The Hometown Love Donation System, which allows donors to donate to their favorite hometown or local government and receive a tax deduction, has been in effect since January 2023. This study analyzed the contents of the Hometown Love Donation System and cases in the Japanese sports sector in order to identify ways to improve domestic sports financing in light of changes in the sports environment and the introduction of the new system. The research methodology analyzed the contents of literature such as previous studies in Korea and related research and policy data in Japan, and drew the following conclusions. First, it was introduced to create a healthy donation culture and revitalize the local economy, but it needs to be improved by limiting the donation area and amount, lacking incentives to donate, and lacking a plan for using the funds. Second, in Japan, individuals and companies can participate, and most local governments are utilizing it to promote sports and culture. In particular, professional teams are using crowdfunding to build stadiums using resident taxes, etc. to create facilities that meet the needs of the team and receive donations to ensure long-term stability. Third, to secure funding for sports, it is necessary to utilize private donations in the short term to support the disabled and marginalized, operate workplace athletic departments, and hold events. In the long term, it is necessary to utilize crowdfunding to create public sports facilities. Fourth, to improve the hometown love donation system, it is necessary to review donation areas and limits, improve the system to allow corporate donations, expand the use of donations, introduce a designated donation system, and institutionalize crowdfunding.