Difference among Charitable Organizations
Characteristics of legal entities used for public interest purposes are as follows:
Note: if you wish to establish a Public Interest Incorporated Association (PIIA, KOUEKI SHADAN HOUJIN) or Public Interest Incorporated Foundation (PIIF, KOUEKI ZAIDAN HOUJIN), you are requested to establish a General Incorporated Association (GIA, IPPAN SHADAN HOUJIN) or General Incorporated Foundation (GIF, IPPAN ZAIDAN HOUJIN) first, and then apply for the authorization of the administrative agency.
(Italicized words are Japanese in roma-ji)
| General Incorporated Association | General Incorporated Foundation | NPO | |
|---|---|---|---|
| Number of incorporator needed | 2 or more | 1 or more | 10 or more members |
| Director | 1 or more (3 or more, if it has board of directors) | 3 or more | 3 or more |
| Auditor | Not needed (1 or more, if it has board of directors) | 1 or more | 1 or more |
| Accounting auditor | Large scale corporations should have an accounting auditor | Large scale corporations should have an accounting auditor | Not needed |
| Councillor | Not needed | 3 or more | Not needed |
| Fundamental fund | Not needed (it can choose to have fundamental fund) | 3 million yen or more fundamental fund is necessary | Not needed |
| Necessary time for establishment | within 2 weeks | within 2 weeks | about half a year |
| Tax | If it meets the requirements of nonprofit corporation, only profit-oriented business is subject to taxation, and non-profit business is tax-free. If it does not meet the requirements, all the income is subject to taxation. | Only profit-oriented business is subject to taxation. | |
As you can see from above, not only certified public interest corporation (KOEKI HOUJIN, such as PIIA and PIIF) but also general incorporated association, general incorporated foundation and NPO (non-profit organization) can have benefit of tax, though there are still some unique tax advantages to certified public interest corporation.
Detailed Comparison
Difficulty of Procedure
GIA/GIF＜＜NPO＜＜PIIA/PIIF
(easy)＜＜＜ ＞＞＞(difficult)
Advantage of GIA over GIF
- The number of people necessaary to incorporate is at least two. On the other hand, GIF needs at least seven people (three directors, one auditor and three councilors). Moreover, GIA can continue to exist as long as at least one member remains in the association.
- No initial property is necessary. Fundamental fund of more than three million yen is necessary for GIF, and the fund is not refundable.
Advantage of GIF over GIA
- If GIF steps up to a PIIF, there is a preferential tax treatment for donation, and this will be an incentive to make a donation to PIIF.
- The GIF can be established by will.
Advantage of GIA/GIF over joint-stock corporation (KK, KABUSHIKI KAISHA)
- Establishment cost is low. Actual cost of KK (without professional fees) is about 200,000 yen. GIA/GIF's cost is about 110,000 yen.
- GIA/GIF can do nonprofit business.
- GIA/GIF may project better image because it is a kind of nonprofit organization.
Advantage of GIA/GIF over NPO
- To establish a NPO requires a lot of time and effort. You have to gather 10 or more members, and need authorization of the Articles of Incorporation at the Prefectural/National Government (GIA/GIF's Articles of Incorporation need to be notarized at a notarial office. It is easy and quick.).
- GIA/GIF is only dismissed in accordance with laws or by court procedure. NPO is dismissed if the Prefectural/National Government decides to do so.
Advantage of NPO over GIA/GIF
- Currently, the NPO has a longer history than GIA/GIF. The NPO has better nonprofit public image.