Behavioral Dimensions of Islamic Philanthropy: The Case of Zakat

Abstract

This chapter studies the behavior of individual Islamic donors who make a specific type of religious contribution called zakat. It seeks to provide a fundamental understanding of what governs the behavior of these donors—the triggers and motivators, traits and attributes, and preferences. The study uses hierarchical cluster analysis to develop psychographic profiles of individual Islamic donors or groups among them. Interestingly, two of the three clusters closely resemble subsets of the overall sample, when disaggregated on the basis of donor’s country of origin, indicating the possibility that Islamic donors from a given country may be displaying a distinct behavioral pattern. This raises a more profound possibility that the national identity of the donor associated with a unique social, economic, legal, and political environment may be a key influencer of the way she/he engages in matters pertaining to faith. The evidence highlights the need to give due importance to the observed diversity among zakat donors in any initiative to develop core principles, regulatory standards, institutional infrastructure, and models of governance for the development of this component of the global Islamic social finance sector.

Appendix 1: List Statements and Descriptors

Code	Statement	Descriptor
X1	I pay zakat because it is a religious obligation for me	Religious–dutiful
X2	I pay zakat because I save on my income tax	Tax saver
X3	I pay zakat because it is compulsorily required by the state	Statist/law-abiding
X4	I pay zakat because it is compulsory mandated by God SWT	God’s servant
X5	I pay zakat because I must help the poor and the needy	Do-gooder
X6	I pay zakat because my zakat may be utilized for propagation of Islam	Propagator of faith
X7	I pay zakat because my relatives and near and dear ones seek my financial help	Affinity seeker
X8	I pay zakat because God SWT is pleased with those who help His creation	God’s pleasure seeker
X45	I pay zakat because organization receiving my zakat helps the poor and makes a difference to the society	Reformist
X46	I pay zakat because organization receiving my zakat helps a cause that is dear to my heart	Change agent
X47	I pay zakat because I feel good after paying zakat	Feel gooder
X48	I pay zakat because Zakat payment purifies my wealth	Purist
X49	I pay zakat because Zakat payment wipes off my sins	Sin expiator
X50	I pay zakat because Zakat payment helps me get rid of my feeling of guilt	Guilt expiator
X9	As a zakat payer, I have a fair knowledge of how to estimate my zakat liability	Knowledgeable
X10	As a zakat payer, I need the assistance of experts to estimate my zakat liability	Ignoramus
X11	As a zakat payer, I am not concerned about how zakat is utilized once I pay my zakat to the collection	Indolent –apathetic
X12	As a zakat payer, it is my responsibility to ensure that zakat is spent for the benefit of the poor and asnaf	Responsible
X13	As a zakat payer, it is my religious obligation to ensure that zakat is utilized properly	Accountable
X14	Who should collect zakat: the Central government in a country or its agency	Statist/Collectivist
X15	Who should collect zakat: the local/provincial government in a country or its agency	Regionalist/federalist
X16	Who should collect zakat: village/town committees and sub-committees	Localist
X17	Who should collect zakat: individuals	Individualist/anarchist
X18	Who should collect zakat: Muslim NGOs	Institutionalist
X19	Who should collect zakat: Ulema	Ulema-loyalist
X20	Who should distribute zakat: the Central government in a country or its agency	Statist/collectivist
X21	Who should distribute zakat: the local/provincial government in a country or its agency	Regionalist/federalist
X22	Who should distribute zakat: village/town committees and sub-committees	Localist
X23	Who should distribute zakat: individuals	Individualist/anarchist
X24	Who should distribute zakat: Muslim NGOs	Institutionalist
X25	Who should distribute zakat: Ulema	Ulema-loyalist
X26	If an individual pays zakat, he/she should get FULL deduction in income tax payable	Return seeker
X27	If an individual pays zakat, he/she should get PARTIAL deduction in income tax payable	Tax saver
X28	If a business pays zakat, it should get FULL deduction in income tax payable	Return seeker
X29	If a business pays zakat, it should get PARTIAL deduction in income tax payable	Tax saver
X51	Zakat and taxes should not be mixed up; neither individual nor business should get ANY tax reduction for paying zakat	Purist
X30	Zakat-collecting organizations should heavily promote their campaigns to raise funds, similar to modern fund-raising organizations, through roadshows, conferences, etc.	Prodigal campaigner
X31	Zakat-collecting organizations should use mainstream media—newspaper, TV, Internet, etc. for advertising and fund-raising campaigns	Communicator
X32	Zakat-collecting organizations should avoid costly and expensive methods of creating awareness	Conformist, frugal
X33	Zakat-collecting organizations should use masjids ONLY for creating awareness regarding zakat	Traditionalist, parsimonious
X34	Zakat organizations must NEVER use zakat to cover their own administrative expenses	Skeptical
X35	Zakat organizations must NEVER use more than one-eighth of zakat collected to cover their own administrative expenses	Cautious—compliance freak
X36	Zakat organizations must NEVER carry undistributed surplus zakat to next lunar year	Traditionalist—conservative
X37	Zakat organizations must NEVER invest zakat surplus to generate good long-term returns	Greed buster
X38	Zakat organizations must NEVER invest zakat surplus in safe and liquid avenues for a short term	Traditionalist—conservative
X39	Zakat organizations must be audited every year by independent financial auditors	Reckoner
X40	Zakat organizations must be audited every year by independent Shari’ah auditors	Shari’ah conformist
X41	Zakat organizations must report the figure for total zakat collections every month to the public	Control freak
X42	Zakat organizations must report the figures for zakat, sadaqa, cash waqf separately to the public	Shari’ah conformist
X43	Zakat organizations must report the category-wise distribution of zakat every year to the public	Information seeker
X44	Zakat organizations must report the project-wise distribution of zakat every year to the public	Information seeker
X52	Zakat organizations must acknowledge my contribution through a letter or a note or some other form of recognition	Recognition-seeker