While this is an initiative between Japan and the United States, it is aimed at improving our collective ability to promote sustainable development, and as such it is potentially very important for the world. Japan and the U.S. are the world's largest national economies and foreign aid donors, as well as leaders in science and technology. Both nations have strengths in different fields, and collaborative projects can leverage financial, technical and other resources from both nations. What we do together can have enormous benefits for the course of development worldwide.
In particular, if the U.S. and Japan were to coordinate their activities to support the development of a strong and engaged civil society throughout the developing world, prospects for sustainable development would be brighter. However, while, as I said, some 40 percent of U.S. foreign aid goes to NGOs, while only 2 percent of Japanese foreign aid has been provided through NGOs.
In my humble opinion, a considerable obstacle in Japan to the health and sustainablity of NGOs, as well as to the effectiveness of government in both domestic and foreign policy, is the fact that Japan does not grant tax deductible status to most of its NGOs. The experience of the United States has shown that tax benefits for NGOs help to stimulate contributions from the public and promotes private charitable giving from the for-profit sector.
I can assure you that the benefits to society and the government far outweigh any loss of tax revenue to the government.
Rather than a drain, the government, for-profit community and NGOs need to change the funding, and thereby the power dynamic of their relationship. NGOs should not turn to or regard government and corporations simply as financial donors. At the same time, governments and corporations must cease defining NGOs as financial parasites and trouble makers that have little or nothing to bring to the table. The truth is that each sector is an integral partner, of equal stature, with each having a distinct and integral role to play in the development process. Governments enact and enforce rules and regulations that define the enabling policy environments needed for development to take root and flourish. For-profit corporations offer know-how, resources (including technical assistance) and technology, while NGOs offer practical on-the-ground knowledge, relationships and implementing networks needed to get the job done in a way that renders the final product sustainable.
It is important, if not essential, that the laws, including the tax laws, in both donor and recipient countries be supportive of NGOs, as well as of the public and foundations that could contribute to them. Governments and corporations should view NGOs as critical extensions of their work that permit them to realize the return they seek, whether those returns are financial or social in nature.
The essential role of international NGOs in responding to crises around the world and to improving livelihoods through sustainable development is growing in recognition among policymakers. However, neither sector―government, for-profit business or non-profit―can do it alone.
The Third Way
Upon reflection of my remarks, perhaps you've observed a pattern emerge that, in my estimation, reflects a new, positive and long overdue trend in how we, the NGO community, respond to the challenges of sustainable development.
