The Impact of Knowledge on Islamic Philanthropy Fund Allocations:

An Analysis of Moslem Society

Anna Sardiana

, Zulfison

and Alvien Nur Amalia

Islamic Finance and Banking Dept, STIE Indonesia Banking School, Jakarta –Indonesia

Keywords: Islamic Philanthropic Funds Allocation, Knowledge, Zakah-Waqf-Infaq-Shadaqah

Abstract: Islamic philanthropic funds are known as Zakat, Waqf (Endowments), Infaq and Shadaqah can be used as a

mechanism of poverty alleviation and income distribution. Decision making for Islamic philanthropic fund

allocation as the initial stage of forming behavior, starting from knowledge about Islamic philanthropy as

the main thing of attitude regarding o the allocation of social funds as Islamic philanthropic fund. Lack of

knowledge of Islamic philanthropy can lead to a minimum acceptance of Zakat, Infaq, Sadaqah, and Waqf

as endowments fund. The purpose of this study was to determine the effect of knowledge on the allocation

of Islamic philanthropic funds of Muslim communities. The method used is a descriptive method with a

quantitative approach. This research was carried out on the Moslem people who allocated their Zakah,

Infaq, Shadaqah, and Waqf through the philanthropic institution was known as Dompet Dhuafa and Zakah

Amil institution as known as LAZ Al-Azhar. Questionnaires, observation and in-depth interviews were used

for data collection. The results of this study indicate that there is an influence of knowledge on the fund

allocation of Islamic philanthropy in the Indonesian Moslem community.

1 INTRODUCTION

Since 1998, Compound Annual Growth Rate

(CAGR) note that the poverty rate in Indonesia has

fallen by 3.04%, whereas Indonesia's poor

population reached 16.70 million of September 2017

with a composition of 38.5% in the city and 61.5%

in rural areas. (Bank Indonesia, 2018). Actually,

poverty reduction can be done through income

distribution between rich and poor people. This is in

line with the findings of Bank Indonesia in 2017,

which social assistance that grew by 6.96% per year

had a high correlation with the decrease in the

number of poor people by -0.54. This can be seen in

the decline of poverty in rural areas by 3.29% and

2.63% poverty reduction in the urban cities.

As Islamic doctrine, fulfilling basic needs

becomes the minimum standard which is an

important element as mentioned in maqasid Syariah.

Adequacy in a good standard of living (Nisab) is the

most underlying thing in the income distribution-

redistribution system (Nasution., et al, 2007). Each

person in the Muslim community must be

encouraged to be able to achieve the minimum for

basic fulfillment, then strive to be able to achieve the

standards of living above assets ownership (Nisab).

Islam has its own instrument to solve the problem of

income distribution equalization and poverty

alleviation, that known as Zakat, Infak, Sadaqah, and

Waqf (ZISWAF) or known as Islamic philanthropy

funds. The distribution of income in the context of

the household will be strongly related to the

terminology of shadaqah (alms) which can be

understood in two aspects, namely obligatory alms

(obligatory) and almsgiving (sunnah). The

Indonesian Muslim community generally knows the

obligatory alms instruments in the form of zakat

while the alms of salvation (sunnah) are infaq,

shadaqah (alms itself), waqf (endowments), and

wills (wasiah). This terminology is known as ziswaf

in Indonesia and Islamic philanthropy fund in

general.

Islamic philanthropy is a worship that contains

two dimensions, namely hablummina Allah or

vertical dimensions (between human and God) and

hablumminannas or horizontal dimensions (between

Sardiana, A., Zulﬁson, . and Amalia, A.

The Impact of Knowledge on Islamic Philanthropy Fund Allocations: An Analysis of Moslem Society.

DOI: 10.5220/0009498613171322

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 1317-1322

ISBN: 978-989-758-432-9

1317

human and another human being). Zakah, as one

component of Islamic philanthropy fund, is an

obligation for Muslims who are considered capable

(according to Islamic criteria) to issue between 2.5%

-20% of the proportion of their assets to be

distributed to those who are entitled to receive the

zakah as mentioned in Al-Qur’an. In the vertical

dimension, when Zakah, Infaq, Shadaqah, and Waqf

(endowment) is fulfilled according to Shari'a

guidance, it will improve the quality of faith, cleanse

and purify the soul, will develop and endow

possessions also.

In several studies, Islamic philanthropy fund

experienced very rapid progress in Indonesia.

However, behind that rapid progress, there are still

many problems that need to be resolved. Some

problems as like as the weakness of public attention

towards zakah are the gap in the reception of zakah

potential and collection of zakah its self. (Huda et al,

2013). The results of research that conducted by

BAZNAS and FEM IPB (2011) reported that

Indonesia has the potential of zakat funds about Rp

217 trillion per year. In 2011, the total collection of

zakah, including infaq and shadaqah (alms) reached

Rp 1,729 trillion only, which is less than 1% of the

total potential availability of zakah. According to

Jahar (2010), lack of coordination and less synergy

between zakah institutions (amil) was the factors

that caused the low realization of zakah collection

and reception. In addition, the gap between the

potential and realization of zakah collection and

reception are due to the low attention and

understanding of the Muslim community towards

zakah, so it still needs to be improved (Huda et al,

2013). For this reason, Hafidhuddin (2011) states

that socialization and education to the community

are some steps that can be taken to explore more the

potential of zakah. It also related to the law and

wisdom of zakah, the assets object that zakah must

be issued as well as the procedures of zakah

calculation. According to those issues, Islamic

philanthropy fund's socialization and education of

the community are closely related to the level of

Muslim communities knowledge who allocate their

fund to the Islamic philanthropy.

2 THEORICAL FRAMEWORK

Philanthropy interpreted as a conceptualization of

voluntary giving practice, voluntary services, and

voluntary associations to help other parties in need

as expressions of love. Philanthropy in the sense of

giving donations also equated with the term of

charity (Kim Klein, 2001). The term philanthropy is

interpreted with a sense of concern for human being

fellows which manifested in the form of giving alms

to others (Ilchman, 2006).

The term philanthropy related to Islam shows

that the practice of philanthropy in the Islamic

tradition carried out through zakat, infaq, charity and

endowments (Abu Zahrah, 2005). Then zakah, infaq,

shadaqah (almsgiving), and waqf (endowments) is a

manifestation of Islamic philanthropy. This term can

help to bring up the discourse of Islamic generosity

that can reach more discourse with wider issues. The

problem will not be observed in terms of traditional

discourse only, such as Islamic jurisprudence and

Islamic ethics, but also can relate it with social

justice, people's welfare, civil society, public policy,

good governance and professional management

issues. Those show that Islamic philanthropy as if

utilized and optimized well, can be an alternative

solution in alleviating poverty and income

distribution.

Islam advocates Muslims to be philanthropic so

that the wealth does not only revolve among rich

people (QS al-Hashr: 7). When explaining

philanthropy, the Qur'an often uses the terms of

zakah, infaq, and shadaqah (almsgiving) which

contain the meaning of charity. Generosity in Islam,

which includes broad dimensions of goodness such

as zakah, infaq, shadaqah (almsgiving), and waqf

(endowments) are terms that indicate the official

form of Islamic philanthropy. This Islamic

philanthropic system was then formulated by the

jurists which reliance on the Qur'an and the hadith of

the Prophet regarding detailed provisions, such as

the types of assets, minimum levels, amounts, and

other rules.

Sometimes The Qur'an does not introduce the

term of zakah, but alms. However, on the order of

discourse, terms of zakah, infaq and alms is

sometimes also contained special meanings and are

also used differently (QS. At-Tawbah: 60). Zakah is

often interpreted as an expenditure of property that

is compulsory and as one of the pillars of Islam

which count based on certain calculations. Whereas

Infaq often refers to gifts that are not zakah, which

are sometimes larger or smaller than zakat and are

usually given for the public interest. For example,

infaq for mushalla assistance, mosques, madrasahs

or schools, and Islamic boarding schools. Alms

usually refers to small amounts of charity that

handed over to poor people, beggars, buskers, and

others. Whereas waqf is almost the same as infaq,

but has benefit-based with a lasting thing that can

not be used based on its waqf contract; may not be

traded and may not be inherited (Al-Makassari,

2006).

The urgency of philanthropy in Islam can be seen

from the way of how Qur'an emphasizes the balance

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

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between issuing zakat and establishing prayer. As

strictly as the command regarding zakat, Qur'an

repeats 72 times the command of zakat (ita az-zakat)

and associates it with the command of prayer (iqam

ash-shalat). In other hands, the word infaq with

various derivation forms appears 71 times and the

word Shadaqah (alms) appears 24 times which

shows the meaning and activities of Islamic

philanthropy. Then, prayer as the main pillar of

Islam, so the practice of zakat is considered equal to

the performance of prayer (QS al-Baqarah: 177).

As mentioned, for Muslims, Islamic

philanthropic fund allocation, better known as

zakah, infaq, shadaqah (almsgiving), and Waqf

(endowments) is something that is related to faith.

So that the knowledge of that Islamic philanthropy is

the basis for considering and then deciding to

allocate individual finances to this Islamic

philanthropy. This is according to the hierarchy of

effect theory was introduced by Lavidge and Steiner

(1961) which states that there are several mental

stages in person after being exposed to marketing

communications of a product or service, until he

decides to choose and use the product. There are

three stages in the model, namely the stages of

cognitive, affective and behavior. In accordance

with this study, which uses the cognitive stage only,

that is the knowledge and behavior stage also like

the decision. This study also uses the concept of

marketing communication to explore the impact of

knowledge in allocating a social fund of Islamic

philanthropy.

Marketing communication is defined as an

application of communication that aims to assist

marketing activities of a company which is a

combination of five communication models in

marketing, including advertising, sales promotion,

individual sales, public relations, and direct sales so

that the company's goals are achieved, namely an

increase in income overuse of products or services

offered (Kennedy and Soemanegara, 2006).

Communication is needed in community life, the

method of communication for Islamic philanthropy

socialization to the community is a method that very

helpful in developing Islamic philanthropy both

from the government and social institutions also.

Socialization, as defined by Veeger (1990), is a

teaching and learning process, through individuals

learning to become members of society, where the

process does not solely teach patterns of social

behavior to individuals, but also individuals develop

themselves or carry out their maturation process

(Setiadi, 2011). According to Notoatmodjo (2005),

Knowledge covered in the cognitive domain has six

levels, namely knowing, understanding, application,

analysis, synthesis, evaluation. Decision making is

defined as the selection of a decision or policy based

on certain criteria. This process includes two or

more alternatives because if there was only one

alternative there would be no one decision to be

taken (Dagun, 2006).

Knowledge as a change in an individual's

behavior that comes from experience. It shows that

consumer knowledge as an amount of experience

and information that someone knows about a

particular item or service (Mowen, 2001). Another

opinion describes knowledge as information that a

person keeps in his brain's memory, some of that

information serves consumers to recognize the

market, and this is referred to as consumer

knowledge. (Engel, Blackwell and Miniard, 1994).

3 RESULT AND ANALYSIS

General characteristics of respondents in this study

can be seen based on gender, age, education,

employment, and monthly income. Following is the

profile statistics table of respondents in this study

along with the description.

Table 1: Profile of Respondents

Characteristic

Total

Percen

tage

Sex

Men

Woman

128

67.7

32.3

Age

18-25

26-35

36-50

>50

7.4

21.7

48.1

22.8

Education

Elementary/JuniorHS/S

eniorHS

Diploma/Bachelor

Magister/Doctoral

4.2

41.3

Employment

Civil

Servants/Army/Police

Employee

Entrepreneur

Others

114

3.2

60.3

19.6

16.9

Income

≤ Rp. 5.000.000

10.1

The Impact of Knowledge on Islamic Philanthropy Fund Allocations: An Analysis of Moslem Society

1319

5.000.001 - 8.000.000

8.000.001 – 10.000.000

10.000.001 –

15.000.000

Above 15.000.001

15.3

16.9

30.7

The table above shows that the majority of

respondents are male, that is equal to 67.7 percent,

while 32.3 percent are women. Most of the

respondents were in the productive age of 77.2

percent with a dominance of 48.1 percent in the age

range of 36-50 years and 21.7 percent in the age

range of 25-36 years and 7.4 percent in the age range

of 18-25 years, while the other 22.8 percent were not

in productive age. Most of the educational

background taken by respondents is Diploma and

Bachelor, which is as much as 54 percent, then

followed by magister and doctoral graduates as

much as 41.3 percent, then elementary/middle and

high school / vocational school graduates of 4.2

percent.

Respondents of this study mostly were company

employees and BUMN employees with a percentage

of 60.3 percent, then followed by entrepreneurs

amounting to 19.6 percent, then other jobs such as

teachers, craftsmen, therapists, etc. were 16.9

percent. The respondents who work as civil servants,

military and police are 3.2 percent. Meanwhile, the

income of respondents is generally above 15 million

rupiahs per month, which is 30.7 percent followed

by income in between 10 million - 15 million per

month as much as 27 percent and income of 8

million - 10 million per month, amounting to 16.9

percent, which is slightly different from respondents

with 5 million - 8 million per month, 15.3 percent.

While the rest, a total of 10.1 percent are

respondents with an income of around 5 million per

month.

4 DISCUSSION

This study was carried out to ensure the urgency of

public education and socialization of Islamic

philanthropy which can impact to fund allocation.

As Houston (2010) describes the construction of

financial literacy in the form of knowledge, abilities,

and attitudes or self-beliefs as indicators in

measuring one's financial literacy level. This is in

line with Mason and Wilson (2000) who describe

financial literacy as the ability of a person to

understand and evaluate relevant information for

decision making by understanding the financial

consequences it causes. Regarding those construct,

known (knowledge) as one of Islamic financial

literacy, reflected as one of the instruments that

influence the community in allocating their

philanthropy funds.

As this research conduct in the form of financial

literacy constructs by looking at knowledge, ability

and also attitude or confidence as instruments,

results of data analysis in the regression coefficient

test, shows that the equation model is obtained as

follows:

ZiswafAloc = 4.176 + 0.85Knwldge +

0.161Ability + 0.096AttitudeConf

Based on the model, can be explained that the

value of philanthropy fund allocation without

knowledge, abilities and attitudes or beliefs is 4,176

units. While each knowledge increase one unit with

the assumption that ability and attitudes or beliefs

were constant will cause an increase in the allocation

of public philanthropy funds by 0.85 times. As for

each increase one unit of ability by assuming

knowledge and attitudes or beliefs were constant,

will cause an increase in the allocation of public

philanthropy funds by 0.161 times. Whereas every

increase one unit of attitudes or beliefs by assuming

that knowledge and abilities were constant, will

cause an increase in the allocation of public

philanthropy funds by 0.403 times.

As Veeger (1990) defining socialization as a

teaching and learning process through individuals

learning to become members of society, where the

process does not solely teach patterns of social

behavior to individuals, but also individuals develop

themselves or carry out their maturation process

(Setiadi, 2011). According to Notoatmodjo (2005),

knowledge covered in the cognitive domain has six

levels, namely knowing, understanding, application,

analysis, synthesis, evaluation. Decision making is

defined as the selection of a decision or policy based

on certain criteria. This process includes two or

more alternatives because if there was only one

alternative there would be no one decision to be

taken (Dagun, 2006). The study also carried out to

ensure that there is perfect relationship by looking at

the coefficient of determination (R²), which is

indicated by whether changes in knowledge,

abilities, and attitudes or behavior that will be

followed by the allocation of community

philanthropy funds in the same proportion. Then R2

value can be seen in the following table:

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

1320

Table 2: R2 value

Model Summary

R Square

Adjusted R

Square

Std. Error of

the Estimate

.573

.328

.317

1.159

a. Predictors: (Constant), AttConf, Knwldge, Ablty

b. Dependent Variable: PhilanthropyAllocation

Source : Primary data, managed, 2018

The table above shows that the R Square is 0.328

or (32.8%). It is mean that the percentage of the

influence of knowledge, ability and attitude or

confidence in the allocation of public philanthropy

funds is 32.8%. In other words, knowledge, ability

and attitude or confidence are able to explain 32.8%

of the variation in the allocation of public

philanthropy funds. While the remaining 67.2% is

influenced or explained by other variables that not

included in this research model. The table above also

shows 0.573 as R number that means there is a

moderate relationship between knowledge, ability

and attitude or belief in the allocation of community

philanthropy funds.

Furthermore, in the t-test, both knowledge,

ability and attitudes or beliefs each partially have an

influence on the allocation of community

philanthropy funds. So this reinforces the

importance of education and socialization of Islamic

philanthropy to the muslim community.

In the simultaneous test of significance, the value

of F calculated was 30,109 and a significant number

(P value) of 0,000. By a significance level of 95% (α

= 0.05) and a significance number (P value) of 0,000

that smaller than alpha (α = 0.05). Based on these

comparisons, knowledge, abilities, and attitudes or

beliefs have a significant influence jointly on the

allocation of community philanthropy funds.

The results of those analyses explain the

construction of Islamic financial literacy which

starts from knowledge. This is in line with the theory

that has been described in the literature review,

where a stimulus through the process of knowledge

and understanding will produce a response (effect)

in the form of the ability to choose which will

ultimately affect the attitude (behavior) of the

individual. This attitude will make individuals

confident in allocating funds for Islamic

philanthropy, as explained by The hierarchy of

effect theory were introduced by Lavidge and

Steiner (1961) and the tri Component of Attitude

(Engel et al., 1995) that the components are in a

consistent relationship, where the component

reflects the cognitive component where individuals

have the knowledge and understanding of

philanthropy, then the affective component aspect

that describes how individuals consider their asset

allocation for philanthropy, to the conative

component aspects that reflect individual attitudes or

beliefs in channeling some of their assets to the

philanthropy.

5 CONCLUSION

Based on the results of data analysis and discussion,

can be concluded that even though knowledge as

cognitive aspect then followed by affective conative

aspect able to explain only about 37% of

philanthropy fund allocation, knowledge is valuable

as a starting point to influences the community in

allocating funds for philanthropy. Regarding those, a

suggestion to forward that both the government,

Ulama, Amil Zakat Institutions and Waqf

Institutions also need to pay special attention to

conducting education and socialization regarding

Islamic philanthropy. Thus, efforts to achieve

community welfare can be realized by philanthropy

funds distribution. In addition, educational

institutions also need to help the government in

educating the public regarding Islamic philanthropy

so that the target of economic growth and the

welfare of the poor people can be realized. In

addition, Amil zakat and Waqf institution need to be

more active in increasing public awareness

regarding Islamic philanthropy so that the target in

receiving philanthropy funds can also be achieved.

Another thing, further research is needed to use or

may add other variables for better research result

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