[Feature: 20 Years of NPOs] NPOs and Community Development

Photo: Social housing and open space developed by a civic enterprise in central London. Photographed by the author (2018).

Twenty years have passed since the NPO Law was enacted and implemented in 1998 against the backdrop of a surge in civic activities. Has Japanese civil society matured during that time? As the name recognition of NPOs has increased, the number of corporations has also grown, and it is certain that volunteer activities are becoming established in society not only during emergencies but also in daily life. In particular, NPOs are becoming prominent in various fields such as community development and childcare support, in addition to the provision of welfare services. They are moving beyond being entities that fill the gaps left by government and corporations to solving problems through new methods based on creativity and flexible thinking. Amidst rapid globalization, the existence of NPOs that focus on individual needs and respond flexibly to them is becoming increasingly important in local communities where diverse people of different ages, genders, and races live together.

However, compared to Europe and the United States, the number of intermediary support organizations that assist NPOs is overwhelmingly insufficient, and it can hardly be said that various types of support for the "independence of NPOs" are generous. Therefore, in activities related to the provision of local services, diversifying income sources to ensure sustainability and continuity—achieving a so-called "income mix"—and drawing up business plans for NPOs has become a major challenge. Nevertheless, the financial situation surrounding them remains severe. In a 2017 government survey of NPOs (6,437 corporations nationwide, 53.8% recovery rate), following the securing and education of human resources, 54.2% of all target NPOs and 67.4% of certified/specially certified corporations faced the challenge of diversifying their income sources. Many organizations are struggling with business strategies aimed at "independence."

In response to these challenges, NPOs in Europe and the United States, which are said to be 20 years ahead of Japan, are seeing a spread of activities called "Social Enterprises" and "Community Enterprises" that combine a strong entrepreneurial spirit with a strong social mission across diverse fields of activity. This is an organizational form in which profits generated through market business are reinvested into public interests and the community to ensure the sustainability of activities. In some cases, special legal status is granted to enjoy tax benefits.

In community development, various civic business organizations are active with the aim of regenerating declining areas in city centers, such as "Community Development Corporations" (USA) and the "Development Trust Association" (UK), handling everything from housing development for low-income earners to the redevelopment of declining areas. They carry out social missions by balancing physical development and service provision, such as acquiring vacant land or dilapidated buildings owned by the government at low cost to develop and operate them as community facilities or open spaces, or providing local services there—so-called "Community Asset Management."

When it comes to collaboration with NPOs, most forms take the shape of co-sponsorship, subsidies/grants, or outsourcing from the government, but these often carry the risk of becoming low-cost subcontracting. In order to establish an equal relationship with the government, NPOs need to enhance their professional capabilities and have the ability to negotiate regarding project content. In cities like Pittsburgh in the United States, experts have established NPOs to take over urban planning and other roles, leading to a situation where government functions are actually shrinking. In Europe and the United States, "human resource mobility" (especially among experts) between NPOs and the government is high, and various mechanisms exist to encourage the independence of NPOs, such as intellectual support from local universities and financial support from foundations.

In contrast, in Japan, because the national and local governments have traditionally taken the lead in deciding policies, NPOs have inevitably been placed in a complementary position. However, in recent years, there has been an increase in cases where NPOs act progressively while receiving support from the government to concretely solve local problems. For example, the "Onomichi Vacant House Regeneration Project," an NPO in Hiroshima Prefecture, works to revitalize the local community by connecting people who want to rent out vacant houses with those who want to rent them. A relationship has been established where the government handles procedural tasks such as mediation and contracts, while the NPO handles other aspects such as matching, renovation, and holding events. Its board members include many experts such as architects, university professors, and designers, who utilize local networks to regenerate vacant houses while realizing attractive community development.

Compared to overseas, what Japanese NPOs overwhelmingly lack are "political nature" and "networks." Regarding political nature, there is a strong belief in Japan that charitable activities should distance themselves from the pursuit of profit, religion, and politics. For this reason, there is a strong image of activities being in non-political and non-market domains, but it is no exaggeration to say that this is hindering the independence of NPOs. Particularly in fields like community development, the more research is conducted overseas, the more the connection between NPOs and local politics emerges. "Because a politician was backing us..." "In exchange for rounding up votes for the mayor..." "Because the Prime Minister often came to inspect..." One hears many such stories.

When an NPO leader tries to implement a project, it is difficult to realize unless they have the "political strategy" and "negotiation skills" to make it concrete. However, they are also fully aware of the danger of becoming too close to specific political forces or the government, and they point out the importance of maintaining distance from those forces. The words of a British social entrepreneur, "I take the most care in maintaining a certain distance from the government and the market, even while being on good terms with them," were very impactful.

Regarding "networking," this is likely to become the most important issue for Japanese NPOs in the future. NPOs aiming to realize a social mission tend to be overwhelmed by daily operations and become socially isolated. The current situation is that they do not have the leeway to explore the direction the organization should take in the future or to think about political strategies. The reason NPOs in Europe and the United States are forming a single social sector is that there are many intermediary support organizations that assist small-scale NPOs, and they have succeeded in networking NPOs with the same social mission.

For example, in the UK, the "Development Trust Association," which supports and networks community development NPOs (civic enterprises) aimed at regenerating declining areas, was established in 1993. In 2011, it became a network organization (Locality) that supports a wider range of activities, addressing social issues in the community as a whole. Locality, which employs experts in various fields, not only provides professional advice to individual organizations but also widely introduces their activities and seeks to network them with other organizations. Within such a network, small NPOs are not isolated, and it serves as an opportunity to be given the courage to work hard and support each other.

In the future, for Japanese community development NPOs to become a powerful "third force" (neither government nor market) that addresses community needs falling through the cracks of government support, the question will be how to diversify their financial foundations, how to enhance their political negotiation skills, and how to build collaborations and networks not only domestically but also with overseas NPOs.