Art of Take and Give: Japanese Learn Philanthropy : Donations: Many firms have concluded that charitable giving is an essential cost of doing business globally.
As he sat in a Tokyo room last week, Craig Smith--publisher of the Seattle-based Corporate Philanthropy Report--reflected on the dramatic difference in his reception on this trip to Japan and his visit just five years ago.
Then, many Japanese executives were baffled at his questions about their plans for corporate philanthropy because their concept of charity was taking care of their own employees. This time, Smith said, the discussions have far more depth. In a series of speeches before Japanese business leaders this week, he’ll be discussing subjects such as the ethics of using philanthropy as a marketing tool.
In the years since Smith’s first visit, the Japanese have closely studied American-style corporate philanthropy and concluded that charitable giving is an essential cost of doing business as they expand investments throughout the world. Particularly in the United States, the value of Japanese corporate donations rose from a modest $30 million in 1986 to about $300 million in 1990 and may reach $400 million in 1991.
“Leading Japanese companies are now on the cutting edge of issues relating to corporate philanthropy,” Smith said. “The scope of Japanese companies is expanding.”
By shedding its neophyte status in philanthropy in so short a period, corporate Japan is again showcasing a strength--its ability to quickly and successfully adapt. After studying American factories in the 1950s, Japanese companies improved their processes and are among the world’s manufacturing leaders. After studying the charitable activities of American firms, Japanese companies are preparing to assume some leadership in corporate philanthropy.
They are taking lessons learned in the United States and initiating corporate-giving programs in Europe and Asia and, on a very modest scale, bringing U.S. models to Japan.
Consider these recent developments: Tokio Fire & Marine, an insurance company, is establishing a major program designed to address the needs of Japan’s elderly. Asahi, the Japanese brewer, is funding medical facilities in Japan. Fuji-Xerox, a joint venture firm, is subsidizing more volunteer work by its employees. And firms, including Omron Tateishi Electronics, are beginning to provide job training for the physically impaired in Japan. However, the United States is receiving the lion’s share of the expanding Japanese largesse, prompting some critics to say Japanese philanthropy is a ploy to derail any U.S. sentiment to get tough with Japan on the trade imbalance between the two countries.
“This is cheapest way to fend off criticism ,” said Pat Choate, a Washington economist who has written a book on Japanese lobbying. “If you can spend $1 billion (on nonprofits) and freeze Congress and continue to run a $40-billion trade surplus, it’s worth it.”
Choate said he suspects that Japanese charitable activities are part of an “influence-peddling” campaign because big business associations in Japan and the Japanese government are actively encouraging philanthropic efforts. Choate contends that the Japanese are pacifying powerful congressional constituents by donating to their “pet” projects.
“This strategy was initiated in the United States and they’re taking this element to Europe,” Choate said. “It’s a cookie-cutter approach to influence. Charities are run by the elite, and this is a cheap way to buy the power network.”
Leading Japanese advocates of expanded corporate philanthropy say they are merely adopting American-style methods of displaying good corporate citizenship.
“There is a lot of Japan-bashing,” said Masayuki Kohama, who coordinates much of Hitachi’s national philanthropic activity from an office in Los Angeles. “Some (Americans) say the Japanese don’t purchase U.S. products. Some say the Japanese are stealing American technology. Some say the Japanese are only interested in profits. This is not true. Japanese companies want to show that they are good corporate citizens.”
Regardless of the Japanese motives, American nonprofits are eagerly seeking additional Japanese support because of a growth in demands for services and a lackluster response from U.S. firms. Japanese corporations, including the Industrial Bank of Japan, Toshiba and NEC, are establishing U.S. foundations.
Mitsubishi Electric just established a foundation that will provide education and job training for physically disabled youths. Hitachi has provided more than $4 million for nonprofit projects for minorities over the past five years. NEC Corp. later this year will begin to underwrite science and technology instruction in high schools across the country. The Toyota USA Foundation recently provided $2 million to the Louisville, Ky.-based National Center for Family Literacy, which provides instruction to undereducated parents and their children.
In the Southland, the Japan Business Assn. of Southern California, teaming with the South Bay Rotary Club, recently helped raise $120,000 for athletic programs for local youths this year. The JBA, which donated $157,000 to schools in Los Angeles and Orange counties in 1990, now aims to boost its support to local schools by 20%.
Also, Asahi Homecast Corp., which broadcasts Japanese-language television programs, recently bought time on Los Angeles’ KSCI-TV to broadcast the first Ume Charity auction, a black-tie, $100-per-ticket event to raise funds to plant 500 flowering apricot trees in Schabarum Regional Park in Rowland Heights. Diners and viewers--bidding via telephone--vied for goods donated by local Japanese firms. The auction, and a more modest weekly television campaign that ended this month, raised about $100,000.
Although such Japanese efforts accounted for about 5% of all corporate giving in the United States in 1990, their giving is the fastest-growing dimension of philanthropy in America. “Within the next two to three years, Japanese philanthropy (in the United States) could grow to $1 billion,” Smith said.
However, there is a disturbing impersonal side to the exchange between Japanese firms and American nonprofits, said Steve Clemons, executive director of the Japan America Society of Southern California.
“Many nonprofits seek money, but don’t seek personal involvement from the Japanese,” Clemons said. “That’s not corporate citizenship, that’s paying off. Philanthropy is more than giving money.”
Japan’s Keidanren, a business federation, has led Japan’s global corporate philanthropic effort by establishing the Committee for Better Corporate Citizenship, a volunteer membership group that urges Japanese companies to aid communities around the world.
In addition, Keidanren last year established a “1% Club” to recognize Japanese companies that set aside at least 1% of their pretax earnings for global philanthropy. About 260 firms have made pledges, and many of those companies this year began to establish actual programs.
Outside the United States, Japan has concentrated most corporate charity in Southeast Asia, the site of rapidly growing Japanese investment, said Eiji Mizutani, director of Tokyo-based operations for the Wyatt Co., an international management consultant.
“The companies are responding because there are great expectations in Southeast Asia--especially in Malaysia and Thailand,” Mizutani said. “People in that region will no longer accept a company that builds polluting plants and cuts down trees if that company doesn’t return something to the local population.”
Japan is a major importer of Malaysian timber. Mitsubishi Corp. recently announced that it would over the next four years plant 1 million seedlings on 50 hectares in Malaysia. Moreover, a Keidanren committee recently established a think-tank in Malaysia to help Japanese businesses become better corporate citizens.
Some Japanese argue that philanthropy will shortly become a more firmly established part of how Japanese corporations operate in Japan. The Japanese government can’t continue to assume all increases in the social welfare burden, said Kiyohiko Arafune, the Japanese government’s Los Angeles-based consul general. Arafune is among those leading the campaign to get Japanese companies to expand their charitable activity in the United States.
“We also have social problems in Japan,” Arafune said. “Soon after the year 2000, one in four in Japan will be over (age) 65. We also have many illegal immigrants living and working in Japan and the government can’t help them because they don’t want to expose themselves (to authorities). . . . We know we cannot handle all these problems by increasing taxation.”
Tracking Corporate Philanthropy
Japanese corporate giving in the United States alone is approaching the value of American corporate giving to all foreign nations. American corporate giving in foreign countries in 1990: $400 million Japanese corporate giving in the United States in 1990: $300 million
Where Japanese funds go in U.S. (estimate) Donations and research grants to university-level institutions: 50% Donations and grants to elementary & secondary education (K-12): 20% Local charities, social and medical programs: 15% Grants to the arts and cultural programs: 15%
Source: Corporate Philanthropy Report
