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Published in Print: January 30, 1991, as Japanese Philanthropy Explodes in U.S., But Some Are Questioning Donors' Motives

Japanese Philanthropy Explodes in U.S., But Some Are Questioning Donors' Motives

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When Mae Gaskins, then an assistant commissioner of education for Minnesota, unveiled a plan by a major philanthropic foundation to help restructure the state education department last year, the reaction was not quite what she had expected.

Instead of praise, or even fear of change, she recalled recently, some employees confided, "'Well, you know what the bottom line is: They're trying to sell us computers."'

The help was coming from the Panasonic Foundation, and according to Ms. Gaskins, now the associate superintendent of the Minneapolis school district, many people could not believe a Japanese corporation would take a hands-on approach to America's education problems without a catch.

Against a backdrop of tough economic competition from Japan and widely criticized purchases of American companies by Japanese concerns, the number of Japanese business donations and endowed corporate foundations in the United States has exploded in recent years, with much of the assistance being channeled to precollegiate education.

The surge in Japanese philanthropy here has left some commentators deeply skeptical about the donors' motives. Other observers say the grant programs should be judged on their own merits, and point out that contributions to American institutions by Western countries go largely unremarked.

The 1991 Directory of International Corporate Giving in America lists 74 Japanese corporations and philanthropies as making contributions in the United States, and the number is clearly growing.

In the past few months, five new Japanese philanthropies--the Mitsubishi, Mitsui, Toshiba, Sumitomo, and Industrial Bank of Japan foundations--have been formed. Total Japanese donations here have grown from about $85 million in 1987 to $200 million last year, and leading Japanese businessmen predict that figure will double again in two to three years.

While that giving equals less than 3 percent of the total grants made by American foundations, attention is increasingly focused on the Japanese.

"I can make one prediction with absolute confidence," said Denis P. Doyle, a senior fellow at the Hudson Institute. "When they get into this in a big way, it'll just knock your socks off."

As with American corporate philanthropy in education, the Japanese donations involve a strong degree of self-interest, said Brad Warren, the research director for the book Japan at the American Grassroots, which will be published this spring by the Seattle-based Corporate Philanthropy Report.

Philanthropy creates good will in the communities in which Japanese businesses are located and in the United States at large, he noted. In addition, he said, support for education is aimed at furthering international understanding and improving the American workforce, on which Japanese subsidiaries here rely, as well as at keeping the United States afloat economically and thus retaining Americans as valuable consumers.

"There's more than a sliver of truth in the pronouncements by Japanese leaders that they can't afford to let the United States get into trouble," Mr. Warren said.

"They are extremely competitive," he added. "They play extremely hard, and philanthropy is part of the way they market themselves."

But, unlike U.S. corporations, the Japanese are reluctant to admit to any self-interest in such philanthropy, some foundation officials say, because they are acutely aware of the rise in anti-Japanese feeling that has come with their increasingly visible presence in American life.

"I know there's Japan bashing. I'm not naive," said Felicia Lynch, senior vice president of the Hitachi Foundation.

The source of such attitudes, she said, "is economic paranoia. It is xenophobia. It is downright racism. It is all of those things."

The Directory of International Corporate Giving notes: "While the Japanese are currently not the largest foreign investors in the United States, they receive all of the criticism ... with regard to philanthropy."

"Not a single contributions administrator at over a dozen companies owned by British, West German, Netherlands, and Canadian firms," it states, "has experienced any particular scrutiny because of the company's foreign ownership."

Officials at Japanese philanthropies acknowledge they cannot do right in the eyes of some Americans.

The Japanese government and prominent business leaders last year began strongly promoting corporate philanthropy as a means of defusing such friction.

Among other moves, the Japanese Foreign Ministry summoned 300 business leaders to lecture them on the need to become more philanthropically active. The Japanese Chamber of Commerce and Industry of New York began circulating a booklet, "Joining In! A Handbook for Better Citizenship in the United States."

The Tokyo-based Keidanren, a prominent Japanese business organization, last year established a "1 percent club" to encourage firms to donate 1 percent of pre-tax profits to charity. And changes in Japanese tax law somewhat simplified the labyrinth of regulations governing overseas philanthropy.

To some, the success of such efforts to promote Japanese philanthropy here is cause for even more suspicion.

The journalist John B. Judis, for instance, writing last year in The New Republic, contended that much of this "good corporate citizenship" was aimed at influencing American debate over trade and foreign investment.

And the controversial book Agents of Influence, written by Pat Choate, asserts that Japanese giving is part of a concerted political and economic strategy.

At the present level of philanthropy, conspiracies hardly seem plausible, counter officials at Japanese foundations.

Hitachi, the largest Japanese foundation operating in the United States, awards about $2.2 million annually, Ms. Lynch said. She acknowledged that keeping Americans strong consumers of company products would be in the interest of the Hitachi electronics corporation that created the philanthropy.

"Can we sustain parity in the industrial world? I guess that's a self-interest," the foundation official said, "but I don't think we're going to do that with $2 million a year."

Still, some critics see the danger not in any single effort, but in the opportunities for orchestration of Japanese support at top corporate and governmental levels back home. They note Japan's tradition of close coordination between the public and private sectors.

In a survey published by the international-philanthropy directory, 60 percent of the 40 European and Canadian foundations questioned said there was little or no input from their foreign parent corporations about their donations here. In contrast, 80 percent of the 35 Japanese philanthropies surveyed said such contributions required headquarters approval.

The more centrally coordinated approach has benefited primary and secondary education, observers of Japanese philanthropy say, given the prominence of education on the Japanese political agenda. The kinds of national orchestration established to channel efforts toward Japan's economic advancement, they say, have now taken the government-sanctioned education focus across the Pacific.

They cite, for example, changes in Japanese tax policy that work to encourage educational contributions at home and, by extension, abroad.

Corporate-tax deductions in Japan have traditionally been available only for the promotion of science, technology, and industrial development, according to an unpublished8paper by Tadashi Yamamoto, president of the Japan Center for International Exchange, which promotes U.S.-Japanese understanding.

Domestic tax incentives in Japan apply to overseas subsidiaries, so any government channeling of money to Japanese education naturally benefits education in the United States, where many of Japan's largest foreign subsidiaries are based.

Contributions to K-12 education in the mid-1980's, when Japanese giving had just started in the United States, went almost exclusively to mathematics and science programs, Mr. Yamamoto writes.

That emphasis continues with such programs as the Toyota U.S.A. Foundation's $76,000 grant to develop a 10-volume calculus textbook based on the techniques of the Los Angeles teacher Jaime Escalante, in the Toyota Appreciation Program for Excellence for Science Teachers Reaching Youth, or tapestry, and in the American Honda Foundation's support for another mathematics program, Mathcounts.

When the Toshiba America Foundation was created last May, foundation officers announced that their primary mission would be developing secondary-school science-education curricula.

According to Mr. Yamamoto, the tax code was amended in 1988 to include the promotion of international understanding. Since then, Japanese support for international-education programs has skyrocketed.

Current Japanese-backed programs here range from trips to Japan to innovative cultural-awareness curricula.

The trips, like one offered annually to 12 teachers by the Japanese Chamber of Commerce and Industry in New York, have been criticized as buy-offs by Mr. Judis.

But other projects have been widely praised.

Hitachi, for example, sponsors the World Games Institute, which paints 40-by-70-foot world maps on playgrounds in Philadelpia elementary and high schools; these enable students to hop from continent to continent in games that teach geography, science, current events, math, and political science.

The Industrial Bank of Japan Foundation last month approved funding for Geography Learning Outcome-Based Education, or globe, centers to be established in the New York City schools.

"We didn't see any positive activities in global education," said Yasuhara Yoneda, a senior vice president of the Industrial Bank of Japan Trust Company, in explaining her foundation's first gift.

"This is very important in the United States," she said, "to give Americans an idea of the role of the U.S. in the world."

Officials of Japanese philanthropies here say they take pride in their innovative and hands-on approach to grant-making.

"From Honda's standpoint, the philanthropy has been one of innovation," said Kathryn Carey, manager of the American Honda Foundation.

"Mr. [Soichiro] Honda was the first person to put an engine on a bicycle," she observed. "[The Honda Corporation] is only 49 years old, but it's in our history to see new ways to deal with old problems."

For a model of hands-on philanthropy, some observers point to the Panasonic Foundation's school-restructuring program, now operating in nine school districts and two state education departments.

"The Panasonic Foundation is really one of the few corporate foundations trying to approach school reform in a different way, by helping systems develop the capacity to reform," said Diana Rigden, vice president for precollegiate education at the Council for Aid to Education.

The foundation's executive director, Sophie Sa, said foundation officers and educators routinely visit the two state sites, in Minnesota and New Mexico, and the district sites, in Allentown, Pa.; Baton Rouge, La.; Dade County, Fla.; Englewood, N.J.; Minneapolis; Rochester, N.Y.; San Diego; Santa Fe, N.M.; and Seattle.

The foundation funds conferences for program participants, site visits, and seminars.

The emphasis, Ms. Sa said, is on teaching districts and state education departments to examine their individual structures and devise their own strategies for reform. Panasonic reviews proposals for field trips and conferences and funds each proposal individually, she said, rather than doling out block grants under the general rubric of reform.

Ms. Gaskins of the Minneapolis district, who worked with Panasonic in the Minnesota state project, said that the initial misgivings evaporated quickly.

"The people from Panasonic really make you think," she said. "They come in not with answers to questions. Instead, they help people stretch and to really dream not about what isn't, but about what could be."

Observers point out that the majority of Japanese giving has not been so innovative. About half the Japanese contribution to U.S. education goes to fairly traditional purposes in higher education, such as Japanese-studies programs and endowed chairs, according to Mr. Warren of the Corporate Philanthropy Report.

They add that the concept of American-style philanthropy is new to the Japanese, and say they should be given time to develop their initiatives.

Giving in Japan is traditionally more personal and paternalistic, experts on philanthropy note. Industry supports its workers; broader social support is left to the central government, which taxes accordingly.

Mr. Yamamoto has suggested that Japanese officials pushing for a quick surge in philanthropy overseas in response to anti-Japanese sentiment may have unrealistic expectations.

"There can be some legitimate questions," he wrote last year, "as to whether a non-Western nation, with a tradition of governmental bureaucratic dominance in the public interest ... can develop the kind of private philanthropy which has been seen primarily in the Western nations of North America and Europe."

Still, others predict Japanese philanthropy here will continue its boom as Japanese and American interests become increasingly entwined.

"They're trying to redraw their circle of support in an age where Japan can no longer afford to be insular," Mr. Warren explained.

"Their astonishing trade savvy is at odds with their insular view," he said, "and learning to do American philanthropy is one of the ways in which they're trying to come to terms with that."

Vol. 10, Issue 19, Page 1, 17

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