Japan’s social sector.
- The FamilyAlbum Foundation, created by Kenji Kasahara, founder of MIXI, offers flexible, trust-based grants to organizations serving children and families, with an emphasis on building relationships rather than imposing metrics.
- The PwC Foundation, backed by PwC Japan Group, supports social ventures using technology to address medical and regional challenges, such as rural health access and assistive technologies for the elderly.
“New foundations are also emerging that aim to create social impact, utilizing financial methods such as investments and loans, and supporting social ventures, not just non-profit organizations” (48)
These examples mark a shift—not only in who is giving, but in how. This new wave of foundations is more entrepreneurial, outcome-oriented. Many are also committed to building organizational capacity in their grantees, rather than funding short-term outputs.
Bridging the Support Gap: Advisors and Ratings
Even as new donors and foundations emerge, Japan still lacks many of the support structures that make philanthropy effective and accessible in other countries.
The report points out the scarcity of professional philanthropic advisors—a role that is common in the U.S., where many donors work with credentialed advisors to develop giving strategies, evaluate nonprofits, and manage legal and tax obligations.
Japan has no equivalent to the U.S. Chartered Advisor in Philanthropy (CAP) system, though there are early efforts underway to develop similar qualifications and training programs.
“There is a weak ecosystem of support in terms of professional human resources and information such as philanthropy advisors and rating agencies.” (5)
There is also limited nonprofit evaluation infrastructure. Platforms like Canpan Field or “Good Giving Mark” Certification exist, but their reach and recognition remain small compared to U.S. sites like Charity Navigator or GuideStar, which help donors find and assess nonprofits based on transparency and performance.
Investing in these "middle layers"—the professionals, platforms, and intermediaries that connect capital to causes—is essential to transforming Japan’s philanthropic culture from a fragmented patchwork to a coherent, functioning system.
How U.S.–Japan Collaboration Can Accelerate the Transition
One of the report’s key insights is that Japan’s transformation doesn’t have to happen in isolation. There are many opportunities to build on U.S. models—not to copy them, but to adapt and co-create through partnership.
The US-JF study outlines concrete collaboration mechanisms that could accelerate Japan’s transition:
- Training programs where U.S. advocacy professionals mentor Japanese nonprofit leaders
- Practical exchanges where young foundation leaders in Japan learn from U.S. peers
- A platform for U.S.-Japan giving, particularly among Japanese American philanthropists, to support Japanese causes
- Field trips and convenings, connecting global funders with grassroots organizations in Japan
Such initiatives not only bring financial resources but also foster trust, learning, and shared frameworks—essential ingredients in building a mature philanthropy ecosystem.
A Sector at the Threshold
The phrase “tipping point” is often overused, but it may genuinely apply to Japan’s social sector today.
Legal reforms are lowering the barriers that have long limited growth. Wealth is beginning to move, albeit cautiously, toward social good. New actors are experimenting with different forms of capital—grants, loans, catalytic investments. And cross-sector collaboration is increasingly normalized, particularly among younger business leaders.
“Foundations provide flexible and patient funding to nonprofits and social ventures to create impacts with intentionality” (71)
Much remains to be done. But a path is becoming visible—and for the first time, that path is not only navigable but also increasingly well-lit.
If the momentum is supported — through smart policy, institutional innovation, and collaborative leadership—Japan’s philanthropic sector could grow into a more strategic, sustainable, and globally connected force for good.
“By strengthening the ecosystem that supports each stakeholder in the social sector, the social sector can become a core player that creates social innovation” (5)
That is the opportunity. And the work begins now.
For the full report by the Japan Fundraising Association, please read here.
