Giving in Japan Today and Tomorrow
#2 Cracks in the Ice
In the first blog of this series, we explored why Japan’s philanthropy sector has remained small and structurally constrained for so long. But while the barriers are real, they are no longer immovable. Something is beginning to shift.
Call it a thaw, or perhaps a quiet realignment. Over the past few years, new actors, funding models, and philosophies of giving have begun to reshape the way social impact is pursued in Japan. Dormant savings accounts are being converted into capital for nonprofits and social enterprises. The impact investing market is growing at a remarkable pace. Corporate leaders are rethinking their social roles. And for the first time, a new generation of philanthropic advisors is helping to guide giving with strategy and purpose.
Together, these developments suggest that Japan’s social sector may be entering a period of innovation—if the momentum can be sustained.
Dormant Accounts, Activated Capital
One of the most striking transformations in Japan’s philanthropy landscape has come from an unlikely place: forgotten savings accounts.
Since 2019, a government-backed dormant deposit scheme has allowed unused bank funds—those untouched for over 10 years—to be redirected toward nonprofits working on social issues. As of April 2024, 1,170 organizations had received grants totaling ¥29 billion ($193 million USD). (61)
At first, these funds were used in fairly traditional ways. But more recently, a shift has occurred: dormant deposits are now being deployed as investment capital—not just grants. A new scheme was launched to support early-stage social enterprises that cannot yet access private financing.
“From 2024, the investment scheme has been newly started for social enterprises that are implementing social businesses in the initial stages and do not have sufficient private funding.” (61)
This marks a conceptual shift. Rather than treating public capital as static aid, these funds are being used to catalyze scalable, mission-aligned ventures—a key principle of impact investing.
The Rise of Impact Investing
Once considered a niche idea, impact investing has taken root in Japan far faster than many anticipated.
In the fiscal year 2023, the country’s impact investing balance reached ¥11.5 trillion ($76.9 billion USD)—doubling from the previous year. That’s more than 300 times the amount recorded in 2016.
“The impact investing market has also seen rapid expansion, and investment utilizing dormant deposits have been initiated.” (69)
Japan’s impact investing landscape is gaining significant momentum, driven by the combined efforts of both private and public sectors. The GSG Impact JAPAN National Partner plays a central role in shaping the market. Complementing this, the Japan Impact-driven Financing Initiative—led by a consortium of financial institutions—has become a key platform for disseminating knowledge and advancing best practices in impact finance.
Building on this private-sector leadership, the Japanese government has positioned the promotion of impact investing as a cornerstone of its “New Capitalism” agenda. The Financial Services Agency (FSA) also has issued the Basic Guidelines for Impact Finance, outlining fundamental principles of impact investing. At the local level, the Tokyo Metropolitan Government has launched a public-private impact growth fund aimed at delivering measurable social value alongside strong financial performance.
While still behind Europe and the U.S. in maturity, Japan’s impact investing field is becoming increasingly sophisticated. And crucially, it’s expanding the range of actors involved in solving social issues—not just nonprofits but startups, corporations, and local governments.
The latest report was recently published, and the total amount in 2024 has reached 17.3016 trillion yen.
The graph below illustrates the overall growth trend of impact investing, based on data from annual reports by the GSG Impact Japan National Partner, despite changes in calculation methods over the years that hinder direct year-on-year comparisons.
Collaborative Capitalism in Action
At the center of this shift is a changing mindset in Japan’s business community.
Led by Keizai Doyukai (Japan Association of Corporate Executives), a movement known as Collaborative Capitalism is encouraging businesses to work more directly with nonprofits and social enterprises. Rather than viewing philanthropy as a side activity, companies are starting to see social engagement as a form of long-term value creation.
“Collaborative Capitalism refers to the initiatives that encourage companies to leverage their ‘animal spirits’ by pursuing their purpose to create social benefits… while also collaborating with the social sector.” (39)
This philosophy has led to a series of concrete partnerships:
- Cross-Sector Board Initiative: Executives from major corporations are placed on the boards of NPOs to deepen mutual understanding and governance capacity.
- Social Wednesdays: Companies like Activo Inc. and Kids Door are encouraging staff to participate in local volunteer work mid-week.
- Corporate Furusato Nozei: Businesses are using the hometown tax donation system to support nonprofit-led community development efforts.
These collaborations aren’t just symbolic. They are shifting how companies think about their roles—not just as donors, but as co-creators of social change.
Furusato Nozei: From Loophole to Lever?
In Blog #1, we explored the Furusato Nozei (hometown tax donation) system—a program that lets taxpayers redirect some of their taxes to local governments, often in exchange for gifts. While popular, it has drawn criticism for distorting giving behavior and diverting donations away from nonprofits, as we have noted in Blog #1.
But that, too, is beginning to change.
Some municipalities are now adapting Furusato Nozei to support social impact more directly. For example, Tokyo’s Shibuya Ward allows donors to designate a certified nonprofit to receive 86% of their Furusato contribution. Fukuoka City has launched a version aimed at supporting social startups.
“Some municipalities have started using the Furusato Nozei to support NPOs and social enterprises.” (30)
These pilot programs are still small, but they signal a creative effort to realign an existing tax mechanism with a more impact-oriented purpose.
Philanthropic Advisors: A Missing Link Emerges
For Japan’s philanthropic ecosystem to mature, donors—especially wealthy ones—need better support. Until recently, that support barely existed.
In the U.S., philanthropic advisors are certified professionals who help families and institutions develop giving strategies. While several professional services for philanthropic advisors have emerged, Japan has lacked a formal infrastructure to guide donors. As a result, even those with a strong intent to give often struggle to navigate legal, financial, and organizational hurdles.
That’s now beginning to change.
“Donations from HNWIs are likely to increase as the number of highly specialized professionals in philanthropy… continues to grow.” (34)
Organizations like the Japan Philanthropic Foundation are experimenting with “Donor-Designed Funds”—customized giving vehicles that allow individuals to support causes while working through a trusted intermediary. Meanwhile, discussions are underway about establishing a Japanese equivalent of the CAP (Chartered Advisor in Philanthropy) credential. If successful, this could help unlock a much larger share of Japan’s private wealth for the public good.
A Shifting Mentality—and a New Generation
Many of these changes are being led by a younger cohort of founders and funders who see philanthropy not just as charity, but as a strategy.
Entrepreneurs behind successful startups are launching foundations designed to be flexible, impact-driven, and outcome-oriented. Examples include the Soil Foundation, which provides seed grants to nonprofit startups, and the FamilyAlbum Foundation, which embraces trust-based philanthropy to support children and families.
These emerging actors are bringing with them the language of innovation—social innovation, system change, co-creation—and combining it with deep concern for Japan’s pressing challenges: demographic aging, inequality, climate change, and more.
From Trend to Transition?
None of these shifts, on their own, will transform the sector. But together, they represent the early architecture of something new.
Japan’s social sector has long operated under constraints—legal, cultural, and financial. Now, for the first time in decades, a confluence of policy, capital, leadership, and public interest appears to be creating space for change.
As the report puts it:
“Japan’s social sector is at a critical turning point for significant future growth, supported by a social environment that is becoming more impact-driven.” (4)
In Blog #3, we’ll explore what could come next—reforms to public trust laws, the introduction of donor-advised funds, the US-Japan collaborations that might accelerate this transformation, and the role of foundations such as USJF could play in that transformation.
Because when the ice begins to crack, the future depends on how we move.
