Integrating Zakat, Infak, Sadaqah and Awqaf with Islamic Financial Services

Zakat, Infak, Shadaqah and Awqaf (ZISA) are social fund  taught by Islam for practiced by Muslims. Zakat is the instruments of Islamic social fund that is obligatory, while infak, shadaqah and awqaf are Voluntary. Although ZISA are social fund, but the allocation has economic dimensions that affect to the welfare of Muslims

Infak are all the expenditures made by a muslim, either for good of spending, as well as for badness. Therefore in the Qur'an, there are term infak fi Sabilillah (infak for goodness) and infak fi sabilit toghut (infak for evil / badness).

 Sahadaqa are all the expenditures for goodness. Included within the scope of shadaqah is all that material and non material.

 Zakat are all the expenditure for the goodness that has certain requirements and certain arrangements in practice (nishab, haul, tariffs and recipient).

Zakât is a certain fixed proportion of the wealth and of the each and every kind of the property liable to Zakât of a Muslim to be paid yearly for the benefit of the poor in the Muslim community. The payment of Zakât is obligatory as it is one of the five pillars of Islam. Zakât is the major economic means for establishing social justice and leading the Muslim society to prosperity and security.

Waqf are spending our money for the good of which the principal value of the property sought to be permanent and its benefits can be felt for social and economic interests of the people. Waqf are prioritized done in a way that generates productive revenue or profits, where income or profits will be used for good.

Most of the Muslims still practice the use of Zakat, infak, shadaqah, and waqf are just purely charitable. Generally the distribution of zakat, infak, shadaqah and waqf are only used for consumptive purposes, social and worship. Still few Muslims who are trying to utilize Islamic social fund (Zakat, infak, Alms and Endowments), which has wider economic benefits.

Associated with the task of improving the welfare of the people, then Now, it is time when the Zakat funds, infak, shadaqah and Waqf can be utilized to assist economic development, especially in helping small businesses. Islamic social fund should be developed to increase revenue, business development and economic development through the Islamic financial services industry.

Sources : Ahmad Juwaini, Zakat, Infak, shadaqah & Waqf for Social Welfare, 2011

Potency  and Developement Zakat, Infak, Shadaqah, Waqf

Zakat can play a significant role in Muslim socio-economic development if it is used properly. Entering the year 2012 was the payment of zakah is increasing worldwide. It is estimated that more than 80% of the Muslims who were categorized muzakki (obligatory Zakat) has regular paid zakat. The Zakat Payers are paid through zakat organizations, as well as directly paid to beneficiaries (mustahik) in their respective countries.

Based on the calculation of various methodes, particularly with reference to the pattern of calculations performed by Habib Ahmed from IRTI - Islamic Development Bank (IDB), then we can calculate that the year 2011 using estimated proportion of GDP every Muslim country, the estimated potential of zakah in the world a year of not less than USD 600 Billion.

By considering the data on the number of poor people of the world in the year 2010 reaching 850 million people, then the potential zakat world will be able to overcome poverty until 23.5%, with the assumption that every poor person will be able alleviated with greater empowerment of zakat funds of USD 3000 per person.

Waqf is one of social service through the issuance of the property is very important in Islam. Waqf is a religious treasure that is realized in the form of fixed assets or the value of the benefit in the long term. In the glories of Islamic history, waqf have become one of the cantilever dynamics of Muslim life. Waqf in the past generally functioned to support the provision of social facilities and public facilities for the community.

Various social facilities and public facilities has filled many of the waqf property. Buildings and places such as mosques, Islamic schools, boarding schools, nursing orphans, graves, fields, and roads are examples of community needs that come from waqf. To meet the availability of these waqf, the community generally give waqf in the form of land, buildings, or money used to purchase / provide land, buildings or equipment for the public benefit. All of waqf management scheme described above is the pattern of conventional management of waqf.

Namely the social-oriented management of waqf, because the use of waqf for public purposes or public interests directly. In the conventional management model waqf this happens the cost to the operational management needs of fund everyday to be subsidized from other funds (such as infaq and alms). In the model of social-conventional management of waqf is not the case process and economic benefits of asset waqf. The second transformation in the management of waqf is when there is development of cash waqf (Cash Waqf popularized by MA Mannan with his Social Investmen bank is well known in Bangladesh). In Indonesia Cash Waqf then used the term money waqf, it is the collection of charitable efforts in the form of money which was subsequently stored in the Islamic financial institutions (such as Sharia banks, Baitul Maal wa Tamwil, sharia micro finance) which is generally stored in form of deposits.

The investment income from the deposit is then used to finance social activities, such as helping poor people, subsidies to operational mosque or islamic boarding school. In this development, the waqf of money has also been utilizing a broader monetary sector for investment. Besides the bank, investing in sharia mutual funds, Islamic bonds, Islamic stock markets, and other Islamic monetary sectors. Of course all the basic requirements for charitable transactions, namely that the principal waqf should not be lost, always used as reference in charitable investments in the monetary sector.

In the next transformation, the management of waqf also entered the productive phase. In the model of productive waqf, asset waqf are for the provision of commercial assets that produce revenue or profits. To further revenue or profit is used to finance activities providing education in a school, health services in hospitals or medical clinics, providing food assistance to refugees, orphans, or to help the poor.

As for assets that were pledged as waqf investments include office, kiosks, markets, parking lots, factories, plantations, trees and perennials that produce many more. In the past, probably a lot of investment in productive waqf are not yet practiced. Now, in addition to this useful productive asset waqf generate revenues or profits for social purposes, as well as create new jobs for the community. Waqf have multiple benefits of productive, that is flowing to waqf donors reward. shaping employment through business activities and generate income in order to subsidize social activities.

All of this transformation, has been and is being undertaken by many Waqf Organizationa (Nadzir). They are trying to implement as one of the economic potential of communities that have religious and social dimensions as well.

In addition to Zakat and Waqf, of course infak and Alms also has great potential. Especially if it is owned by a wealthy Muslim who are concerned to help fellow human beings. When this has been the everyday culture practiced by the Muslims, then the impact will also be a huge help in overcoming the problem of poverty.

Position of Zakat, Infak, Shadaqahh and Waqf in Islamic Finance System

In the context of the entire Islamic financial system, Zakat, infak, Alms and Endowments have the following roles:

1.       Provide the basic needs of the community

That is to meet the needs of food, clothing, shelter, health and education.

2.       Help to provide the public service

That is to meet the provision of mosques, tombs, schools, clinics, roads, bridges.

3.        Supporting economic development through business support in social and semi-commercial level.

That is to provide venture capital, business assistance and strengthening the business.

The main focus of the utilization of Zakat, infak, shadaqah and waqf are intended to overcome poverty and build self-reliance of the poor so that they can live in dignity.

Small Enterprise Transformation

Enterprise Level & Sources of Fund

Integrating Zakat, Infak, Shadaqah and Waqf in Islamic Financial Services

To be able to integrate the Zakat, infak, shadaqah and the Waqf in Islamic financial services industry, there are several ways we can do, namely :

1. Making business financing with funds from Zakat, Infak, Shadaqah, and waqf, as a basis for the creation of a strong commercial scale entrepreneurs in develop readiness to trade with the Islamic banking

• Provide learning and practice of Islamic financial transactions to beneficiaries

• Establish a strong mental entrepreneur

• Increase the level of employers from social level to the level of commercial

2. Establish and develop Islamic Microfinance Institutions (such as Social Trust Fund, Cooperative Sharia, Baitul Mal wa Tamwil)

• Establish partnership and business networking

• The institutionalization of Islamic microfinance institutions

• Stabililisasi business and finance Islamic Microfinance Institutions

• Building the parent institution for Islamic Microfinance Institutions

3. Fund of Zakat, Infak, Shadaqah and waqf  placed in the Islamic financial sector to strengthen the liquidity of the Islamic financial institutions

• Save Zakat, Infak, Shadaqah, and waqf in Islamic banking

• Investing  waqf Fund  to Islamic financial services sector

4. Do the channeling of financing among the Islamic banking, business community and the Islamic Microfinance Institution

• Islamic banks to channel financing to Islamic Micro Finance

• Islamic banks to channel funding to community organizations assisted OPZ

5. The expansion of the role of Islamic financial institutions as manager Islamic social funds organization

• Islamic financial institutions as managing partner of zakat organizations.

• Islamic financial institutions as cash waqf managers through the role as nadzir or partner of nadzir.

Steps that need to be done to integrate Zakat, Infak, Shadaqah and Waqf in Islamic financial services industry:

1.       Socialization to common perception about ZISWAF integration in the Islamic financial services industry. Socialization is necessary to reduce the persistence of those who do not understand the importance of integration of Zakat, infak, Shadaqah and Waqf in the Islamic finance industry.

2.       Active involvement of all components of the social fund managers in various organizations of Islamic economics, that enable various stakeholders to ensure rapid information transfer occurs resulting in the similarity of views, similarity and equality action plan.

3.       Formulation and implementation of Islamic finance development blueprint that incorporates aspects of Islamic social fund as part of efforts to develop Islamic financial institutions in a planned and purposeful.

4.       Formulation and implementation of integration Zakat, Infak, shadaqah and Waqf policy in the Islamic finance industry involving all components interested in the development of Islamic financial institutions such as government, banking, Islamic microfinance institutions, the social fund managers Islam and Islamic finance experts.

5.       Realized the need for a pilot project for the realization of integration Zakat, Infak, Shadaqah and Waqf in the Islamic finance industry that benefits can be felt by the various parties as a whole, giving rise to the trust and support more widely.

*) Ahmad Juwaini is Executive Director of Dompet Dhuafa Foundation – The largest Zakat and Waqf Organization in Indonesia.

Email : ahmad@dompetdhuafa.org

            ahmad.juwaini@gmail.com

Youth and Zakat Movement

In each community development, youth serve as the driving energy dynamizing changes in it. The spirit of courage and creativity of youth necessitates the birth of new ideas to inject life field rejuvenation process. The monotony of conventional and in a society has been transformed through the engagement and the dynamics of youth. Youth, is the true meaning of a particular age group in the social class of the community. Youth in the population pyramid, is often interpreted as the age group under 35 years old. But youth is indeed a tempestuous spirit in the breast of every man who always had the courage, creativity and innovation to give birth to something new in creating a state of repair. If we go into the development of zakat in Indonesia, no doubt we will find the fact the role of youth in changing the history of zakat in Indonesia. In the period before the late 80s, the atmosphere of zakat in Indonesia impressive world of traditional, conventional and monotonous. In this period does not seem a passion and excitement in the management of zakat in Indonesia. Partially sighted people tend to be skewed towards the management of zakat. Entering the late 80's and early 90's, especially with the emergence of organizations managing zakat "private", the world of zakat started by young people who are driven an average of under 35 years old. Even most of the crew manager at the zakat under the age of 30 years. The youths are generally newly graduated college this bench charity enter the world of the spirit world to bring the bubble of student affairs. They make the management of zakat as a new media struggle idealism has ever had as a student. Youth group is then burdened with the legacy of the past without the zakat world, make innovative breakthroughs in the management of zakat. This group of models which eventually led to a more modern zakat management, open, professional, and community-oriented benefits to make the profession as a manager of zakat (amil) into a profession can be proud of. In a further development, this youth group that has colored the management of zakat in Indonesia as a humanitarian movement, awareness and empowerment. In further developments, of course, these young people have left the meaning of born youth, as most of them are not young anymore. Youth group of the first generation of managers of this zakat organization has now grown into a group with experience who has owned stock. Wisdom and maturity of the group today may continue to be the inspiration that guides the movement of the wheel charity. The strength of this first generation to be supported by a group of second-generation youth to keep the freshness of the charity world. Zakat world must continue to be filled by the fresh graduates from colleges that still have the energy of youth is still full of idealism. World zakat should also always provide sufficient open space for young people to throw ideas dynamizing breakthrough for the development of zakat in Indonesia. Zakat should be able to accommodate the world of creativity and innovation of young people to continue to animate the movement of zakat. Management should also be able to Zakat Hammersmith media for youth development capacity. Well as the youth are developing themselves in the management organization of zakat, or alms when managers engage in activities that develop the ability of youth. Some of the activities to develop a youth empowerment charity such as the scholarships for students, training for youth entrepreneurship and the formation of voluntary organizations and care for adolescents. In the end, every process of development of youth, including those that occur in the world of zakat to donate the birth of the leaders who will color changes in society. The duty of all parties involved in the zakat

world to continue to make the elements of youth as an important element in the development of the charity movement.

Elegy of Somalia

The world we live in is, it should be is a beautiful place for all the sons of men. Each hemisphere is supposed to be a comfortable place for every man to weave the future of life. Laughter is loose in an area of ​​the earth, should be able to drive the smile that broke in other areas. Every joy that crosses in each corner of the world will be bliss for generating energy corner of the world. But now, when the majority of Muslims around the world to learn about hunger in the month of Ramadan, the population of Somalia has reached the end of hunger. Most of them have to withstand the pain of hunger that stab stomach limit their patience. Some had been dying to pick up his end. From day to day, constantly writhing body row that can not help scour hungry. Somalia, a country in the horn of Africa, already 20 years as a country that seemed self-governing. The country is hit by prolonged conflict. Civil war involving the militia of each region and ethnic-based groups no ending. Drought and the failure to create a food resource also continued to haunt. Coupled with the inability to develop trade and economic management, all resulting in Somalia became a failed state. Ultimately impact the suffering people of Somalia are endless. UN calls Somalia as a country that was ranked first in the world in terms of malnutrition. Currently estimated at more than 80% of children in Somalia are malnourished and 30% of whom suffer from acute malnutrition. World Food Programme (WFP) launch news that says that more than 3.7 million Somalis need food assistance. From a number of these, 800 thousand of whom are children. During drought and famine that peppered this conflict, tens of thousands of Somalis have died. To save themselves, Every week an average of 5000 Somalis are willing to walk for days in the hot sun to the refugee camps in Kenya and Ethiopia. To date, more than 175,000 Somalis have become refugees, in general they live in the border region of Kenya and Ethiopia. Somalis are not only faced with famine. Currently they are also threatened his life, because the Somali militia to hunt them in order to get the treasure. Somali militia in uniform and armed with rifles and pistols, it should keep residents who suffer from hunger. But in reality, they actually hunt down the people who are already suffering from famine. One of the disturbing actions committed by the militia of this happened some time ago. A 13-year-old girl and two sisters were abducted when their families managed to cross into Kenya. Parents third of these refugees were robbed, while three girls were taken hostage by the militia. For two days three siblings underwent forcible rape, before finally freed. Various voluntary organizations that want to provide help for the citizens of Somalia has run into difficulty. Not a few humanitarian organizations that are prohibited entry by the militia forces. The militants were blocking relief brought by human volunteers. There has been also militia kill aid workers. It seems that the suffering people of Somalia who appeared on the world stage, we will still continue to see. Bodies emaciated and pale face full of anguish still will adorn the world media screen. The birds that flew and perched vows in a former human bone beluang will still die of hunger terperagakan in the face of the earth's population, as long as we just stay quiet and sit on my hands. Song of death from Somalia may still be the entertainment for the citizens of the world that no longer cares. No one deserves done by us, except go and help them. As difficult as any we are feeling, we may still be set aside part of caring for them. While we continue to help overcome the difficulties of the nation, let a speck of human solidarity be a helper for them.

Street Musician, Band Players and Celebrity

When we look at the behavior of the zakat fund manager or social institutions, particularly in relation to relate to society, then we can classify his style on three types of behavior. All three of these styles can be seen also as the three classifications. The third force is the tendency of behavior often displayed by the managers of zakat, or charity fund. The third of these styles can be named as the style of street musician, band players and celebrity.

Street musician style shown by the behavior of the managers of humanitarian agencies who have a habit to make sad people in order to invite sympathy. Generally they are doing is telling the suffering of the poor are vulgar. Very often they exploit the difficulties of the poors. Sometimes it does is create or display the poems lament or sorrow songs. Not a few are up to show the children from poor families to tell the anguish of his life in front of crowds. The goal is that people who hear the part soluble in sadness and finally willing to spend money donations.

The next style is the style that is sometimes displayed the band. This style refers to the behavior of the managers of charity or social institution that tries to present an interesting program packaging, quality and harmony of good management. This band of players try to show the performance management of charity and social activities as a substance to achieve the goal of helping the poor. To invite the money and sympathy, the band is not the main provisions of poetry and songs of sorrow, but the value of the benefits and impact of programs to improve the fate of the poor. In a higher stage, surely the quality of players we could call this band as an orchestra player, because of his skill in concocting the substance of value in a dynamic program.

The third style that is often displayed by the fund manager charity or humanitarian institutions is celebrity style. This style refers to the behavior of the managers of charity and social institutions are more interested in popularity in carrying out its activities. This group made the publicity and popularity as a destination from a variety of activities done. This style is supported by a variety of activities which involve more journalists and promotion in various media. It does not matter whether the activity benefits the poor people or bring in donations, the important names of institutions and personnel of the more widely known by the public.

Of course, a legitimate charity or if the manager displays the behavior of social institutions as mentioned above. All behavior that is part of an effort every manager charity and social institutions to achieve their stated objectives. In addition to its objective factors, behavioral styles also emerged due to the knowledge, experience and skills possessed personnel involved in managing the charity and social institutions. The more qualified managers charity and social institutions, will be more quality display of force behavior.

Some managers charity and social institutions may also have noticed that the aspects of the substance of the benefits of the program, the ability to bring sympathy and donations and the impact of popularity is the third thing that can not be separated. They make all aspects of it as a defining element of they directing the organization or impelemnting the program. These aspects has been a decisive element of success of activities and ran well organizations wheel. But whatever the behavior of zakat or charity institution, the community will continue to appreciate the style of behavior displayed. Apreciation from community can emerge in the form of positive or negative appreciation. The impact of zakat or charity institution will be loved or shunned society. Now it's up to the institution of zakat, or charity, the style of what behaviors will be displayed?