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Some 12% of nonprofits in major Japan cities dormant, some used for crimes

Performance records of NPO corporations indicating a lack of activity, showing that they are effectively dormant. (Mainichi)

TOKYO -- About 12 percent of 17,316 specified nonprofit corporations in central Tokyo and 20 other major cities nationwide are dormant, with some of them used for crimes, a Mainichi Shimbun survey has found.

Under current regulations, local governments that are supposed to oversee nonprofit organization (NPO) corporations cannot take action on those 2,138 dormant bodies, despite their potential for abuse. The 17,316 NPOs analyzed are only about one third of the 50,866 entities registered at the end of March 2016, according to Cabinet Office figures.

The Mainichi survey is based on analyses of performance reports filed by these 17,316 NPOs with their local governments. Of these, 1,184 had no achievement records, and 954 did not submit a report at all. These criteria to determine dormancy were chosen on the advice of Yasuhisa Yamada, a senior board member of the Japan Center for NPO Evaluation, as there is no government-set definition.

As high as 80 percent of those corporations without achievement records also had no activities listed in fiscal 2014, suggesting they had been dormant for some time.

By city, Shizuoka in central Japan had the highest ratio of dormancy at around 28 percent, followed by Chiba east of Tokyo at about 25 percent, and Kitakyushu in southern Japan at approximately 24 percent. In contrast, the figures are just 7 percent for Hiroshima in western Japan, about 8 percent in Saitama north of Tokyo, and some 9 percent for Kawasaki south of Tokyo. About 10 percent of analyzed NPO corporations in the 23 wards of Tokyo were dormant.

These variations seem to suggest that efforts by local governments to encourage NPOs to carry out activities are working. In the case of Saitama, city officials send letters to NPOs to prompt the filing of performance reports.

Besides "dormant" bodies, 235 corporations reported in fiscal 2015 that they are "preparing activities," and more than 80 percent of them, or 192 NPOs, wrote the same thing in fiscal 2016. Sixty-seven corporations filed their performance records without details on the timing and location of their activities, which should be available if they had really carried out those activities.

Meanwhile, 439 NPO corporations reported no revenues or expenditures. Many active NPO entities are considered to have no income because of their volunteer work, but some of the questionable bodies reported no spending despite stating they are "building training facilities."

Even dormant corporations can survive as far as they keep submitting performance reports, according to a local government official in charge of the entities. The relevant law gives local bodies the authority to fine or retract the certificates of NPO corporations not submitting reports, but it is up to the local government to decide on individual cases. "Finding out what those corporations are doing is no easy task," the official said. "They are essentially doing whatever they want."

However, there have been criminal cases involving incorporated NPOs in recent years. Two NPO operators were arrested in June this year by the Metropolitan Police Department on suspicion of defrauding debtors of money paid back by their lenders after paying excessive interest. Moreover, dormant NPO corporations have become targets of commercial transactions, and one such corporation named "Life Plan" was bought and used to set up bank accounts for a suspected investment fraud scheme costing its victims some 100 million yen, a Mainichi Shimbun investigation has found.

(Japanese original by Yasuji Mukaihata, Ryuji Tanaka and Go Terada, Special News Group)

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