Looking for More People to Undertake ‘Unprofitable but Meaningful’ ActivitiesSoil’s efforts to subsidize nonprofit startups
Key Points
- Many nonprofits, including NGOs, small corporations, and volunteer groups, are plagued by funding issues.
- Soil is a public interest corporation that provides subsidies to nonprofit startups to back their activities.
- We need success stories to boost the number of people engaged in “unprofitable but meaningful” activities.
Many nonprofit groups striving to solve society’s problems face huge hurdles in terms of financing their activities. Even when the social significance of their work is clear, if nonprofits do not have the potential to generate returns as a business, they often do not receive sufficient aid to sustain their activities.
This is why Soil (external link, in Japanese) provides subsidies to newly formed nonprofit startups and gives them support so that they can grow.
To learn about the reasons for and significance of Soil’s support for nonprofits, The Nippon Foundation Journal interviewed Soil Executive Director Hirotaro Hosoi for this article.
We also asked how the number of people willing to undertake activities that are unprofitable but meaningful can be increased, and how an environment could be created in which such people can continue their activities on a long-term basis.
Not enough money or systems: The big challenges facing nonprofit organizations
The Nippon Foundation Journal Editing Department: What are the financial challenges facing nonprofits supporting grassroots social action?
Hirotaro Hosoi: In general, nonprofits do not have sufficient funds, but in particular, many do not have enough money to expand or strengthen their organizations.
The reason is that they don’t get enough donations in the first place. Moreover, while there are both public and private subsidies available, the number is limited. What’s more, even when a nonprofit is selected to receive a subsidy, the way the funds can be used tends to be limited. We therefore often hear that it can be hard for a recipient to expand its activities, with the procedures for doing so being quite complicated and groups finding it hard to use the funds they do receive freely.
Journal: Why do Japanese nonprofits have trouble getting donations? Is it because Japan does not have a deeply rooted culture of giving to organizations, or is it also because people do not feel close to the issues nonprofits deal with?
Hosoi: You’ve got a point there. Nonprofits working in areas like poverty or education, which are relatively easy to understand, tend to have an easier time getting donations, but groups working in areas that are not well-known do seem to have more difficulty getting donations.
In addition, there is a certain number of people who are anxious or reluctant to give donations, wondering if the money they give will be used properly or if transparency will be ensured.
Journal: Can you please tell us why Soil was founded?
Hosoi: As I was just saying, there are many social issues that are not being solved because groups engaged in trying to solve them are facing financial difficulties even though their endeavors have social merit; Soil was founded in 2023 with the aim of ameliorating this situation.
While he was still a student, Soil’s founder, Tetsushi Hisata, had established the company Speee (external link, in Japanese) to support digital marketing, and when it grew large enough for listing on the stock exchange, he decided to use his assets to benefit society rather than himself.
After Speee was listed, Mr. Hisata consulted with a wide range of people engaged in trying to solve social issues. He became aware of the lack of funding, and as a result, the fact that not only were problems left unsolved but that there was no increase in the number of groups trying to solve them. This led him to wonder if he could use funds from his enterprise to solve this impasse.
There had been a period when Mr. Hisata had felt that there was no real meaning in life. He was eventually led to believe that the best way to find meaning and value in his life was to pour his energies into bettering society.
Journal: There are many nonprofits, so why did Soil decide to funnel subsidies into nonprofit startups?
Hosoi: When Mr. Hisata founded Speee in 2007, establishing a company was not a road often taken. However, over the years, conditions for commercial enterprises improved and the number of people who had good ideas, got funding and went on to succeed increased.
On the other hand, as the world became more complex, many social issues fragmented and parts remained unresolved. Mr. Hisata felt that it would be difficult to solve such issues relying on the capacity of profit-making enterprises alone; he therefore concluded that it was vital to support nonprofits.
Moreover, the number of people interested in solving social issues was increasing. Mr. Hisata thought that under these conditions, if funding could be found to deal with unresolved issues, the resolution of these issues could be accelerated.
Mr. Hisata predicted that there would come a time in the future when it would be taken for granted that nonprofits should be subsidized, so he wanted to serve as the soil that would serve as the foundation for that flow of funds. This is why he chose the English word “soil” as the name for this foundation.
Simple subsidies that support nonprofits without seeking returns
Journal: Could you be more specific about the structure and characteristics of Soil’s subsidy system?
Hosoi: We mainly offer two subsidy programs: Soil 1000 and Soil 100. The Soil 1000 program is designed to support nonprofits that already have an established presence and record but need funds to move on to the next stage of their development. The maximum subsidy it provides is 10 million yen.
The Soil 100 program is primarily aimed at individuals and groups that are in the process of forming or have just been established. In addition to a maximum subsidy of 1 million yen, Soil will help new nonprofits get started by providing regular consultation with an assigned mentor as well as support and guidance on drawing up business plans and decision-making for three months.
Hosoi: The biggest difference between our programs and other types of subsidies is that we offer what we think of as simple subsidies, in that we do not seek any economic return from the groups we support. Moreover, we try to put as few restrictions as possible on the use of the funds so that they can be employed where they are really needed.
Furthermore, we do not ask groups to write reports just as a formality or to submit a large number of documents. We reduce the burden on the groups we support by asking only for essential information.
In the two and a half years since our founding in 2023, we have provided roughly 200 million yen in subsidies.
Journal: Where does the money for these subsidies come from?
Hosoi: We have three main sources of funding: first, contributions from Mr. Hisata’s personal assets, second, donations from other entrepreneurs who support Soil’s aims, and third, corporate contributions.
There are actually many people who want to contribute to the betterment of society but who do not know where they can contribute or how they can engage in such an activity. We are hoping to continue expanding our ties with individuals and corporations who agree with our ideas.
Journal: How do the contributors learn about the intentions and value behind subsidizing nonprofits?
Hosoi: Among our contributors, there are many who, like Mr. Hisata, founded their own enterprises to solve certain social problems and then realized that their enterprise alone could not overcome these problems, so they have a strong desire to support groups grappling with these social issues.
Before we registered Soil as a public interest corporate foundation, we asked contributors to join in our evaluations of potential recipients. Many said that they had not been aware of the problem that the group they evaluated was addressing and felt it had been a valuable experience to learn about it. Moreover, in addition to donations, some contributors inquired about possible collaborations between these groups and their own enterprises.
I believe that many of our donors feel a great deal of hope and value in having their donations contribute to the betterment of society and bringing returns to society itself.
Journal: Have any of the groups or projects you have funded so far had an especially strong social impact?
Hosoi: One example is AiCAN inc.(external link; in Japanese)[1] , a company that supports the digital transformation[2] of child support centers. In 2016, the director of AiCAN’s forerunner established an NGO to do this work, but lack of funding made it impossible to sustain this activity, so the project was reborn as a corporation in 2020.
It nonetheless still struggled to procure funding, so, with the support of the Soil 1000 program, it conducted actual demonstrations of its work for local governing bodies and was then adopted by 16 such governmental units.
In addition, there are many groups acting in a wide range of fields, both inside Japan and overseas, that have received subsidies from Soil, including #Your ChoiceProject (open in a new tab, in Japanese), which helps high school girls from outside the Tokyo metropolitan area go to college, Accept International (open in a new tab, in Japanese), an NGO that helps terrorists from Somalia and other countries reintegrate into society, and Ledge (external link, in Japanese), a corporation that focuses on using the power of the judicial system to change society for the better through public interest litigation.
- Note 1: For further information, see this article: “How can we increase the number of people engaged in impact investing that pursues both solutions to social issues and profits?” (open in a new tab, in Japanese)↩︎
- Note 2: Using digital technology to improve people’s daily life.↩︎
Knowing, speaking out, getting involved: What we can do to promote activities that are “unprofitable but meaningful”
Journal: Over and above financial difficulties, what other challenges are nonprofits in Japan facing today?
Hosoi: In addition to shortages of funds, another major problem is shortages of manpower. Some groups get a number of people to offer their skills on a pro bono[3] basis, but they end up with management problems. Others don’t have enough human resources in the first place, making it hard to build the enterprise up to the next level. There are quite a few groups like that.
Figuring out how to attract core talent is a challenge faced by many groups. Soil therefore considers not only subsidies, but also other ways in which we can help. For instance, in the past, we arranged social gatherings for recipients of our subsidies, which were well-received by the participants. They felt that these gatherings offered a chance to exchange information with other groups — something that they found hard to do because they normally did not have opportunities to interact with other groups.
Even when they are active in different areas, groups need places where they can learn about outstanding endeavors and share know-how and information with other groups. We feel that increasing such spaces for interaction will lead to the generation of new ideas and collaborations as well as other forms of synergy, helping promote group growth.
- Note 3: Pro bono refers to using the skills and experience gained at one’s workplace to contribute to social action.↩︎
Journal: What do you think needs to be done to foster opportunities for large corporations and commercial businesses to support nonprofits in their efforts to solve social problems?
Hosoi: I think the key is to develop a large number of success stories. In addition to letting people know about groups that are engaged in wonderful activities, it is essential to provide concrete details about the kind of transformations that resulted from financial support. It is also important to actively create opportunities for interested corporations and executives to directly hear from those involved in the activities, experiencing their appeal and gaining heightened understanding of their goals.
Such endeavors can help people understand the social significance of what these groups are doing and bring home the importance of providing funding.
What can be done to help those who are willing to undertake nonprofit work for the betterment of society take the first steps in that direction
We ended the interview by asking Mr. Hosoi what can be done to encourage people who have a desire to serve society through nonprofit activities, but who have given up trying to do so because they do not know where to start, or think there are no funds to do it, or that it will not earn returns.
(1) First, start with something small
Many of the groups Soil supports start with small actions, like consulting with people who have the same problem, sharing information about the issue they have investigated, speaking out through social media, and so on. When they think of improving society, people tend to want to do something really big, but it is important to start by taking small steps and putting ideas into action, and then widening the circle of collaborators.
(2) Actually get involved in volunteer and pro bono work with a nonprofit
Move beyond simply gathering information and get actual experience in the field in order to become familiar with the realities of the issue and concrete approaches to solving it.
(3) Investigate the funding system for each group
Many groups, including municipal governments as well as the Ministry of Economy, Trade and Industry, have their own subsidy system. First, find out what kind of subsidies are available and under what conditions, and then actively make use of them.
We asked for this interview because we were interested in finding out why a funding group began its support activities — what its motivation was and how it went about getting established.
“Unprofitable but Meaningful”: As Soil’s slogan suggests, activities that have social value are not necessarily those that have economic value. However, we felt that by deepening their understanding of a group’s ideas and background, people can become aware of its real value.
Even if you do not feel that a particular social issue is relevant to you, it may take on more resonance as a compelling problem if you learn about the ideas of those actively involved in trying to solve it. This interview brought home this fact to us once again.
Text: The Nippon Foundation Journal Editing Department
