Market Size of Donations in Japan
The market size of donations in Japan has been gradually growing.
According to Donation White Paper 2021 published by the Japan Fundraising Association, individual donations are estimated to total 8.66 billion US dollars(USD) (1.2126 trillion Japanese yen(JPY)).
*1 USD = 140JPY
However, this amount includes 4.80 billion USD (672.5 billion JPY) from the widely popular "hometown tax donation" program, a unique fundraising scheme where individuals donate to local municipalities and receive return gifts.
Excluding the hometown tax donation, the actual individual giving amounts to approximately 3.85 billion USD (540.1 billion JPY).
Is the Japanese donation market large or small from a global perspective?
Let’s take a look at a comparison with the US and the UK based on the data from the Donation White Paper.
- United States: 1.55% of GDP (324.1 billion USD = 34.5948 trillion JPY)
- United Kingdom: 0.47% of GDP (10.1 billion GBP = 1.4878 trillion JPY)
- Japan: 0.23% of GDP (8.66 billion USD = 1.2126 trillion JPY)
When compared to the United States, the difference is overwhelming, with Japan's market being only about 1/34th the size of the U.S. market.
Even when compared to the U.K., Japan's market is roughly half as large, making it notably small relative to its economic scale.
On the other hand, it can be said this indicates a significant potential for an increased flow of charitable donations in the future.
Source: Japan Fundraising Association, “the Donation White Paper 2021” 2021, P.12-13
What organizations are there in Japan’s nonprofit sector?
In Japan's nonprofit sector, several prominent nonprofit organizations are making significant contributions across various fields.
Traditional organizations
The Japanese Red Cross Society, established in 1877, is part of the global Red Cross and Red Crescent Movement, offering disaster relief, medical services, and promoting health and safety through initiatives like blood donation and nursing education.
The Akai Hane (Red Feather) Community Chest of Japan, founded in 1947, focuses on social welfare, addressing issues such as child abuse, homelessness, and domestic violence by supporting local nonprofits through nationwide fundraising efforts.
Major NGOs
NGOs like Médecins Sans Frontières Japan, UNICEF Japan, and UNHCR Japan are also driving fundraising growth in Japan.
Universities
Many universities such as University of Tokyo and Kyoto University have invested their resources in fundraising in recent years.
Other National Organizations
The National Museum of Nature and Science has recently gained attention for its successful crowdfunding project, which raised over 6.42 million USD (900 million JPY), potentially inspiring further fundraising in Japan’s cultural and arts sectors.
Diversity and Potentiality of Donation in Japan
The year 2011, marked by the Great East Japan Earthquake, can be considered a turning point for the growth of donations in Japan.
The figure more than doubled to 7.27 billion USD (1.0182 trillion JPY).
This increase was largely driven by significant donations to the disaster-affected areas, especially in the Tohoku region.
Since then, Japan’s nonprofit sector has focused on increasing donation revenue.
Individual Giving
As mentioned above, the latest data shows individual giving reached 3.85 billion USD (540.1 billion JPY). Looking at regular giving, various organizations have made enormous efforts.
Based on the financial information in FY 2023, UNICEF Japan had 177 million USD (25.4 billion JPY) in donation revenue, 83% of it came from individual giving. Furthermore, 83.7 million USD (12.02 billion JPY), almost half of the individual donation revenue, was from regular giving.
When it comes to online fundraising, many national crowdfunding platforms have emerged, such as CAMPFIRE and READYFOR.
Crowdfunding is still a popular method for Japanese nonprofits to raise money, even though some have a negative feeling toward service fees.
Corporate Giving
The Donation White Paper 2021 says corporate giving amounts to 4.80 billion USD (672.9 billion JPY) based on the 2019 data.
In addition, the latest corporate statistics released by the Ministry of Finance, 法人企業統計調査 in Japanese published in September 2024, show that retained earnings, which correspond to internal reserves of companies, reached approximately 4.28 trillion USD (600 trillion JPY) for fiscal year 2023, an 8.3% increase compared to the previous year, marking a record high for the 12th consecutive year.
If corporate giving increased more, it would make a big change.
Bequests
In terms of population, there are around 120 million people in the country, and 40% are aged 50 and over. The estimated amount of wealth transfer is expected to be 428 to 500 billion USD (60 to 70 trillion JPY) by the late 2030s. It can be said that there is significant potential for not only bequests but also major giving by high-net-worth people.
According to the data regarding the number of requests and amounts for tax deductions on donations through bequests, which were disclosed through requests to the National Tax Agency Japan, the total amount of bequest donations in 2020 was approximately 283.57 million USD (39.7 billion JPY), compared to 54.28 million USD (7.6 billion JPY) in 2014.
The number of cases was 826, more than double the 397 cases in 2014. While the amount varies by year, it has steadily increased.
Grant
The Donation White Paper 2021 reports that the total amount of grants was 853,000 USD (119.5 million JPY). This information is based on the Japan Foundation Center’s research.
They also operate a platform that matches grant-making foundations, which provide grants and scholarships, with grant seekers, including nonprofit organizations.
According to the Donation White Paper 2021, in FY 2019, 985 foundations and their grant programs were listed on the platform. These include 597 research programs, 353 project grants, and 343 scholarship grants.
Moreover, one of the distinctive grant schemes is the utilization of dormant deposits, inactive deposits for 10 or more years in bank accounts, being introduced since 2019 to promote public interest activities under the Act on Utilization of Funds Related to Dormant Deposits to Promote Public Interest Activities by the Private Sector enacted in December 2016 by the Japanese Government.
This grant aims to address social issues through equal partnerships among JANPIA, Funds Distribution Organizations (FDOs), and Players. As of April 2024, the total amount of the grant reached 206.42 million USD (28.9 billion JPY).
Other
The Hometown tax donation, Furusato Nozei in Japanese, is also one of Japan’s unique fundraising program. This is a Japanese tax deduction program that allows taxpayers to donate to local municipalities outside their current residential area in return for tax benefits and gifts. The program encourages support for rural areas, which may face declining populations and limited resources, and allows individuals to contribute directly to regional development projects.
Some people in the Japan’s fundraising sector often criticize it’s not “donation”. However, considering that the total amount was 672.5 billion JPY in 2020 based on data from the Donation White Paper 2021, it seemed to become a unique fundraising system.
In summary, Japan’s donation landscape, while still relatively small compared to global markets like the U.S. and U.K., shows significant potential for growth. The rise of crowdfunding, bequests, and corporate giving, coupled with unique programs like the hometown tax donation, highlights the diversity and potential of charitable contributions in Japan.
As key nonprofit organizations, universities, and national projects expand their fundraising efforts, there are promising opportunities to foster a more robust culture of giving. With continued development, Japan’s philanthropic sector is poised to make a greater impact both domestically and internationally.
Acknowledgments: Special thanks to Tomohisa Hosogai for his valuable contributions to the development of this article.
