Hometown donations surge, especially after natural disasters

JIJI

More people are remitting cash to municipalities where they do not live, such as their childhood homes in the countryside, using the tax-deductible furusato nozei (hometown donation) program.

Spikes are seen whenever a natural disaster strikes, and the surge in giving has led some to say a culture of donations may now be taking root in Japan.

Donations to local governments under the program totaled ¥45.4 billion in only the first half of fiscal 2015, topping the ¥38.9 billion figure for the whole of fiscal 2014, the Internal Affairs and Communications Ministry said.

Introduced in fiscal 2008, furusato nozei allows people to make donations to municipalities and prefectures of their choice — not necessarily their hometowns. In response, donors qualify for deductions on their income and residential taxes.

Many local governments thank the donors by sending gifts, such as baskets of vegetables or lottery tickets. In addition, many allow the donors to specify how their money should be used, such as helping parents with young children or environmental projects.

The program has become widely known, due partly to competition among municipalities for donors by offering attractive gifts.

There was a surge in donations following the March 2011 earthquake, tsunami and nuclear disaster, which ravaged the coast of Tohoku.

In fiscal 2015, donations increased sharply to municipalities that were hit by disasters, such as the city of Joso in Ibaraki Prefecture, which suffered deadly floods after the Kinugawa River burst its banks in September.

The city received only nine donations in the first five months of fiscal 2015, but this number soared to around 3,000 after the floods. By value, donations exceeded ¥400 million, including those made via humanitarian organizations that provide emergency assistance. In this case, the city was so busy focusing on recovery work it did not offer gifts of thanks.

“We’re very grateful for the donations that arrived despite the lack of gifts,” an official of the city government said. “We plan to use all the money for disaster recovery work.”

Meanwhile, Hakone, a hot spring resort town in Kanagawa Prefecture that suffered volcanic activity last summer, has received donations of ¥23.62 million so far this fiscal year, compared with ¥5.48 million for the whole of the previous year.

“Some donations came with messages of encouragement,” an official of the town government’s financial affairs division said. “They made us realize that we have the benefit of wide support.”

To promote the furusato nozei system further, the central government doubled the upper limit on the amount of tax deductions in January 2015. The ceiling depends on factors such as the donor’s annual income.

The government also introduced a system in April under which a wage earner is not required to file a tax return to claim deductions for donations to up to five local governments.

Some 40 percent of donors use the “one-stop exception system,” said an official involved at the Miyakonojo City Office in Miyazaki Prefecture.

Total donations to local governments under the furusato nozei system in the first half of fiscal 2015 soared roughly fourfold from a year earlier. With the exception of Joso and a few other municipalities, however, most local governments did not witness steep increases in donations.

Noting that donations are now coming in more heavily, an internal affairs ministry official said it is hoped that a culture of giving will start to take root in Japan.