Transcript Making Nonprofit Satellite Account: Japanese Experience

Making Nonprofit
Satellite Account:
Japanese Experience
Naoto Yamauchi, Osaka University
October 11, 2006
Working Party on National Accounts, OECD
1
What is Nonprofit Satellite Account ?
A satellite account of nonprofit institutions is a
comprehensive statistical system to describe
activities of the nonprofit sector, in consistent
with 1993 SNA.
 It has been proposed by the UN Statistics
Division in collaboration with Johns Hopkins
CNP team.

2
UN Handbook
For inplementation, Handbook on Non-profit
Institutions in the System of National Accounts
was released in 2003.
 It is a manual of estimation procedures, and
contains definition, classification, key
variables and tables, data collection strategy
etc.

3
Why Nonprofit Satellite Account ?
Civil society, nonprofit and nongovernmental
sector: an emerging force worldwide
 Increased policy interest
 But, insufficient statistical information
 Need comprehensive and detailed statistical
system, preferably consistent with SNA

4
JHCNP and Satellite Account
Johns Hopkins Comparative Nonprofit Sector
Project (JHCNP) is a unique private initiative,
and has produced statistics on nonprofit sector
for well over 30 countries including Japan
since 1990s.
 At the new phase of the project, they call on
national statistical offices to prepare a “satellite
account” on the nonprofit sector and
philanthropy as part of their regular economic
data gathering and reporting.

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Towards More Comprehensive Picture
Nonprofit satellite account will pull together a
much more comprehensive and reliable picture
of the nonprofit sector than has ever been
available by estimating scale and structure of
the sector.
 As part of this process, statistical agencies are
also called on to estimate the scale and value
of the volunteer effort these organizations
mobilize and to include this in estimates of
economic activity (from JHCNP website).

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Countries involved
To date, following 26 countries have
committed to implement Nonprofit Satellite
Account.
 Argentina, Australia, Belgium, Brazil, Canada,
Camaroon, the Czech Republic, France, Ghana,
India, Israel, Italy, Japan, Kenya, Kyrgyzstan,
Korea, Mali, Morocco, New Zealand, Peru,
Philippines, Slovakia, South Africa, Uganda,
the United States, and Zimbabwe

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Japanese Experience
Activities of nonprofit sector and roles of civil
society have received increased attention by
policy makers and researchers since mid 1990s.
 Local governments (many suffered from
serious financial problem) have tried to
contract out various activities to local
nonprofits.

8
Important Events for Nonprofits
1995: Disaster relief & urban reconstruction
in wake of Kobe Earthquake
 1998: Implementation of the Law to Promote
Specified Nonprofit Activities (“NPO Law”)
 2000: Nursing Care Insurance System begins
 2001: Tax-deductible donations for selected
public benefit nonprofit corporations begins
 2003: Implementation of amended NPO Law
 2006: Enactment of the New Public Benefit
Corporations Act

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Increasing Number of Nonprofit Corporations
30000
28,238
Annual # of accreditations
Cumulative # of accreditations
25000
24,763
Source: Cabinet Office Website
(Data as of August 31, 2006)
20000
19,963
15000
14,657
10000
9,329
5,328
5,626
5000
5,306
4,800
3,703
3,156
1,980
1,176
3,475
2,470
1,176
0
1999
2000
2001
2002
2003
2004
2005
2006
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Research team for Japan
Economic and Social Research Institute
(ESRI) of the Cabinet Office officially
committed to implement nonprofit satellite
account project.
 They started two year (2005-2006) project, by
contracting out to private research institute.
 Research team of 7 economists and
practitioners has been set up.

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Working Definition in the Handbook
NPI must fulfill the following;
 Organizations
 Not-for-profit and non-profit distributing
 Institutionally separate from government
 Self-governing
 Non-compulsory membership
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Treatment of NPIs in the 93SNA
source:JHCNP
Sectors of the System
Type of
Non-financial Financial
institutional
corporations corporations
unit
sector
sector
General
government
sector
Households
sector
NPISH
sector
(S.11)
(S.12)
(S.13)
(S.14)
(S.15)
C1
C2
Corporation
Government
units
G
Households
Non-profit
institutions
H
N1
N2
N3
N4
N5
13
Institutional Units Cross-Classified in 93SNA
source: JHCNP
Type of
Institutional
Unit
Sector
Non-financial
corporations
sector
Financial
corporations
sector
General
government
sector
Household
sector
NPISH
sector
Non-financial
Financial
corporations and corporations and
Corporation
quasiquasicorporations
corporations
Government
units and social
security funds
Government
units
Households
NPIs
Households
Non-financial
market NPIs
Nonmarket NPIs
Financial market controlled and
NPIs
financed mainly
by government
Nonmarket NPIs
serving
households
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ICNPO:International Classification of
Nonprofit Organizations
1. Culture & Recreation 2. Education & Research
3. Health 4. Social Services 5. Environment
6. Development & Housing
7.Law, advocacy and politics
8. Philanthropic intermediaries and voluntarism
promotion
9. International 10. Religion
11. Business and professional associations, unions
12 Not elsewhere classified
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Relation between ICNPO and Primary Statistics
Basic Survey on Civic Today’s Private School
Orgs
Finances
X
1) Culture/Recreation
Survey on Private
Nonprofit Orgs
X
2) Education/Research
X
X
3) Health Care
X
X
4) Social Services
X
X
5) Environment
X
6) Development/Housing
X
7) Law, Advocacy, Politics
8) Philanthropic
Intermediary,
Voluntarism Promotion
9) International
X
X
10) Religion
X
11) Business &
Professional Associations,
Labor Unions
X
12) Other
X
Survey on Medical
Economics
X
X
X
X
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Three Versions of Accounts Suggested in
the Handbook
 1993
SNA basis
 SNA + non-market output of market NPIs
 SNA + non-market output of market NPIs
+ value of volunteer labor
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Non-market output of market NPIs
Non-market output of market NPIs (eg. free
phone consultation by private hospitals) is not
counted under 1993 SNA, but should be
counted under nonprofit satellite account.
 Because such non-market output, often
supported by charitable giving, is important
part of NPIs, although that may not show up in
sales revenue.

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Relationship between NPI and Market/
Non-Market Output
Market NPI
Non-Market NPI
Market Output
Non-Market Output
X
X
X
19
Institutional Sectors and Market, Non-Market Categorization of
Japanese NPIs
NPI
Institutional Sector
Market vs. NonMarket
Medical Corporations
Non-Financial
Institutions
Market
Producers of Nonprofit
Services Serving Households
NPISH
Non-Market
Producers of Nonprofit
Services Serving Businesses
Non-Financial
Institutions, Financial
Institutions
Non-Market
Incorporated Nonprofits
Households, NPISH
Non-Market
Unincorporated Voluntary
Associations
Households, NPISH
Non-Market
20
Valuing Volunteer Labor
Because volunteer labor is so important for
nonprofits, imputed value of volunteering is
counted under nonprofit satellite account.
 Volunteer time is valued based on the
replacement cost (not opportunity cost)
method, using average wage of welfare and
social service field.

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Scale and Structure of Japan’s NPIs
The scale of Japan’s NPI in 2003
inc. non-market output of market NPIs
 Output: 36.3 trillion yen
 Employee compensation: 19.1 trillion yen
 Gross value added: 20.8 trillion yen
compared to NPISH: 9.8 trillion yen

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Expenditure & Revenue Structure of NPI
1) Expenditure
60,000
50,000
40,000
Billion
Yen
Property Income Payments
Contributions, Subsidies, Other
transfers (payments)
Operating Expenses
363
611
557
237
15,344
13,695
30,000
17,555
18,870
20,000
10,000
35,052
16,830
22,300
27,829
0
1990
1995
2000
2003
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2) Revenue
from property income
60,000
50,000
40,000
Billion
Yen
from contributions, subsidies,
donations
from sale of services
1,754
632
2,578
26,835
24,824
30,000
678
22,161
24,053
20,000
10,000
13,691
18,451
22,232
27,447
0
1990
1995
2000
2003
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Gross Value Added by Type of Organization
Unincorporated
Nonprofit Orgs.
25,000
20,000
Specified nonprofit
corp.
Survey on Private
Nonprofit Orgs.
0
0
M edical Corp.
15,000
116
35
School Corp.
0
5,669
5,071
0
Billion
Yen
10,000
0
0
4,292
11,119
3,407
5,000
8,558
6,043
4,245
2,092
2,644
1990
1995
3,797
3,903
2000
2003
0
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Gross Value Added by Field of Activity
25,000
20,000
Billion
Yen
15,000
10,000
5,000
Other
11:Professional orgs., Trade Unions
10:Religion
4:Social services
3:Health care
2:Education and research
502
694
688
3,099
512
868
829
458
2,010
740
8,626
1,555 602
601
719
751
3,580
11,257
6,103
4,287
2,100
2,657
3,817
3,935
1990
1995
2000
2003
0
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NPIs including Imputed Value of Volunteering
2003 in billion yen
Total
(1)Culture and recreation
(2)Education and research
(3)Health
(4)Social services
(5)Environment
(6)Development and housing
NPI of SNA standard,
NPI including non
Value of
market output of
volunteering
market NPIs
20,842
72
3,935
11,257
3,580
52
11
NPI including
volunteering
1,808
212
334
94
479
213
254
22,650
284
4,269
11,351
4,059
265
265
2
114
116
40
-
40
(9)International
(10)Religion
4
751
0
107
4
858
(11)Business and professional
associations, unions
719
-
719
(12)Not elsewhere classified
420
-
420 27
(7)Law, advocacy
and politics
(8)Philanthropic intermediaries
and voluntarism promotion
Growth of NPIs overtime


In Japan growth rate of value added of NPIs has been
much higher than GDP, since 1990s including the
period so called “lost decade.”
As a result, relative size of gross value added
produced by NPIs to GDP has increased from 2.2%
in 1990 to 4.2% in 2003.
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Growth rate of NPI &GDP
4.5
6
6.15 4.2
6.07
5.90
3.5
3.4
5
3.0
4
2.6
3
4.0
2.5
2.2
2.0
NPI
2 growth rate
GDP growth rate
1 of NPI to GDP
ratio
1.5
0
0.5
1990
-1
ratio of NPI to GDP
Annual growth rate
7
1.0
1990-1995
1995-2000
2000-2003
0.0
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Issues for discussion (1)
Unit of estimation is ambiguous
Establishment vs. institution vs. activity
‘Non-profit-distribution’ can be applied to
institution, although the Handbook suggests
establishment as unit of estimation
 Valuing volunteering is inconsistent
While unpaid volunteers are valued, paid
volunteers (paid but much lower than the
market rates, common in Japan) are not be
valued.

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Issues for discussion (2)
Definition of NPIs is still amboguous
Eg. Are national universities NPIs due to
incorporation or general government ?
 ICNPO: demerit of hybrid system
Eg. Should NPI for international healthcare
classified as international or healthcare?

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In Conclusion
Nonprofit satellite account (NSA) provides
very useful information on the nonprofit sector
 It would be useful to produce NSA regularly
(eg. every 5 years)
 More countries are welcome to NSA
implementation. The more countries involved,
the richer the international comparative
statistics.

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