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Resource Mobilisation and Islamic Charity-Giving in Indonesia: Evidence from Low-Income Households

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Islamic Finance, Risk-Sharing and Macroeconomic Stability

Abstract

This paper examines low-income households’ perspective on regular charity-giving behaviour in Indonesia. Theory of social production function and the theory of planned behaviour are adopted. 1780 questionnaires are collected and analysed by using structural equation modelling. The findings suggest that informal financing institution negatively related to regular charity-giving behaviour, while indirectly related to attitude and perceived behavioural control. Meanwhile, financial education is proven to be positively related to the behaviour of giving charity regularly. It is also indirectly related through perceived behavioural control (experiences), if subjective norm (other important parties perceived by respondents) is included, but negatively related to the behaviour if subjective norm is excluded. The regular charity-giving behaviour positively affects financial ratios and satisfaction in lifestyle. These findings are useful for social-finance practitioners to change the perspective and behaviour of low-income households.

This paper is an extended and revised version of the earlier paper entitled “Debt-Taking and Charity-Giving Among Low-Income Households: Strengthening Resilience in Islamic Perspective”.

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Notes

  1. 1.

    Mustahik comprises eight groups of people as stated in the Quran, 9:60. They are the poor, the needy, and the officials (appointed) over them, those whose heart are made to incline (to truth) or muallaf, the ransoming of captives, those in debts, those in the way of Allah and the wayfarer.

  2. 2.

    Zakat is a charity-giving obliged for Muslim whose wealth has been exceeded specific amount called nisab. Present perfect sentence here is used because the wealth also needs to be held within specific haul, i.e. one year. The indicator of wealth nisab can be approached through one’s monthly income, which is called “zakat of profession”. Nisab “zakat of profession” in Indonesia derived from an equal amount of 653 kilograms of paddy or wheat, which are collected every month when Muslims received their income. There is no haul in “zakat of profession” since it is derived from zakat of agricultural, where Muslim farmers whose production output exceeded nisab are obliged to pay zakat right away during the harvest time (Quran 6:141). The nature is the same as employee or entrepreneur or any other profession who usually calculate their income in monthly periodic. Collected zakat funds, then, must be distributed to mustaḥik, the recipients of zakat funds.

  3. 3.

    Muzakki is zakat payer. In Indonesia, Zakat Management Act No. 23/2011 divides muzakki into two, i.e. individual Muslim and legal entity (corporation).

  4. 4.

    Charity in this term is different from zakat. This charity can be done by any Muslims without any requirement of nisab and haul like zakat.

  5. 5.

    Amil is the agent of zakat funds. It collects, distributes, and manages all zakat and charity funds so it can be circulated in the society.

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Authors and Affiliations

  1. Bogor Agricultural University, Bogor, Indonesia

    Laily Dwi Arsyianti

  2. Institute of Islamic Banking and Finance, International Islamic University Malaysia, Gombak, Malaysia

    Salina Kassim & Adewale Abideen Adeyemi

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  1. Laily Dwi Arsyianti
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  2. Salina Kassim
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  3. Adewale Abideen Adeyemi
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Correspondence to Laily Dwi Arsyianti .

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  1. Islamic Research and Training Institute, Islamic Development Bank, Jeddah, Saudi Arabia

    Muhamed Zulkhibri

  2. Islamic Research and Training Institute, Islamic Development Bank, Jeddah, Saudi Arabia

    Turkhan Ali Abdul Manap

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Arsyianti, L.D., Kassim, S., Adeyemi, A.A. (2019). Resource Mobilisation and Islamic Charity-Giving in Indonesia: Evidence from Low-Income Households. In: Zulkhibri, M., Abdul Manap, T. (eds) Islamic Finance, Risk-Sharing and Macroeconomic Stability. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-05225-6_10

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  • DOI: https://doi.org/10.1007/978-3-030-05225-6_10

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