Dogs and Demons_ Tales From the Dark Side of Japan - Kerr [122]
Nor is the damage limited to individuals. When economists measure «public savings,» they tend to concentrate on how much individual savers put in the banks, and overlook endowed trusts and charitable foundations. Japan s Ministry of Finance, intent on ensuring that labor and money go straight to manufacturing corporations, has discouraged charitable giving and volunteerism. Almost no tax deductions are allowed on charitable gifts, and severe hurdles have made establishing nonprofit foundations extremely difficult.
Yet trusts and foundations represent national wealth in a very real sense. In the United States, by 1998 there were more than 1.5 million nonprofit foundations with annual revenues of $621 billion, accounting for more than 6 percent of the GDP. Nonprofit organizations are so important that they make up their own sector of the economy, known as the «independent sector,» which employs 10.2 million workers. Assets from these foundations are the fuel used to fire start-up companies and boost the capitalization of the stock market. The proceeds fund schools, hospitals, libraries, and myriad other institutions. The IRS grants about $12 billion in tax exemptions to foundations annually, and an additional $18 billion to individuals as charitable contributions-a total of $30 billion. That $30 billion makes up part of America's overall savings, even if it does not belong to individuals or companies.
In Japan, charitable giving is negligible. It stems from the lack of a philanthropic tradition, an undeveloped legal structure to regulate the work of nonprofit organizations, and tax disincentives. Only in 1998 did the government pass a law making civic groups eligible for nonprofit status, but the law provided no tax benefits either to the organizations themselves or to the people giving to them. For the foreseeable future, the lion's share of nonprofit endowment will continue to lie in tokushu hojin and koeki hojin established as amakudari nests for retired bureaucrats and feeding off government money. They are parasites on the national wealth, not contributors to it.
Canny fund managers in the United States have multiplied their funds' assets at fantastic rates. Yale University's assets rose from $3.9 billion in 1996 to $7.2 billion in 1998, while Harvard's rose from $9.1 to $13.3 billion during the same period, the two universities enjoying three-year returns on investments of 84.6 percent and 94.9 percent, respectively. Although these years were a bumper season for the stock market, and endowments do far less well in slow periods, foundation endowments grew tremendously during the 1990s. Meanwhile, Japan's foundations, their money invested in bank accounts earning no interest and in stocks making no yields, withered on the vine. By 1997, the assets of the twenty largest U.S. foundations came to twenty-two times the assets of Japan's twenty largest.
The difference between the United States and Japan is further underscored by the existence of something like the American Cancer Society, which in 1998 had more than two million volunteers, dispensed more than $100 million for research, and had assets of $1.1 billion. There is no private organization in Japan that functions on a scale remotely like this. By the beginning of the twenty-first century, total assets of American nonprofit groups could be estimated as approaching $2 trillion – a hoard of savings that Japan couldn't begin to match. And the difference lies not only in dollars in the bank but in a legal infrastructure and the expertise of millions of people in managing such funds.
It's difficult to compare university-endowment growths, since Japanese university endowments are one of the nation's great secrets – a textbook case of how hard it is to find accurate information in Japan. In the summer of 2000, an extensive