[ Keidanren ] [ Policy ] [ 1% Club (in Japanese) ]

Overview of the Japanese Corporate Philanthropy in 1990's

(Tentative Translation)

Kyoko Shimada

Chairperson of the Subcommittee on
"Changing Society & Corporate Philanthropy"


It has been already ten years since we, corporate philanthropy managers, started meeting at Keidanren (Japan Federation of Economic Organization). In those days, or the early 1990's, the so-called "bubble" economy was in its last stages, and signs of slowdown or even of no growth was beginning to be felt in many fields including business, government, educational institutions and public service organizations.
Large-scale art and cultural events were indications that the bubble economy was still alive. Corporations that spent a large amount of money sponsored various events such as art exhibitions featuring famous artists and paintings and concerts with world leading musicians. However, these events began to disappear around 1992 when the bursting of the bubble economy became apparent to us all. Instead, perceived confines began to spread and eventually engulfed the entire society.
As we think back, we realize that our philanthropy efforts were born in a difficult time. Since ours was corporate philanthropy, our main theme naturally was donation of corporate resources such as funds, products, facilities/equipment, know-how, and human resources to the society. But the aforementioned corporate resources began to shrink rapidly in the 1990s. Despite such a harsh environment, corporate philanthropy has survived and held its own. However, it has been said that, in reality, we did not have enough power and energy to challenge and move ahead with new programs.
Because of these difficult conditions, or possibly more appropriately thanks to these difficulties, our discussions have not deviated from the true principle of philanthropy. From the beginning, we were able to form and maintain the perception that corporate philanthropy is more than simple donations of funds and goods and that we philanthropy managers are not just staff for charity.

What Is Corporate Philanthropy ?

We spent the first year discussing the purposes of corporate philanthropy and defining the roles of us, the philanthropy managers. It took some four years before the results of our first year's discussions were widely accepted by several hundred corporate members of Keidanren.
The purpose of corporate philanthropy was finally defined as "to notice and to voluntarily take action for the urgent issues of the society, to which corporate resources are donated without seeking direct pay-off." Numerous urgent issues always exist in the society. Yet, aren't we guilty of looking away from these issues? That is not acceptable. We must make conscious efforts to notice these issues. It is impossible for corporations to take action for every important issue, but we should actively engage in these tasks as much as we can. We should, if necessary, invest our funds, products, facilities/equipment, know-how and human resources. However, we should not seek for name recognition for our efforts, nor should we think that our investments become substitutes for advertising expense. We do not seek for direct payoff for our actions, but our participation in the society in this manner will inject energy and a sense of belonging to the society, and will provide opportunities for nurturing flexible and creative cultures within corporations. These types of indirect rewards were what we had in our mind as we discussed what our activities should be.
In short, what we have done is nothing more than re-defining the corporate culture. Because we did not define philanthropy narrowly as charity and because we included a broader sense of mission required to rebuild corporate culture as part of corporate philanthropy, we were able to develop and expand corporate philanthropy under extremely difficult economic conditions. It would have been impossible to stir and maintain the interest of executives and employees for more than ten years under a sluggish economy, if we had defined corporate philanthropy simply as donation of funds and goods.

Encounter With Non-profit Organizations (NPO)

As I have described above, we defined corporate philanthropy as activities that further strengthen the relationship between society and corporations. Our goals are to have society recognize that corporations play important roles in supporting society and to have all employees of corporations realize the same. It is natural that, with these goals, active interactions with non-profit organizations (NPO) became necessary. To learn about NPOs is nothing more than to learn the urgent issues that the society faces. The society has numerous issues that need to be constantly and continuously addressed such as nursing care, education, the environment, art/culture and international exchanges, to name a few. NPOs, ahead of corporations, attempted to find the roots of these issues.
Moreover, in order to deal with these issues, NPOs tried to empower themselves with on-site know-how, professional knowledge and the necessary resources. We learned that cooperation with these NPOs would enable the corporations themselves to participate in the resolution of many of these social issues. From 1991 through 1994, we, corporate philanthropy managers, visited NPO offices, participated in NPO action programs, and shared the experiences involving NPOs with our colleagues at work. We repeated this process with an aim of stirring interest within our fellow workers. Our efforts paid off, and one by one, workers began to show interest as evidenced by their desire to know more about these activities. They began to want to participate as volunteers or staff. In order to make participation by the employees easier, corporations began to establish programs such as volunteer time-off, volunteer leave of absence, financial support for volunteer activities and matching gift. Details of these activities and programs are found in "Keidanren White Paper On Corporate Philanthropy in 1999" and "Synopsis of the Survey on Corporate Philanthropic Activities in 1999"
As we were busily gaining experiences through involvement in the aforementioned activities, we were hit with the Hanshin Awaji Great Earthquake on January 17, 1995. The huge wave of volunteer activities during the disaster is well known and documented. We, the corporate philanthropy managers, supported the activities from behind the scene. We were able to do so because we had four years of interaction with NPOs in various fields. Corporations alone would not have been able to carry out operations of that magnitude.

Partnership With NPOs

The experience of the Great Hanshin Earthquake prompted a move to establish a law that would grant legal status to NPOs. At this time, people representing NPOs once again led the way and spent many hours talking to and convincing members of the Diet and officials nationwide of the importance of such a law. Corporations, led by Keidanren, supported and cheered NPOs efforts. By then we were firmly convinced that NPOs would be positioned as a "third pillar" of the society. The government and corporations alone can no longer run the society. We need NPOs to consolidate the various wills of individuals and to take the necessary actions in a professional manner. We came to realize that if the importance of NPOs had been recognized earlier and had NPOs been positioned as a third pillar of the society, the society may have been able to avoid the perceived confines of today's society.
The Law to Promote Specified Nonprofit Activities (so-called NPO Law) which was born as a result of the aforementioned activities, though we are not completely satisfied, is a monumental step in recognizing NPOs and in positioning NPOs as the third pillar of the society. In order for NPOs to truly become the pillar of the society, partnerships between NPOs and corporations must continue to be expanded in ever-diversified fields. To do this, infrastructure organizations that make it easier for NPOs to take action and intermediaries, which connect NPOs and corporations with information and participation, are indispensable. Already some organizations are established as evidenced by the operation of the Japan NPO Center. It is our hope that many more of these organizations will be established nationwide.
As we have strengthened partnerships with NPOs, we have also developed various interesting programs. As I have stated before, our primary goal is to contribute to the society by taking actions to resolve urgent social issues. At the same time we have another goal of opening corporate windows so that the wind of the society may breeze through the corporations. Some of the programs we established through the late 1990s had this second goal in mind. The aim of these programs was to have philanthropy change the corporations and the society. Details and examples of the programs are also disclosed in the aforementioned "Keidanren White Paper On Corporate Philanthropy in 1999" and "Synopsis of the Survey on Corporate Philanthropic Activities in 1999." Those of you who read these documents understand that the bases of our activities have been to contribute to the society and to reform corporations. Because of the second goal to change corporations and the society, we were able to concentrate our energy on partnerships with NPOs, and we were able to carry out activities that required participation by company workers.

New Development

It was late in the 1990s when some changes began to occur in the developments described above. Upon the foundation of increased knowledge of NPOs and stabilization in workers' awareness and desire to participate, we, the managers, began to focus our efforts on further expansion of partnerships and on extending our view to global activities. We are going beyond partnerships between corporations and NPOs to include governments and international organizations. We are beginning to coordinate our activities with governments and international groups. Moreover, we are beginning to look for professional activities, which are not readily apparent and participated in by corporate employees. As an example of the former, we have Japan Platform that is a system to provide emergency relief in natural disasters and refugee situations more effectively and quickly. This is realized through an equal partnership of NGOs, businesses and government, with each constituent making full use of its resource and characteristics. Moreover, as an example of the latter, we can list programs in which corporations find and pay for part time work opportunities for students in NPOs that possess specialized skills, knowledge and management capabilities. Through such programs, the students are able to gain experience in expanding their intellectual knowledge and on-site work know-how. Of course, not every worker can participate in such programs. However, many workers support such programs with confidence in the managers' insight and judgment for NPOs. We know of another example of building closer relationships in which a corporation and a NPO worked together in caring for the elderly in an area.
All these programs are investments in the society, investments in the future, and preparation for the intellectual society of tomorrow. Corporate philanthropy has completed the first phase of "social participation" and "corporate reform" of the 1990s and is moving towards the second phase of "investment in the society." This transition is the trigger that we decided to publish a new book titled "The Philanthropic Ideas which Have Added New Values to Companies." Slowly but surely, our activities are progressing towards new development and we wanted citizens of the society to realize and understand our progress as well.

Corporate Philanthropy Envisioned by Top Management

As I have explained above, our activities are surely in the process of writing a new page. We are certain that the corporate philanthropy, which is progressing towards the second phase, will become the type of programs that have been contemplated and envisioned by the top management of corporations. Up to now, the themes of the programs have been discussed mostly by the philanthropy managers of each company and interested employees. However, in the near future, the programs will become a major theme in corporate management. As we move toward an intellectual society, it will become impossible for the corporate organization to function as a vertical organization where the will of those on top is simply commanded down to those at the bottom. As Peter F. Drucker, a father of modern management said, in the industrial society where land, capital and labor are the main elements of production, the laborers have no choice but to work in the factory where machines and equipment are located. However, in the intellectual society of tomorrow, the main ingredient of production will be knowledge that is found in human brains. Human brains are not bound to factories and plants. Human brains easily travel from city to city and office to office. How are we going to manage these intellectual laborers in the intellectual society? We are already seeing today some movements that cannot simply be managed by conventional vertical organization, the handing down of orders from the top to the bottom. The management of intellectual laborers in corporations will likely be similar to management in NPOs today. Many corporations will learn much from the management of NPOs. The basic principle governing corporate actions is "efficiency," while NPOs are organized on the foundation of "sympathy." Intellectual laborers will refuse to work where they do not sympathize with the company's common goals. They will only work under management of organizations where each member looks beyond corporate profit toward the entire society and shares a common goal of contributing to the society.
Moreover, in today's society where globalization of Japanese businesses is moving at a fast pace, assigning employees, who have never thought beyond Japanese society, or beyond their corporations in some cases, to overseas posts would be a great risk. It is much safer and more effective to send employees who are interested in the world outside of the company and who are capable of respecting other languages, religions, cultures and sense of values than to dispatch those whose talents are limited to making profits. It is our hope that, as top management contemplates the changes in company management, they will learn a great deal from philanthropic activities.
As I have explained above, corporate philanthropy should be an important theme in corporate management. However, top management has the responsibility to maintain balance in leading the company. It is the balance among a wide range of stakeholders (people who have interest in the company) including shareholders, clients, employees, suppliers, communities and NPOs. Management, which concerns itself primarily with the satisfaction of shareholders, is beginning to face a dead-end. On the other hand, management with heavy emphasis on employees is also experiencing difficulties. Under these circumstances, it becomes vital for management to maintain balance. One of the most effective measures of management is to determine how much resources management pours into corporate philanthropy. It is not difficult to see that management which has no interest in employees' desire to participate in society, and which shows little willingness to spend resources for NPOs and communities that need corporate support is on the way to failure. However, spending too much resource on philanthropy will cause resentment and protests from shareholders, clients and suppliers.
Simply put, the key to successful philanthropy is to gain support from a wide range of stakeholders who have also come to share the same feeling about philanthropy. In the U.S., a certain consensus is established among stakeholders that corporations are allowed to spend 3% of pretax profit on corporate philanthropy. Top management should search and come to a conclusion on their own figure within the framework of balanced management. At any rate, corporate philanthropy will become a major part of corporate management, and top management will be required to establish its mission and goals and will be concerned with achieving them. This new phase of corporate philanthropy is what we have envisioned and worked toward for the last 10 years.

( This article is excerpted and translated from titled "The Philanthropic Ideas which Have Added New Values to Companies." )

Home Page in English