Dormant Deposits for Social Issues
Japan has been confronting many social issues such as child poverty, isolation, or deterioration of local communities. Non-profit organizations and the private sector are working to address social issues, but most of them are facing chronic shortage of money and staff. A new initiative was started in 2019, utilising dormant bank deposits for providing support to address social issues to which the national and local governments cannot respond one by one.
With the extensive ageing of the population, social issues are getting more complex and diverse in Japan, including those concerning isolation from society, child poverty, abuse, and so on. The national and local governments are taking measures to address these issues. To approach people who need assistance facing social issues, it is often the case that public policy measures by governments, which always have to ensure fairness and uniformity, face difficulties in providing proper responses to all issues one by one. Various non-profit organisations are working on the social issues beyond administrative restrictions. However, in Japan, it is also often the case that many non-profit organisations are facing chronic shortages of money and staff.
In 2019, the Japanese government launched a new initiative to provide grants derived from dormant bank deposits to many private organisations working on solving social issues. Every year, it is estimated that dormant bank deposits unclaimed for more than 10 years generate approximately 120 billion Japanese Yen. On average, 50 billion out of 120 billion yen is reclaimed by original owners of bank deposits, and 70 billion remain unclaimed. The new initiative utilises a part of the unclaimed deposits for supporting vulnerable people and communities through providing grants to organisations working on certain social activities.
The new government Act stipulates three fields of activities covered by the initiative as follows:
i) activities to support children and young people
ii) activities to support people who are economically, socially disadvantaged and people with disabilities
iii) activities to support communities facing declining vitality or other social difficulties.
The Cabinet Office designated JANPIA to distribute funds to intermediate support organisations (“Intermediaries” hereafter). It publicly seeks Intermediaries that distribute funds to organizations to solve specific social issues set by Intermediaries within three fields.
In November 2019, JANPIA announced it selected 22 organisations as the first Intermediaries for 2019. to distribute approx. 3 billion yen for three years. Each organisation makes an agreement with JANPIA about what type of social activities it supports, in which area, for how long and how much it distributes to organisations. The projects selected vary widely within the three fields, for example,
-to support organisations upbringing operational capacity of “cafeteria for kids”: 119 million yen to be granted in total for 3 years
-to support organisations to support kids and youth with foreign origin: 248 million yen
-to support peer-support activities for those who are feeling difficulties in lives: 77 million yen
-to support activities for cancer patients to help finding jobs, or young patients supports: 116 million yen
-to support activities toward narrowing income disparities in the Chugoku area: 105 million yen etc.
Each of the Intermediaries calls for and selects the organisations carrying out activities to submit a detailed plan describing how they operate and how they measure their outcomes. JANPIA supports Intermediaries not just by providing funds to them, but also cultivating human resources. In Japan, non-profit organisations working on social issues face lack of managerial capacities. It accompanies each Intermediary by providing frequent dialogue and tutorials. All the Intermediaries then accompany each organisation they selected to carry out activities not just through grants but also by providing frequent dialogues towards better management and accountability.
An new intensive training course for the programme officers of Intermediaries was developed and provided. It is expected to have significant impact on the Japanese social sector by building capacity and capability. Through these processes, it is expected that a new scheme for utilising dormant deposits for social issues should lead to improvements in the lives of vulnerable people and communities.
The mechanism to utilise dormant assets unclaimed has been seen in many countries around the world for a long time. Some countries use such assets to replenish their national or state revenues. The number of countries and regions that utilise such assets for social issues is limited. Japan held an international symposium in May 2019 with participation of the UK, Ireland, British Columbia Canada and the UN. The Minister of Japan at the time mentioned in his closing speech, “national and local governments, international organisations, private companies and NPOs are seriously required to work together to solve social issues through utilising diverse funds, human resources and expertise”. The Cabinet Office will try every effort to support operations of this new initiative and to disseminate globally this innovative way of funding for utilising dormant assets for social issues.
What Makes Your Project Innovative?
The Basic Outline approved by the Prime Minister in 2018 stipulates the principles that organisations distributing / receiving funds should consider during their activities, operations and management. Its uniqueness lies in one principle for the private sector initiative, with three tiers consisting of private organizations working independent from government.
Another innovation is that the funds can be provided for multiple years. In Japan, government budgets are strictly managed under a single-year budget principle, whereas interventions to social issues generally take longer. The Act overcomes this restriction and ensures longer-term activities.
Another uniqueness in the global context is grants combining financial and non-financial support with a three-tier flow of funds from JANPIA to Intermediaries nationwide and to organizations anywhere. The Basic Outline prompts each organisation to find its own finance source looking at the after granting period, leading to the strengthening of their capability and capacity.
What is the current status of your innovation?
A new initiative is in the early implementation process. Operations fully started in 2019 after a two-year preparatory period since the approval of the Act. During preparations, the Cabinet Office set up a new Council under the Act to discuss compiling a Basic Outline describing detailed structures to realise the project. In 2019, the Cabinet Office announced JANPIA to play a central role in the selection of organisations to provide / receive funds from dormant deposits. It selected 22 Intermediaries for 2019 and each Intermediary select organisations to provide grants. Every year, this process will be repeated and new organisations engaging in this initiative will be born. The Cabinet Office monitors the initiative, ensuring it is properly executed and that it will not be used or seen as a complement to government budgets. Following the Basic Outline, a guideline was released on how to measure the impact of social activities for organisations granted under the initiative.
Collaborations & Partnerships
The Basic Outline encourages collaboration throughout the process. JANPIA collaborates closely with Japan's Business Federation, labour unions, and social sector leaders. It invites the application to grants from social entrepreneurs to grass-rooted NPOs. The Cabinet Office is conducting a study on how to spur collective impact along with this new initiative. This scheme has a big potential to spur momentum for social issues, including the SDGs, and to enrich mutual assistance in Japan.
Users, Stakeholders & Beneficiaries
Dormant money will be activated to improve the lives of vulnerable people and communities. Organisations engaged can improve performance with colleagues in the scheme. Organizations outside the scheme can also learn good practices on social issues through disclosed information.
JANPIA seeks new ways of involving private companies motivated for the SDGs and employees who have no experience as volunteers. These lead to an enrichment of mutual assistance capacity in Japan.
Results, Outcomes & Impacts
In Japan, there is a wide range of non-profit organisations working on social issues, but not so many that can act as Intermediaries immediately. 22 Intermediaries out of 49 applicants were selected in 2019. The Cabinet Office and JANPIA keep on disseminating this new scheme to uncover potential Intermediaries.
The Basic Outline also requires the measurement and visualisation of the impact of activities, but this has not yet been achieved in this early stage.
On the amount granted, it started with 3 billion yen annually from 2019 and almost the same amount is expected in the years to come. The remaining dormant deposits are securely managed according to the laws of Deposit Insurance Corporation. By operating the new scheme successfully, by enriching the capacity of the social sector, and by prevailing better understanding of the scheme widely, the amount provided will be increased.
It may not be easy, but JANPIA also envisages linking SDGs and activities under this scheme as a whole, in the future.
Challenges and Failures
As the project is in the early stages of implementation, there are no particular failures so far.
Because the dormant deposits are people’s assets by nature, wrongdoings such as fraud or influence peddling could potentially damage the scheme. One of the principles articulated in the Basic Outline was to prevent conflict of interest thoroughly. Each agreement between JANPIA and Intermediaries, and the ones between Intermediaries and organisations operating activities, cover preventive clauses.
Conditions for Success
The better understanding of the nature of the scheme among people is essential. First, organisations under this scheme are required to disclose information from the selection processes to daily expenditure and outcomes. JANPIA keeps on developing an innovative ICT system so that every organisation can easily report its activities and that people can easily access the disclosed information. Second, this scheme has strong potential to involve many people who have not engaged in activities for social issues. This may lead to improvements in Japanese subjective well-being through the rebuilding and strengthening of social capital. The Cabinet's Office and respective organisations should always bear in mind that this scheme is not just for own organisations’ sake but for people’s sake. Lastly, it is essential for each stakeholder and for people to share a sense of nurturing the scheme, allowing failure with tolerance.
Potentially, many other organisations outside the scheme, without grants, can learn and improve their own PDCA cycles from disclosed information through the scheme. Disclosed information will cover what type of interventions they take, or how they combined financial and non-financial supports on specific social issue in certain areas. The public sector can and should learn plenty from this achievement. This can lead to upbringing capacity of addressing social issues.
Internationally, there is an estimate that achieving the SDGs by 2030 would require 5 to 7 trillion dollars per year. Even larger funds are needed to solve entire social issues. To finance these solutions only with public funds is unrealistic. Utilizing funds, especially dormant assets in the private sector for social issues potentially deserves a lot of attention.
Through the International Symposium mentioned above, one common factor for success was recognised: supra-partisan party support from the legislative branch. In Japan, especially, the Act was born after intensive discussions among legislators. There is always the possibility that discussions will arise to utilise dormant deposits not for social activities but for fiscal consolidation. Supra-partisan support from policymakers always encourages the executive branch to operate this newborn system.
Another common factor found was to manage dormant assets with sufficient reserve to give people confidence that original owners of assets can always reclaim their own assets at any time in the future.
This new scheme may also have the potential to promote social innovation further if finance systems can be well structured with investments or loans. Japan will soon start to conduct a study on investments and loans by utilising dormant deposits.
The scheme has just started, but every year the number of organisations selected will accumulate. This means that the number of people who receive necessary support will increase. Within a few years, a big amount of data around social issues will accumulate because of the one-stop ICT system under development. Some may include failure cases. However, all the cases and data will then be significant to enrich all the activities around social issues, from public policy, academia, private companies, social entrepreneurs, to various non-profit organisations.