The name furusato nozei may give the impression that it is simply a way to send money to your hometown or to a place you want to support.
In practice, it is a system of donations to local governments. If certain conditions are met, most of the donated amount can be deducted from taxes, apart from a small out-of-pocket portion.
But when people actually use the system, many do not begin by asking, “Which municipality do I want to support?” Instead, they may start with “I want this beef,” “I want this rice,” or “That fruit looks good,” and choose where to donate based on the return gift.
These return gifts are products or services sent by municipalities in exchange for donations.
Japan has many municipalities, and if you have no personal connection to a particular town, it can be difficult to decide where to send your donation. Return gifts give people a more concrete reason to choose one place over another.
If the gifts are local products such as rice, beef, seafood, fruit, sake, or crafts, they do more than attract donations. They also create orders for local farmers, fishers, food producers, and other businesses, while giving people across Japan a chance to discover products they may never have encountered otherwise.
In that sense, return gifts do not just attract donations. They also help local products reach customers across the country.
But the more important return gifts became, the more intense the competition between municipalities grew.
One well-known example is Izumisano City in Osaka Prefecture. At one point, the city offered Amazon gift cards in addition to local return gifts and attracted a large amount of donations, leading to major controversy.
The episode exposed a weakness in the system.
If a program meant to support local communities rewards whichever municipality offers the most generous gift, it can eventually turn into a competition over who gives donors the best deal.
For that reason, there are now limits on the value of return gifts, and as a general rule, the gifts must be products or services connected to the local area.
That local connection matters. If municipalities could simply hand out popular products or gift cards available anywhere, the link between the donation and the region would become much weaker. But if the return gift is local beef, rice, fruit, seafood, or crafts, even a donation motivated mainly by the gift can still generate sales for businesses in that area.
There is therefore a small gap between the ideal behind furusato nozei and the way many people actually use it.
The ideal is to donate to a municipality you want to support. In practice, however, return gifts have become a major reason why people choose one municipality over another.
That is why today’s system does not try to eliminate return gifts. Instead, it tries to use their popularity to support local businesses and producers.
References
- Ministry of Internal Affairs and Communications, Furusato Nozei Portal Site
- Ministry of Internal Affairs and Communications, materials on the Furusato Nozei designation system
- Supreme Court of Japan, case concerning the cancellation of Izumisano City’s Furusato Nozei designation
- Izumisano City, Furusato Nozei information
