Social welfare is not for profit

Many publicly subsidized operators of social welfare services were found recently to have accumulated large amounts of internal reserves. They need to realize that their purpose is not to generate profits, but rather to do their best to utilize their know-how and resources to contribute to improving the well-being of the socially weak, especially low-income people who are not adequately covered by the nation’s social insurance systems.

These nonprofit organizations run such facilities as critical nursing care homes for the aged (tokubetsu yogo rojin home in Japanese or tokuyo for short), day-care service centers for children and support centers for disabled people.

Roughly 19,000 of these organizations across the country are exempt from income and property tax payments. Much of the costs to operate their facilities are covered by government subsidies and compensation paid out of social insurance systems. They enjoy tax-exempt status because they are engaged in activities that, unlike private businesses, will not generate profits but will instead enhance public interest.

Yet, a survey carried out by the health and welfare ministry two years ago at the request of a government panel on administrative reform found that tokuyo operators had internal reserves worth some ¥300 million on average. This has raised a question of whether social welfare services operators are really doing what they are expected to do.

In the case of tokuyo operators, much of their incomes comes from compensation paid out of the nursing care insurance system for the services they provide. In many cases, the operators have set aside the reserves to pay for repairs and reconstruction of facilities, but some operators were found to have accumulated large amounts of reserves whose purposes were not entirely made clear.

The Abe administration’s deregulation panel has demanded that social welfare services operators disclose their financial statements and their managers’ salaries. It also has called on the health ministry to ease the rules so that private businesses will be allowed to run tokuyo homes. Currently only local governments and social welfare services organizations are allowed to operate tokuyo.

It is easy to see that behind the panel’s demand is the business community’s interest in operating welfare services. But companies need to earn profits and pay dividends to shareholders. The operation of tokuyo homes is not for profit.

Serious social and ethical problems could result if businesses launched tokuyo homes and then withdrew from the operations on the grounds that they were not generating enough profits. Special attention should be paid to the fact that more than 50 percent of tokuyo occupants are low-income people who live with physical or mental conditions that require special nursing care.

While the entry of private businesses into the sector could be problematic, the current operators of social welfare services for their part need to improve accountability. Some officials of these operators were found unable to correctly read financial statements, while some operators do not have their own websites — even though they are now required to put their financial statements on the Web.

Some operators apparently intend to profit on the compensation payments from the nursing care insurance system — forgetful of their duty to contribute to improving the welfare services in local communities. This is unpardonable.

Operators of social welfare services should not forget that their duty includes supporting needy people who drop through the social security nets such as public livelihood protection, unemployment insurance, children’s welfare services and nursing care insurance. Officials and employees must remember their mission and strive to improve their capabilities as professionals who shore up Japan’s social welfare system.

  • Raymon555

    Anybody here ever try oil trading? I’ve been trading oil and making very good money. I tried the forex and that was no good and stocks can be too volatile for my tastes but with oil trading I’m making very good trades and money. I’m using the method by Traders Superstore for oil trading, just Google Traders Superstore and you should be able to find them.

  • http://www.sheldonthinks.com/ Andrew Sheldon

    This seems a bit of a beat-up because reserves are provisions for future known expenses, but also unforeseen contingencies or events. It might however indicate that these institutions are too generously subsidised. This however only highlights the fact that these institutions need to be ‘for profit’, so that there is a counterparty to ensure money is not wasted or misappropriated. One govt agency looking after another is fraught with risks.