Charitable trusts

In recent years, attention to public interest activities has increased in Japan, and a growing number of individuals and companies have attempted to return some of their profits to society by providing their assets for public interest activities.

Charitable trusts are part of a system that allows such individuals and companies to entrust their assets to trust banks and other institutions, whereby such organizations manage and invest these assets in accordance with the defined public interest purpose.
The system has been broadly used since the first charitable trust was established in 1977 with payments for scholarships, assistance for research in the natural sciences and humanities, assistance for overseas economic and technological cooperation, and assistance for town planning and protection of the environment.
For the tax system, charitable trusts that meet certain criteria are called specified charitable trusts. Those specified charitable trusts with certain trust objectives approved by the competent minister are called authorized specified charitable trusts. Tax breaks exist in both cases if the trusts are unprofitable.

Charitable trusts

The settlor (benefactor) and trustee (trust banks and other institutions) have detailed discussions to identify the specific purpose in the public interest and the method to achieve that purpose, which are set forth in the details of the charitable trust agreement.
The trustee applies to the competent government agency for approval to undertake the charitable trust.
The competent government agency provides approval after conducting a review.
After receiving approval, the settler and the trustee enter into the charitable trust agreement.
The competent government agency inspects the administrative operations of the charitable trust and may issue necessary orders to the trustee.
The trust caretaker approves important matters that are the trustee's duties.
On the basis of consultation with the trustee, the management committee and other institutions needed for proper management of the trust shall advise and provide counsel regarding the endorsement of those received assistance and the execution of the charitable trust operations to facilitate the execution of the trust's purpose.
The trustee provides aid to those received assistance according to the purpose of the charitable trust based on the advice and counsel from the management committee and other institutions needed for proper management of the trust.
The trustee annually reports the state of the trust property to the trust caretaker for a fixed period.
The trustee submits a report on the state of the business to the competent government agency within three months after the end of each business year.