Abstract
The governance of nonprofit organizations, defined as a system to define organizational goals and policies, oversee management and ensure accountability, has received scant attention in Japan. This paper finds that the corporation law enacted in 1998 that has provided a legal framework for citizens’ nonprofit activities for public benefit is flawed with regard to governance. Although the Nonprofit Corporation as defined in this statute is a membership corporation, one of its provisions is that directors represent the corporation. Nevertheless, members do not have the right to vote for directors, resulting in an incoherent structure of governance. Moreover, neither directors’ duties no.their accountability is clear in the statute. The nonprofit corporation law in the US, in contrast, defines a clear structure of governance in which the board of directors is made responsible for the operations of the organization and accountable to the general public. Nonprofit autonomy and self-discipline in the US may well be highly regarded, but in the US commentators have argued that such a structure is theoretical and difficult to put in practice, calling for reform to enhance nonprofit accountability. This paper suggests that Japanese NPOs should review, bearing the lessons from the US in mind, their bylaws so as to establish accountable structures of governance.
