Global Systems for Establishing Non-Profit Corporations
Major countries are operating systems that differ from South Korea’s “authorization system” to ensure autonomy in establishing non-profit corporations.
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Japan (Certification and Rule-Based System): To overcome the limitations of the former authorization system, Japan operates the non-profit corporations (Certification System) and the General Incorporated Association/Foundation (Rule-Based System). Associations and foundations can be established simply through registration, while non-profit corporations acquire legal personality through certification by administrative agencies to promote the healthy development of public interest activities.
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Australia (Rule-Based System): Any group of five or more people can register, and they may be simultaneously recognized as eligible recipients of tax-deductible donations upon registration. Through a single portal linked with the Australian Taxation Office (ATO), all legal procedures can be monitored and updated, fostering high trust between the government and civil society.
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Germany (Rule-Based and Approval Systems): Non-profit corporations apply a rule-based system where legal personality is acquired by registering in the association register of the competent court after meeting legal requirements; courts have no discretion to refuse registration if requirements are met. For foundations, an approval system is used, but the right to request approval is specified in the Civil Code. This ensures that if objective requirements are met, the administrative agency must grant approval, preventing arbitrary denials and substantially guaranteeing the freedom of establishment.
The GPEI 2025 Report recommends to “improve the legal framework with enhanced clarity and fewer restrictions” as a key measure to enhance the non-profit environment. According to the report, this is a necessary condition for creating a virtuous cycle where the non-profit sector maximizes its capacity to solve social issues, facilitating the flow of donations and revitalizing the sector.
The Doing Good Index (DGI) 2024 Report emphasizes that simplifying the management of the non-profit sector into a “Single-window” is highly effective in increasing the efficiency of non-profit corporations establishment by easing administrative burdens and streamlining government processes. Such a system can alleviate the hassle of navigating different documents and procedures across multiple ministries.
In contrast, South Korea has 43 agencies with the authority to grant approval for the establishment of non-profit corporations. This figure is exceptionally high compared to other Asian countries surveyed in the DGI. This excessively fragmented administrative structure for the establishment and operation of non-profit corporations is interpreted as a factor that raises entry barriers and hinders the overall environment for the Korean non-profit sector.
| Evaluation Indicator | Korea’s Status & Current Situation | Comparison with Other Asian Countries |
| Number of Regulatory Agencies | Total of 43 | Disproportionately high among surveyed countries (Hong Kong/Taiwan have only 3) |
| Legal Understanding | Over 70% of organizations responded that laws are difficult to understand | Among the lowest group in Asia, along with Cambodia and Thailand |
| Overall Cluster | Doing Better (One level below “Doing Well”) | While overall infrastructure is in place, complex regulations and low autonomy act as hurdles to entering the top tier |
Key Implications
South Korea should move away from the “Authorization System,” which leaves the establishment of non-profit corporations to the discretion of government ministries and local governments, and consider transitioning to a “Rule-Based System” where legal personality is granted upon meeting objective legal requirements. Leading examples from Japan, Australia, and Germany show a shift toward guaranteeing civil society’s right to autonomous establishment through rule-based, certification, or registration procedures rather than leaving authority to total administrative discretion.
In South Korea, the fact that there are 43 central ministries and 17 local governments with approval authority causes severe administrative costs and high entry barriers. This stands in stark contrast to other countries that have only three regulatory agencies or operate a single-window system. Therefore, to fundamentally resolve administrative inefficiency, the introduction of a “Single-window System” to centralize and simplify processes must be implemented in tandem with legal reforms.
References:
KO, S. H. (2010). A Study on Reforming in Non-profit Corporation. Seoul National University Law, 51(2), 103-129.
Sohn, W. I. (2011). International Comparison of Systems Related to Non-profit Corporations: Focusing on the Definition and Establishment of Non-profit Corporations (Current Issue Analysis 1). Korea Institute of Public Finance.
Centre for Asian Philanthropy and Society (CAPS). (2024). Doing Good Index 2024: Examining the readiness of Asia’s social sectors to thrive.
Indiana University Lilly Family School of Philanthropy. (2025). The 2025 Global Philanthropy Environment Index