July 2021

Operation Manual for the Administration of the
Nippon Foundation Fund for Japanese Language Education Program
July 2021
Published by the Tokyo Foundation for Policy Research
NF-JLEP Association Secretariat
Roppongi Grand Tower, 34th Fl., 3-2-1 Roppongi, Minato-ku, Tokyo 106-6234 Japan
Tel +81-3-5797-8402 Fax +81-3-5570-6032
https://www.nf-jlep.org/

nf-jlep@tkfd.or.jp

OPERATION MANUALFor the Administration of the
Nippon Foundation Fund for Japanese Language Education Program
July 2021
CONTENTS
Glossary of Financial Terms ········································································ iFlow Chart of NF-JLEP Endowment Management ·········································· ii
Introduction ··························································································· 1
I. Program ···························································································· 1
II. Overall Structure of NF-JLEP ································································· 2III. Program Administration ······································································· 3
1. Objectives and Scope
2. Budget
3. Announcement and Selection
4. Reporting
IV.Endowment Management ····································································· 5
1. Purpose of Endowment Management
2. Separate Accounting/Pooled Investment
3. Investment Guidelines
A. Principles
B. Exceptions
C. Currencies of Investment
V. NF-JLEP New Financial Scheme ····························································· 8
VI.Revision of Agreement ········································································· 9
Attachments
1. Program Report ············································································ 10
2. NF-JLEP Fellows Information List ···················································· 11
3. Income-Expenditure Statement/Breakdown of Capital ························· 12
4. Bond Portfolio/Description of Term Deposits ····································· 13
5. Statement for “Exceptions” ····························································· 14
6. Review Report ············································································· 15

GLOSSARY OF FINANCIAL TERMS
Administrative expenses
Administrative expenses refer to a university’s operating costs in the administrationof the NF-JLEP program and management of the endowment.
BudgetThe budget refers to the income and expenditure plan, which serves as the basis forthe allocation of expenditures.
CapitalThe capital consists of the following: the original capital of 1.5 million US dollars
and the reserves (explained below).
Earnings
Earnings are the sum of realized gains and changes in unrealized gains (explained
below).
Expenditure
Expenditure refers to administrative expenses and program disbursements, asmentioned elsewhere.
Income/realized gain
Income refers to realized gains, such as interest from bank deposits and coupon
interest from bond investments, as well as gains or losses from the sale of equities
and bonds.
Original capitalThe original capital is the 1.5 million US dollars (or equivalent if converted intoanother currency, using the exchange rate at the time of conversion), donated toeach NF-JLEP institution. If the original capital is divided into two or morecurrencies, the amount for each currency should be calculated using the exchange
rate at the time of initial conversion.
Program disbursements
Program disbursements refer to expenditures for Japanese-language-education
activities, such as scholarships for students, research grants, development ofteaching materials, and others as stipulated in the Agreement.
Reserves
Reserves are the part of capital that exceeds the original capital (US$1.5 million).
Unrealized gain
An unrealized gain is the difference between the book value and market value ofequity and bond investment.

iFlow Chart of NF-JLEP Endowment Management

Original
Capital(US$ 1,500,000
equivalent)

Capital20%* (or more) of (A)should be added to:Reserves
Income(A)

95% or more of (B)At most80%* of (A)Expenditure(B)

No more than 5% of (B)*The portion may vary according to NF-JLEP institution.

ii

Program
Disbursements

Administrative
ExpensesINTRODUCTION
This document is intended to provide administrators of the Nippon Foundation Fundfor Japanese Language Education Program (referred to hereinafter as “NF-JLEP”) withpractical information and guidance on efficient and effective management of the
program. Especially, it aims to set forth guidelines for endowment management andstandardize financial reporting formats. Inquiries should be addressed to the
Leadership Development section of the Tokyo Foundation for Policy Research, whichis responsible for the overall administration of the program (see contact information on
the inside front cover.)I. PROGRAM
NF-JLEP was launched by The Nippon Foundation in 1994 with the purpose ofenhancing the quality of Japanese language education abroad. Since then, endowmentsof US$1,500,000 each have been established at eight institutions in six countries.
Because two endowments are shared with two or more institutions, there are 11
institutions participating in the program.
NF-JLEP Institutions (Parentheses indicate the year NF-JLEP endowment was established.)
Australia⚫ Macquarie University (1995)⚫ Monash University (1995)⚫ University of Queensland* (1997)
Griffith University
Egypt⚫ Cairo University (1997)
Indonesia⚫ Indonesia University of Education*, ** (1997)
Manado State University
State University of Surabaya
New Zealand⚫ Massey University (1995)
Romania⚫ University of Bucharest (1994)
Turkey⚫ Canakkale Onsekiz Mart University** (1996)*This institution administers the NF-JLEP endowment on behalf of the university(ies) listed below.
**This institution operates the NF-JLEP program under the new financial scheme.

1II. OVERALL STRUCTURE OF NF-JLEP
NF-JLEP is a collaborative undertaking among the following organizations:
The Nippon Foundation
The Nippon Foundation is the donor of the NF-JLEP endowment. Established in 1962
to contribute to maritime development, The Nippon Foundation supports domesticsocial welfare and volunteer initiatives and promotes international cooperation with afocus on improving basic human needs, developing human resources, andencouraging international cooperation.
The Tokyo Foundation for Policy Research
The Tokyo Foundation for Policy Research is the organization responsible for overall
NF-JLEP administration including:(1) Collaborating with the management committees of NF-JLEP institutions tomaintain efficient and effective program operations and endowment management(2) Supporting NF-JLEP fellows’ endeavors in promotion of Japanese language
education and their network building through various programs(3) Serving as the secretariat of the NF-JLEP Association1
NF-JLEP Institutions (Management Committees)2
An NF-JLEP institution operates the program through a management committee,
consisting of a chairperson and committee members, as stipulated in the original“Agreement” that was signed by the representatives of The Nippon Foundation and
the NF-JLEP institution. The management committee is responsible for sound program
operations, including:(1) Operating the program (see Section III)
(2) Managing the endowment (see Section IV)(3) Reporting to and communicating with the Tokyo Foundation for Policy Researchon the status of the program and endowment management (see Section III)The NF-JLEP Association is an iconic and conceptual platform established with the
purpose of bringing closer together the many stakeholders in the NF-JLEP community,
including fellows, management committee members at the 11 institutions, and the staffof The Nippon Foundation and the Tokyo Foundation for Policy Research. The
Association also helps raise the program’s profile both inside and outside thecommunity.
2 The name of the committee varies according to NF-JLEP institution.
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(4) Cooperating and collaborating with the Tokyo Foundation for Policy Research on
NF-JLEP-related activities

III. PROGRAM ADMINISTRATION
1. Objectives and Scope
The overall goal of NF-JLEP is to enhance the quality of Japanese language education
by developing Japanese language professionals who are committed to playing anactive role in language education. The institution-specific objectives and scope of the
program are stipulated in Appendix 1 or 2 to the original “Agreement,” or in the“Memorandum of Understanding (MOU)” subsequently signed by representatives of
the Tokyo Foundation for Policy Research and the NF-JLEP institution.
(1) Activities
Specific activities that NF-JLEP supports differ from one institution to another;
they are specified in the original “Agreement” or in the MOU.
If the institution provides a fellowship or a grant under the NF-JLEP program, theamount provided should be set high enough to fulfill the objectives of the programand be regularly adjusted in accordance with changing socioeconomic conditions.
The program is not intended to cover personnel costs, including those of theteaching staff, unless otherwise stated in the Agreement or MOU. If an NF-JLEP
management committee wishes to change the activities funded by the program, it
should submit a written proposal to the Tokyo Foundation for Policy Research
before implementing the change, since the scope is contractually agreed upon in
the original Agreement establishing the endowment. Please refer to Section VI(Revision of Agreement) below.

(2) Identity
Although each NF-JLEP institution has its own name for the program, all arerequested to make clear in introducing or advertising the program that it isfinanced by the “Nippon Foundation Fund for Japanese Language Education” andthat the recipients of fellowships and grants provided under the program arecalled NF-JLEP fellows (even after the period of fellowships or grants) and eligible
for additional programs offered by the NF-JLEP Association.

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2. Budget
NF-JLEP management committees are responsible for developing a budget each year
specifying the amount to be set aside for the program and administrative expenses inaccordance with the “Annual Allocation of Proceeds of the Fund for the Program,” asspecified in the Appendix of the Agreement or MOU or otherwise agreed upon
between an NF-JLEP institution and the Tokyo Foundation for Policy Research. In
principle, the budget should be developed on the basis of actual income. A portion ofannual income should be set aside and added to the capital as “reserves.” For details,
refer to Section IV 3 A (3) on the “Use of Income and Reinvestment.” The management
committee is requested to forward the annual budget and program plans to the Tokyo
Foundation for Policy Research once they are formulated.
3. Announcement and Selection
The selection process must be open and transparent; the NF-JLEP management
committee should make announcements accessible to eligible applicants and screen
applicants on a competitive basis. The program’s funding source (NF-JLEP) and its
aims should be mentioned in such announcements.
4. Reporting (see Attachments)
NF-JLEP institutions are required to submit the following annual reports by the dateindicated.
(1) Program Report (Attachment 1, p. 10)
A program report, submitted within three months of the end of each academic
year. Institutions may choose to use the format they have been using until now,
considering the wide range of activities undertaken through the program. In thatcase, however, please be sure to include the following information:⚫

Overall assessment of the immediate past year’s NF-JLEP activities (suchas positive outcomes, difficulties, considerations made for Japaneselanguage-education trends in your country, and areas needing
improvement)⚫

Description of each activity undertaken during the past year⚫

Notable accomplishments by scholarship/grant recipients, if any⚫

Events or activities carried out in conjunction with the NF-JLEP programat your institution⚫

Breakdown of program disbursements4⚫

List of members of the NF-JLEP management committee(2) NF-JLEP Fellows Information List (Attachment 2, p. 11)
The management committee is required to provide information on the recipients of
NF-JLEP scholarships/grants (NF-JLEP fellows) promptly after they are selected.
Provision of this information is important for the recipients to be recognized as
NF-JLEP fellows who become eligible for additional programs offered by the
NF-JLEP Association.
(3) Financial Report (Attachments 3 to 6, pp. 12–15)
A financial report, submitted within three months of the end of each fiscal year.
For details, please refer to Section IV 3 A (2). For institutions falling into the“Exceptions” category, please refer to Section IV 3 B (2).
IV. ENDOWMENT MANAGEMENT
1. Purpose of Endowment Management
The NF-JLEP endowment should be managed:(1) To generate sufficient income in accordance with the medium- to long-term plans
for the NF-JLEP program(2) In a way that ensures the gradual growth of the capital without allowing it to fall
below the amount of the original capital (US$1.5 million).
2. Separate Accounting/Pooled Investment
In principle, each institution is required to maintain a separate account for the NF-JLEP
endowment from other funds of the institution. In cases where the capital is pooled
and invested with other funds, the amount of the NF-JLEP endowment and its incomemust be clearly demarcated. Generally, pooled investments are approved when an
institution’s pooled fund is large enough to achieve higher returns by scale and whenfund management is conducted by groups of experts in accordance with rules
approved by the institution’s board as being transparent and accountable with clearly
identified risks, returns, and responsibilities.

53. Investment Guidelines
A. Principles(1) Basic Policy
The NF-JLEP endowment must be invested in a “safe and secure manner,” asfollows:
a. Financial instruments in which the endowment may be invested include:—Term deposits at banks rated A-/A3 or better by Standard & Poor’s, Moody’s,or Fitch, and/or—Bonds rated A-/A3 or better by Standard & Poor’s, Moody’s, or Fitch.
b. Diversification:
Bond investments should be well diversified, avoiding concentration in terms of
issuers, industries, and countries. Bonds of any single industry or country
should not exceed 40% of the total. However, diversification is not necessary forbonds of government and supra-national issuers whose credit ratings are
AA-/Aa3 or better.
(2) Reporting
A financial report must be submitted within three months following the end ofeach fiscal year. The report should include:a. Income-Expenditure Statement and Breakdown of Capital (Attachment 3, p.
12)*
b. Bond Portfolio (in case of bonds) and/or Description of Term Deposits (in caseof bank deposits) (Attachment 4, p. 13)*c. Review Report confirming the validity of the above statements (Attachment 6, p.
15)**
d. Bank statement(s) showing the amount of cash, term deposits, and bonds at theend of the fiscal year corresponding to b. above.
* Bond amortization: If a bond is purchased at a premium, the amount of the premiumthat is amortized should be deducted from both coupon interest and book value.
** Review Report: The Review Report may be prepared by an auditor or department
within the university not involved in writing the financial report. It need not be
prepared by outside professionals.
(3) Use of Income and Reinvestment
In accordance with the Appendix of the Agreement or MOU, each institution isrequired to reinvest a portion of income every year as a hedge against inflation

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and other forms of financial instability. Even when there is no provision in theAgreement about how much to reinvest, the institution should, as a rule, add 20%(or more) of income to the reserves and use the remaining 80% (or less) as
expenditures for fellowships and administrative expenses. If the institution isunable to adhere to these rules due to unavoidable circumstances, it should consult
with the Tokyo Foundation for Policy Research on their reinvestment plans before
spending more than 80% of annual income—or whatever amount that has been
agreed upon. Changes in reinvestment rules may be approved as a contingency
measure in consideration of the institution’s financial status, sustainability of the
program, and/or the proposed total program budget.3
Administrative expenses should not exceed 5% of total expenditures (see Flow
Chart of NF-JLEP Endowment Management on page ii).
Only realized gains may be used as expendable income. Although unrealized
gains may arise in the case of bonds whose market values can be assessed, thesegains should not be used as a source for expenditures, since market value will
return to par at maturity.
B. Exceptions(1) Basic Policy
If an NF-JLEP institution, for historical or other reasons, wishes to invest in riskier
financial instruments, such as lower-rated bonds, stocks, or real estate, it will needto disclose the breakdown of its investment and to demonstrate that it has theorganization and capacity necessary to manage such a riskier portfolio. Specifically,
it will need to have (1) investment experts, either within or outside the university,and (2) an investment management committee or equivalent organization tomonitor risks.
For investment in riskier financial instruments, unrealized gains may be used assources for expenditures, provided that certain conditions are met.
a. Rules determining the percentages of capital for targeted earnings and planned
expenditures must be clarified. These rules must be approved by the NF-JLEP
management committee and the Tokyo Foundation for Policy Research.

3

Rules on the Use of Income and Reinvestment are subject to change. Any amendments will beannounced before they are implemented.

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b. Actual medium- to long-term expenditures (over a period of about five years)
must not exceed 80% of actual earnings over the same period. (The percentage
may vary according to NF-JLEP institution.)c. The capital must not fall below the amount of the original capital.
(2) Reporting
Please submit a financial report within three months of the end of each fiscal year.
The report should consist of:a. Consolidated financial report providing the allocation of assets, investment
performance, and a description of the investment management team set up to
manage the riskier portfolio (no prescribed format)
b. Statement for “Exceptions” indicating conformity with condition (1) b above(Attachment 5, p. 14)
c. Review Report confirming the validity of the above statement (Attachment 6, p.
15)** Review Report: The Review Report may be prepared by an auditor or department
within the university not involved in writing the financial report. It need not be
prepared by outside professionals.
C. Currencies of Investment
The NF-JLEP endowment must be invested in assets denominated in US dollars orother currencies stipulated in the Appendix of the Agreement or MOU. The
endowment should not be converted into any other currency.

V. NF-JLEP NEW FINANCIAL SCHEME
In the light of the difficulty some NF-JLEP institutions have been facing in generating
sufficient investment income, a new financial scheme was proposed to all institutionsin spring 2014 that enables universities to continue providing program disbursements
without worrying about endowment management.
The aim of the new financial scheme is to enable NF-JLEP institutions to continue
offering fellowships in an uninterrupted manner. To participate, institutions are first
requested to return the NF-JLEP endowment and to sign a three-party agreement with
The Nippon Foundation and the Tokyo Foundation for Policy Research. To learn more
about the scheme, please refer to the Operation Manual of the (new) NF-JLEP
Fellowship Program, available upon request.

8VI. REVISION OF AGREEMENT
When the NF-JLEP management committee wishes to revise Appendix 1 and/or
Appendix 2 of the Agreement, it should consult with the Tokyo Foundation for Policy
Research and submit a written proposal before taking any action. The matter will be
discussed, and, upon agreement, a Memorandum of Understanding (MOU) will besigned to execute the revision.
If the Tokyo Foundation for Policy Research and the management committee agree thatthe proposed changes do not require an MOU, the changes may be implemented by
way of an exchange of written correspondence (letter or e-mail) between thechairperson of the NF-JLEP management committee and the executive director for
leadership development of the Tokyo Foundation for Policy Research.

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Attachment 1

Program Report

This report should be signed and submitted by an NF-JLEP management committee
member within three months following the end of each academic or calendar year.
Name of Institution: ________________________
Academic Year: From (month) ______ (year) ______ through (month) ______ (year) ______
Program Information
1. Overall assessment of the immediate past year’s NF-JLEP activities (e.g., positive
outcomes, difficulties, considerations made for Japanese-language-education trends in yourcountry, and areas of improvement)
2. Description of each activity undertaken in the past academic year
3. Notable accomplishments by scholarship/grant recipients (past and present), if any
4. Events or activities carried out in conjunction with the NF-JLEP program (e.g., an award
ceremony)
5. Breakdown of program disbursements
6. List of the members of the NF-JLEP management committee. Please note changes, if any
7. URL of NF-JLEP program at your institution
Program Planning
1. Plans for the next academic year, including income and expenditure plans, and theprogram calendar
2. Anticipated revisions to Appendix 1 and/or Appendix 2 of the Agreement or the MOU
in near futureThis report has been completed by:(name)(title)______________________________
Date________________________________
Signature

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Attachment 2

11

Attachment 3

12

Attachment 4

13

Attachment 5

14

Attachment 6

Review Report(sample)To the Chairperson of the Management Committee
The Nippon Foundation Fund for Japanese Language Education Program (NF-JLEP)
ABC University

We have reviewed the accompanying Statement of Financial Position of ABC University
regarding the Nippon Foundation Fund for Japanese Language Education Program (the“Program”) as of March 31, 2021, and the related Statement of Activities for the financial
year then ended. These financial statements are the responsibility of the Program’s
managers. Our responsibility is to express an opinion on these financial statements basedon our review.
We conducted our review in accordance with the NF-JLEP Operation Manual dated July
2021. Those procedures require that we plan and perform a review to obtain reasonableassurances that the financial statements are free of material misstatement. A review
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.
In our opinion, these financial statements present fairly, in all material respects, thefinancial position of the Program as of March 31, 2021, and the results of its operations forthe year then ended in accordance with the NF-JELP Operation Manual dated July 2021.

[Name and Signature of Reviewer](Name) John Smith, Financial Expert

Date

Signature15