"Korea Should Consider a Predictable Nonprofit Corporation System"

Interview with Annelotte Walsh, Head of Research at CAPS, and Yu Ishida, Professor at Kwansei Gakuin University

"It is more important to clarify operating standards than to make it difficult to establish nonprofit corporations."

As the Constitutional Court continues its review of the civil law's permit system for establishing nonprofit corporations under Article 32, overseas experts have suggested 'predictability' as the direction for improving Korea's nonprofit corporation system.

This case reached the Constitutional Court after the Seoul Administrative Court requested a constitutional review of Article 32 of the Civil Law in December 2025 (2025Hun-Ga20). In April, lawyers from 12 major law firms formed a coalition to participate as public interest representatives, drawing attention, and the review process continues with additional attorneys being appointed as recently as this month.

Anerote Walsh, Head of Research at CAPS (left), and Yu Ishida, Professor at Kansei Gakuin University in Japan, are posing before an interview with The Law Times on June 17 in Seongsu-dong, Seoul. Photo by The Law Times

The key issue for the Constitutional Court is whether the current system—requiring the competent government authority’s approval for establishing nonprofit corporations—excessively restricts freedom of association. As a result, overseas systems that recognize incorporation upon meeting legal requirements and the practical results of such systems are being closely compared.

Major countries such as Japan have adopted a 'standard-based system,' whereby corporations are recognized once they meet statutory requirements, with public interest being examined in a separate process. Overseas experts have assessed that Korea should consider restructuring the system to enhance predictability by clarifying establishment and oversight standards, rather than limiting discussions to whether the permit requirement should be abolished.

Annelotte Walsh, Head of Research at the Centre for Asian Philanthropy and Society (CAPS), and Professor Yuu Ishida of Kwansei Gakuin University’s Department of Human Welfare met with The Law Times in Seongsu-dong, Seoul, on June 17 to discuss this topic, comparing Japan’s nonprofit corporation reforms to the Korean system. Walsh is the lead researcher on the "Doing Good Index (DGI) 2026," which analyzes the environment for public interest activities in 17 Asian countries. CAPS is an independent, nonprofit research institute focusing on the environment for public-interest activities in Asia and releases the "Doing Good Index (DGI)" biennially. Professor Ishida is president of the Japan NPO Research Association (JANPORA) and has researched Japan’s nonprofit law reform.

The two experts shared their views on Japan’s nonprofit corporation reform experience, characteristics of Korea's system, and future improvement directions. The following is a Q&A.

-Debate continues over Article 32's permit-based system for nonprofit corporations. What prompted Japan to reform its system?

Ishida: "There were several factors. Social problems arose from collusion between public interest corporations and the government, as well as parachute appointments of officials, and this led to discussions on administrative reform. The 1995 Kobe earthquake was also a key turning point. It became clear that the government alone could not meet the diverse needs of society, leading to a consensus that civil society must play a more active role."

-How did Japan’s nonprofit corporation system change after the reform?

Ishida: "Anyone could now establish a general incorporated association or foundation. However, to be recognized as a public interest corporation, one must go through a review process by a committee consisting of certified accountants, lawyers, and academic experts. The system allows free establishment but assesses public interest through a separate process. After the reform, the number of incorporated associations increased from about 10,000 to over 80,000."

-In Korea, one must obtain approval from an administrative agency to establish a nonprofit corporation, while in Japan, the standard-based system allows establishment upon meeting certain requirements. How do you assess the two systems?

Walsh: "It does not necessarily mean that a permit system is inherently flawed. What matters is predictability. In the standard-based system, requirements are clearly laid out and can be met for establishment. In contrast, the permit system leaves room for administrative discretion, making outcomes unpredictable for applicants. Rather than the form of the system itself, it is crucial to clarify standards and procedures."

-Based on the Doing Good Index, how did you evaluate the environment for public interest activities in Korea?

Walsh: "Korea is a very interesting country. Civil participation, corporate social responsibility, and digital infrastructure are at a high level. However, trust between the government and nonprofit organizations (SDOs) was relatively low. This means the foundation for public interest activities is sufficient, but there remains room for improvement in how the system is operated.

Regulation is like cholesterol. Appropriate levels can enhance accountability and trust, but excessive regulation can stifle activities. In Korea, there are as many as 43 supervisory bodies. More important than the number is predictability. The criteria for review need to be clear so organizations can operate stably. Singapore provides a good reference by separating registration and support functions."

-What issues should Korea address institutionally going forward?

Walsh: "It is important to make registration and supervision systems easy to understand and to reflect input from the field into policy. Tax incentives to encourage donations should also be considered. Creating an environment where citizens can easily participate in public interest activities and organizations can operate stably is vital."

-What do you see as the most important factor for a healthy nonprofit corporation ecosystem?

Ishida: "No nonprofit organization is perfect from the beginning. There must be a societal understanding that organizations can grow through trial and error. Rather than the government taking on every role, it is important that intermediary support organizations and civil society build the ecosystem together."

Walsh: "The government and nonprofit organizations can be partners in solving social problems, rather than having a hierarchical relationship. Accountability, transparency, and citizen participation are not conflicting values; they can and should be advanced together."

Reporter Hanju Cho, The Law Times

※This article is based on content supplied by Law Times.

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