A long with nonprofit organizations (NPOs), incorporated bodies, including incorporated foundations, can play an important role for communities and society through such activities as promotion of academic researches, social welfare and cultural activities. In December 2008, the revised law governing such bodies went into effect — the first major reform in about 110 years.

Under a new system, incorporated bodies are divided into two types: ordinary incorporated bodies and incorporate bodies for public services. The first type can self-register themselves. The second type must be certified by national or prefectural third-party organizations but will benefit from tax privileges.

In the past, incorporated bodies were under the jurisdiction of various government ministries, many of them receiving subsidies from the latter. Thus special connections were formed between them. Of the 1,423 central government bureaucrats (division chiefs or those in higher positions) who retired during the one-year period from Aug. 1, 2007, the largest number of 500 or 35.1 percent landed jobs at incorporate bodies. This is more than the previous period’s 444 or 34.6 percent.

Under the new system, incorporated bodies are solely under the jurisdiction of the Cabinet Office, severing the special connections with government ministries. Ordinary incorporated bodies have to pay tax but can operate relatively freely, while those registered as public services bodies have to meet strict conditions including a cap on the amount of revenue they can generate. Within five years, some 25,000 incorporated bodies have to decide which status to seek — ordinary or public services. But so far, only 13 organizations have been certified as public services bodies while four have registered themselves as ordinary bodies.

Organizations seeking the public service status have to submit detailed account settlement documents both before and after certification. Some organizations are apparently daunted by the large amount of paper work involved. The government should listen to these organizations and consider loosening the conditions for incorporated bodies for public services.

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