Donations in Japan: Hometown Tax Donation and Reciprocal Gifts

• Published in: Advances in Consumer Research Vol. 49; pp. 174 - 175
• Main Authors: Hidaka, Yuichiro, Stanislawski, Sumire, Mizukoshi, Kosuke, Ohira, Shuji
• Format: Conference Proceeding
• Language: English
• Published: Urbana Association for Consumer Research 01.01.2021
• Subjects: Charities; Donations; Tax deductions; Tax revenues; Taxpayers; United States > US; Japan
• ISSN: 0098-9258

Though Japan has historically had lower rates of charitable giving (Ouchi 2004), it has recently seen an expansion of donations through the introduction of the hometown tax donation system (HTD) by the Japanese government. The HTD allows taxpayers to write off donations to local municipalities as tax deductions based on adjusted income. Municipalities' competition to attract donations led to emphasis on reciprocal gifts, and led to concentration of tax revenue to the most "generous" municipalities with luxurious reciprocal gifts. This trend was criticized as counter to the pro-social origins of the system and mostly benefiting high-income individuals with high deduction limits (Sato 2017). While HTD is a relatively new system for charitable giving in Japan, it has seen wide adoption despite such criticism. This paper aims to further understanding of HTD and consider what drives charitable giving in Japan. Bekkers and Wiepking's 2011 literature review found reputation to be an important mechanism that drives charitable giving where donations lead to social recognition and approval. Donations are perceived to impress others, and visibility tends to increase willingness to donate (Lee et al. 2020; Winterich et al. 2013). Yet, in Japan, there are critical views of publicly "doing good." Activities related to social good are expected to be done in secret under the beauty of a virtue called intoku (literally "hidden good") (Stanislawski et al. 2014). As society expects charitable behavior to be hidden, visible charitable acts can lead to minimal or even negative social reinforcement (Yamamoto and Tanaka 2018). How is HTD influenced by this cultural norm? Costs and benefits were another major mechanism identified by Bekkers and Wiepking (2011). As costs go down (tax deductions) and benefits increase (reciprocal gifts), donations are predicted to increase. Yet, these factors can shift emphasis from giving to exchange, and "crowd out" intrinsic motivations and psychological benefits such as the "warm glow" effect (Andreoni 1989), dampening giving. Indeed, HTD's emphasis on reciprocal gifts has been widely criticized and led to government intervention limiting the value of reciprocal gifts (Hidaka and Mizukoshi 2018). Yet, this system has also been credited for making donations more accessible to the average Japanese as seen through considerable donations collected in response to disasters (The Mainichi 2018). This is significant because individual charitable giving is historically less common in Japan than in the West (Ouchi 2004). How do donors perceive HTD in relation to self-benefit vs. other-benefit? To answer these questions, an exploratory research was conducted by interviewing twelve HTD donors using purposive sampling (Etican et al. 2015). As HTD aims to help areas with weak revenue bases, urban interviewees were primarily selected. Additionally, those with various motives (ranging from purely for reciprocal gifts to more altruistic) were recruited. Thematic analysis was conducted on interview transcriptions (Braun and Clarke 2006), and emerging themes were discussed among researchers until agreement was reached. The appeal of realizing social benefits is said to be effective when donation behavior is visible, while the appeal of self-interest received by the individual donor is more effective when behavior is not visible (White and Peloza 2009). In HTD, the appeal of selfinterest is enhanced given that donors do not want to publicly claim donations (since it does not lead to positive reputational effects due to intoku) and because donations are linked to income (which most consider private and do not wish to disclose). However, the focus on self-benefit was not seen to "crowd out" intrinsic motivations or prevent "warm glow" as might be expected. Economic self-benefit was not perceived as problematic by respondents. Rather, reciprocal gifts were credited for stimulating local economies and fulfilling the original intent of HTD to help municipalities struggling with reduced tax bases. Moreover, the act of participating in this system was perceived as intrinsically rewarding, counter to expectations of extrinsic motivations crowding out intrinsic motivations and warm glow effects. Past studies have shown that social recognition can facilitate donation behavior (Winterich et al. 2013). However, in Japan, donations are influenced by the norm of intoku, which is against "showing off" good deeds. Not only that, people are also generally expected to make modest self-presentations that refrain from appearance of self-enhancement (Kitayama et al. 1997). This is considered rational behavior aimed at displaying humility to maintain good relationships with others in mutually cooperative cultures (Heine et al. 2000; Yoshida et al. 2004). In this context, the existence of self-benefitting reciprocal gifts seemed to act as an "excuse" for the charitable act. In essence, reciprocal gifts "hide" the charitable act and make it socially acceptable to practice publicly. It was found that HTD is driven by people seeking self-benefit from reciprocal gifts. However, people simultaneously found social significance and justified their enjoyment of these goods as contributing to social good by interpreting the reciprocal gift as a way to stimulate local economies. Under this understanding, it is "normal" to get returns for donations, and this act of what is in essence "responsible consumption" is interpreted (at least partially) as socially motivated rather than solely for oneself (Giesler and Veresiu 2014). In HTD, the benefits of reciprocal gifts are a target of vague positioning with dual meaning. This allows room for nurturing intrinsic motivations, and may even influence donor identities where past giving leads to more future giving (Kessler and Milkman 2018).