An Analysis on the Changing Operational Nature of Baitul Maal

Institutions in Indonesia

Adi Saifurrahman and Salina Kassim

IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia, Indonesia

Keywords: Baitul Maal, Comparison, State’s Treasury, Charitable Body, Zakat.

Abstract: Baitul Maal is deemed as a vital financial institution in the past, apart from its role as the state’s treasury in

managing all types of revenues and expenditures that the Islamic State had. Previously, Baitul Maal served

as the assurance body to ensure public security and preserve the welfare of the public. Due to this important

function, the modern Muslim civilisation, especially in Indonesia, once more intended to establish an

identical institution and have the aspiration to replicate the past function of Baitul Maal. When this research

is conducted, the main purpose of this research is to compare the role and function of the past Baitul Maal

with the role and function of present Baitul Maal in Indonesia, identify and analyze the similarities and

differences between the two generations, whether the present Baitul Maal truly reflects the role and function

of the past Baitul Maal, or it is just merely a name? The result of this research implies that there are several

similarities and differences between the two institutions. The similar aspect between the two generations is

in the aspect of concept and philosophy of Baitul Maal. Subsequently, the different aspect between the two

institutions is in the aspect of the definition, source of wealth or revenues, expenditures, and organisational

structure. In general, the past Baitul Maal serves as the state’s treasury, while the present Baitul Maal serves

as the charitable body. Due to this different characteristic between the two institutions, the past Baitul Maal

has a wider type of revenues to be managed and larger type of expenditures to be spent, whilst current

Baitul Maal is limited to the sadaqah types fund only that consist of Zakat, Infaq, Sadaqah, and Waqf. Thus,

explicitly, its expenditures are also limited and only can be spent on the beneficiaries and the needy.

1 INTRODUCTION

The growth of modern Islamic banking and finance

is deemed rapid and enormous; the expansion is

perceived globally in the Muslim countries and Non-

Muslim countries alike. Unfortunately, according to

some research, the expansion, and growth of Islamic

finance are not followed by the welfare of Muslim

civilisation in the respective country. Critics have

highlighted that the current Islamic banking and

finance practices are merely a replication of

conventional banking system, where the main

objective is the profit maximisation rather than

social and environmental development.

The Economic Development Success is not just

measured on how high the income and expenditure

level, but also measured on how the wealth or

property was managed, distributed and benefited to

those who need, to achieve justice and fair welfare

of society. Thus, in order to strengthen the public

wealth sector and to realise its full potential for the

socio-economic development, the mobilisation and

distribution of the resource are utmost important.

(Possumah & Ismail, 2012).

Previously, as we know, Islam has the Important

Financial institution known as Baitul Maal, this

institution collects the funds of Muslims from

various sources and spend those funds on developing

the state and as the social security to ensure public

well-being, the wealth management that held by the

Baitul Maal is deemed benefited the most of Muslim

in the previous age, and this institution is considered

the pioneer in promoting the equitable wealth

distribution among society.

Due to these functions, Baitul Maal was

considered as an essential strategic tool to manage

wealth and property of Muslim in the past, since the

time of Rasulullah peace be upon him until the time

of Khilafah, all of the financial matter at that time is

referring to the Baitul Maal, from Zakat and

Sadaqah distribution, collection of spoils of war

(Ghanimah), Salaries of staffs and soldiers etc. are

taken directly from Baitul Maal.

Saifurrahman, A. and Kassim, S.

An Analysis on the Changing Operational Nature of Baitul Maal Institutions in Indonesia.

DOI: 10.5220/0010115800002898

In Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance (7th AICIF 2019) - Revival of Islamic Social Finance to Strengthen Economic Development Towards

a Global Industrial Revolution, pages 127-135

ISBN: 978-989-758-473-2

127

With the pass of the time, and with the growth of

Islamic finance in modern age, the Muslim once

again dreams about the establishment of Baitul Maal

that reflects the function of the past Baitul Maal and

can help them manage their financial aspect, in

Indonesia the first intention to establish Baitul Maal

was in 1980, at that time Indonesian people are

aware of the existence of Islamic Bank since

Indonesia is occupied mostly by Muslim. The

experiment of Islamic finance institution was done

through the small scale by establishing of Baitul

Maal in Bandung and Jakarta in the form of

cooperative institution, but the real Baitul Maal

institution was established along with the

establishment of Islamic Banks in Indonesia in 1990.

With the big gap between the past and present,

sometimes the role of the institution may differ due

to a different era, people, purpose, and

understanding, this research intends to compare the

Role of today’s Baitul Maal in Indonesia with the

past Baitul Maal, did they role and operation reflect

the past Baitul Maal? What are the differences, and

what are the similarities?

When this research is conducted, the main

objective of this research is to compare the role and

function of the past Baitul Maal with the role, and

function of present Baitul Maal in Indonesia identify

and analyse the similarities and differences between

the two generations, whether the present Baitul Maal

truly reflects the role and function of the past Baitul

Maal, or it is just merely a name?

This paper discusses the importance of Shariah

audit in Islamic financial institutions and it is

regarded as a confession by the institutions that all

its operational activities are in accordance with

Islamic teachings. This is importance to keep the

institutions are accountable and trustworthy in the

eyes of public as stakeholders.

2 LITERATURE REVIEW

2.1 Baitul Maal in the Past

According to the Dictionary of Islam, Baitul Maal

was defined as National Treasury who received the

money collected by the state from various sources

such as Zakat, Waqf, etc. (Huges, 1895). According

to Abdul Qadeem Zallum in his book, 'al-Amwal Fi

Dawlah al-Khilafah' defines Baitul Maal as the

competent authority in charge of all the State’s

revenues and all the expenditures for which the

Muslims are eligible (Zallum, 1988). This definition

describes Baitul Maal as a treasury of the state. So

every property, be it land, buildings, minerals,

money, or commodities, where the Muslims are

entitled to have it according to the Shariah rules, and

the individual who entitled to its ownership has not

been specified, although certain parties have the

right to accept the portion of it.

The Baitul Maal was utilised to deal with the

economic matters of Islamic state like revenues etc.

During the reign of our Prophet Muhammad (SAW),

a permanent Baitul Maal was not established, no

reserves were kept, the revenues that were

accumulated were immediately distributed. During

the reign of Abu Bakar RA, Baitul Maal was also

not kept as there was no prominent need for the

reserves to be kept. Whereas during the caliphate of

Umar RA, the needs changed as the conquests

started increasing and larger quantities of revenues

were generated. Previously salaries were not paid,

but with the increasing men in the army and the

increasing revenues, Caliph Umar started paying

salaries to the fighting men (Possumah & Ismail,

2012).

As the revenues began to increase, the second

caliph Umar established a permanent Baitul Maal

after consulting with his companions. A central

treasury was established in Madinah. Accounts

department was included. Later the provincial

treasuries were also set up, and salaries and stipends

were paid. For the royal treasury, a separate

building was built that was the Baitul Maal.

As the Baitul Maal continuously growing and

expanding in the past, the concept of Baitul Maal

was included permanently to make the Islamic state

a welfare state. Reserves of food were also kept for

natural disasters and famine. No money was allowed

to be wasted on luxuries that were unnecessary so

that the money can be used for the welfare of the

people.

According to A. Ghazali, the philosophy of the

past Baitul Maal is to form the basis of public

financing. The final aim is to construct a society

committed to balancing the material and spiritual

values by ensuring that wealth obtained by

individuals is distributed from the "haves" to the

"have-nots" (A. Ghazali, 1990).

Regarding the sources of wealth of past Baitul

Maal, Zallum (1988) discusses war spoils, treasures,

fifths, kharaj, jizyah, public properties, state

properties, lands, buildings, general utilities, tithes,

illicit money from the rulers or civil servants money

acquired illegitimately, fines and so forth. Zakat on

various types of wealth has been discussed within

the funds of sadaqah. While discussing the sources

of Baitul Maal, Abu Ubayd (d224H) has categorized

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it mainly into two, First: funds that were exclusively

belonged to the Prophet (may peace be upon Him)

excluding others, Second: the funds, which fall

under the head of the Muslim state, are of three

kinds as pointed out by Umar, and he elucidated it

from the Holy Qur'an: Sadaqah, Fay', Fifth of war

spoils, the treasure of trove, mines, and the like (Abu

Ubayd, 1989), Manjarah categorizes the funds that

should be collected and accumulated in Baitul Maal

into twelve. These are: a fifth of rikaz (hidden

treasure), a fifth of nadrah (piece of mineral),

bequest of free slave, tax of the land taken from

enemy by force, jizyah (head tax) by peace, and by

force, fifth of war spoils, gift received from the

enemy, wealth of the apostate, wealth that remains

after distribution of the prescribed shares, what is

taken from the businessmen of enemy and free non-

Muslims under Islamic rule, and wealth that

occupies the liability (Manjarah, 1993).

For the expenses of past Baitul Maal, Lakhmi

says: at first the funds should be spent for the

defence of the city where it is collected. Thus, funds

were spent to reform its forts at coastal areas;

weapons, instruments, etc. would be bought; salaries

of the officials, army, and judges of that city would

be paid, if anything remains would be given to the

poor, and then if anything remains would be kept to

face the unforeseen circumstances (Manjarah, 1993).

However, all these are subject to the discretion of

the chief of the state, and he is free to spend and to

prioritise whatever he deems appropriate to get the

attention of the funds of Baitul Maal (Tawudi,

2000).

2.2 Present Baitul Maal in Indonesia

The operation of Baitul Maal in Indonesia is known

well as the Baitul Maal wat Tamwil (BMT), and it

has a various and multiple roles in the Indonesian

society, BMT is a small financing institution which

operates using mixed concepts of “Baitul Maal” and

“Baitul Tamwil” with its target focused on the small

business sector (Andriani, 2005). The concept of

Baitul Maal in a BMT institution is that of the role

as a religious and social institution which collects

funds from Zakat, Sadaqah, and Infaq, and

distributes these funds to beneficiaries (e.g., Asnaf

of Zakat, and other recipients). By this concept,

BMT also acts as Zakat institutions (Amil). The

concept of Baitul Tamwil in a BMT institution has a

role as a business institution which conducts its

business activity involved in trading (sale and

purchase of commodities), and as a financial

institution which provides savings facilities and

financial products. (Hamzah, D., Rusby, D. Z., &

Hamzah, Z, 2013).

At present, the role of BMT as an Islamic

microfinance institution has become increasingly

important, particularly with respect to its positive

impact on eliminating the problem of poverty in

Indonesian society. It provides financial facilities to

the selected entrepreneurs either in the form of

macro or micro-financing. According to Subkhan

(2008), there are around three million customers

who have obtained micro-financing from BMTs in

Indonesia.

From previous information and description about

the Baitul Maal wat Tamwil (BMT), this can be

concluded that the BMT does not fully reflect the

practice and function of the Baitul Maal at the

beginning of Islam, since the most role of the BMT

is funding and financing, the implementation of

Baitu At Tamwil (House of Finance) dominate the

Implementation of Baitul Maal (House of Money),

and it is no different than the Islamic Bank but for

the Micro-financing level and for funding the small

enterprises, where the central role of the real Baitul

Maal is for Zakat and Sadaqah distribution and

Muslim wealth management.

In the other hand, Baitul Maal Hidayatullah

(BMH) is one of the Indonesia largest zakat and

sadaqah distribution institutions that its functions are

arguably reflected more to the function of the

previous Baitul Maal in the Caliphate age, the

establishment of this institution has strong

relationship with the establishment of Hidayatullah

Islamic boarding school in 1973 in Balikpapan, East

Kalimantan. The boarding school was first

established as the Social Organization and the public

foundation founded by Abdullah Said, followed by

this boarding school establishment, Hidayatullah

foundation founded several charity efforts in the

social, educational, da’wah and financial aspect, one

of this effort is the establishment of Institution that

engages in the funding, fund management, and the

distribution of Ziswaf (Zakat, Infaq, Sadaqah, and

Waqf) and this institution was later known as Baitul

Maal Hidayatullah. Until now Hidayatullah

foundation has more than 250 Islamic boarding

schools, and Islamic foundation networking that

spread across Indonesia and the Hidayatullah

Organization itself is considered the third-largest

Islamic organisation in Indonesia after Nahdhatul

Ulama (NU) and Muhammadiyah.

There are four main program that the Baitul Maal

Hidayatullah (BMH) has, namely: Da’wah Program,

Educational Program, Social & Humanity Program

and Economic Program as the primary concern of

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129

the Institution, several of these programs have been

performed, from helping the orphans, establishing

the educational center for the poor children,

establishing free educational institutions and

schools, disaster aid and assistance in the

nationwide, and humanity aid for the Palestine,

Syria, and another Muslim countries.

Baitul Maal Hidayatullah (BMH) is available in

30 Provinces of Indonesia with the 105 funding

auxiliary units for Zakat, Infaq, and Sadaqah, the

role, and function of the BMH is deemed massive

and perceived by the regions and districts in

Indonesia, with the existence of 287 Hidayatullah

Islamic boarding schools, 5213 robust Islamic

spiritual teachers (Da’i) has been spread over the

Indonesia archipelago, thousands of the poor family

has been empowered and deemed independent,

thousands of school-age children get a decent

education, all of this is possible due to the

impressive management for Zakat, Infaq, Sadaqah

and Waqf that was entrusted and managed by the

BMH, and for this enormous success, in 2015 the

Ministry of Religious Affairs in Indonesia confirms

the BMH as the formal and official institution for

Zakat Management in the Nationwide with the SK

No 425 Year 2015 and according to the provision of

UU Zakat No 23/2011. (bmh.or.id)

This research was conducted using Qualitative

methodology by adopting the Case Study method,

the data was collected primarily using purposive

sampling by organizing the semi-structural interview

to the Headquarter office of Baitul Maal

Hidayatullah (BMH) to find the connections and

links between the function of Baitul Maal that

implemented in Indonesia currently, and the function

of Baitul Maal in the Past, the reason for choosing

this Institution is that because Baitul Maal

Hidayatullah is deemed as one of the largest Baitul

Maal institutions in Indonesia and its practice is

reflecting more to the past practice of Baitul Maal

compared to its BMT (Baitul Maal wat Tamwil)

cousins.

The primary data and resource was obtained

from the Interview event, the interview is recorded

and documented audibly using the “Transcend”

recording device “MP330 8GB” in WAV format

with the length of the interview session about 74

minutes and the size of the files approximately 68.3

Megabytes, the interview is conducted using

Indonesian language and was translated to the

English, and as additional primary data the

researcher use the previous annual report of the

BMH institutions to support the data that the

researcher acquires.

Moreover, for the secondary data, the researcher

uses some of data and information obtained from the

internet or specific website that describe the growth

of Baitul Maal Hidayatullah in Indonesia, to

conclude and predict the prospect of Indonesia

Baitul Maal institutions in the future.

The main reason this research choose the Baitul

Maal Hidayatullah (BMH) is due to the size and the

significant number of branches that the Hidayatullah

institution has. Besides, this institution is not only

focusing on the Baitul Maal, and financial aspect,

Hidayatullah institution famously known as the

reliable Islamic educational institution and the third

substantial social organisation in Indonesia after

well know Nahdhatul Ulama organisation and

Muhammadiyah organisation. Hence, conducting the

research in the BMH will represent almost the whole

operation of Baitul Maal in Indonesia itself, and this

research is conducted by interviewing the General

Director and Head of the Human Resource of Baitul

Maal Hidayatullah.

Another reason for choosing the BMH as the

primary interest is that because their institutions

reflect more to the actual function of Baitul Maal

that was practised in the past, where its cousins the

BMT reflect more to the function of today’s Islamic

Bank for the Micro-financing level and small

companies and enterprises, it is cannot be doubted

both of them plays a significantly influential role for

the equitable distribution and poverty alleviation

among Indonesian people, since this research

objective mainly focus on finding the link and the

relevance of current operation of Baitul Maal in

Indonesia and the past Baitul Maal, it is considered

suitable and fair to choose the closest function

among these institutions so the real comparison can

be conducted and the relevant result can be

obviously known and achieved.

3 DISCUSSION

3.1 Analysis of Changing Operational

Nature of Baitul Maal: Between the

Past and Present Generation in

Indonesia

This chapter will focus on the findings based on the

Interview conducted in Baitul Maal Hidayatullah

(BMH) and also the data that was obtained from the

respective Institution, this chapter will identify,

analyse and compare the characteristics and function

between the past Baitul Maal that was practised in

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caliphates ages and the current practice and

operation in Indonesia represented by BMH

institution.

1) From the Definitional Aspect:

According to the general understanding of Baitul

Maal definition, the past Baitul Maal has different

function than present Baitul Maal, in the past, Baitul

Maal act as the state’s treasury and manage all kinds

of revenue and expenditure, while today’s Baitul

Maal especially in Indonesia, the function of

institution is limited to the philanthropy function or

as charitable body, current institution is limited only

to manage zakat, sadaqah, infaq, and waqf, whereas

the past institution is wider and broader.

2) From the Conceptual Aspect:

The previous Baitul Maal has the concept to make

the Islamic state as the welfare state and to achieve

fair distribution to ensure the public wellness,

whereas the current Baitul Maal in Indonesia has the

similar concept to make the Indonesia as the welfare

nation through the fair distribution of zakat and

other philanthropy mechanism, even though there

are some differences in implementing this concept,

from overall perspective, both institution has similar

and identical concept which is to achieve the welfare

of the nation and public. The current Baitul Maal in

Indonesia has several limitations in implementing

this concept due to the different era, situation,

condition, and lack of government support,

therefore, to achieve the similar success in

implementing the previous Baitul Maal concept, the

extensive involvement of Indonesia government is

deemed needed and important.

3) From the Philosophical Aspect:

The past Baitul Maal main objective in their

philosophy is to construct the society with the

balance in their spiritual and material aspect and also

to establish the public security to ensure the welfare

of the people by providing the clothes, housing,

health care, education and access to the food,

whereas current Baitul Maal in Indonesia

represented by the Baitul Maal Hidayatullah (BMH)

tried to implement the similar philosophy in their

activity and operation by providing the spiritual

teacher and regular teacher in their programs, and

providing several services to enhance the life of the

poor people, from the scholarship, free education,

health care, and some of the public services.

4) From the Source of Wealth Aspect:

The past Baitul Maal has wider type of source of

wealth if it is compared to the current source of

wealth of Baitul Maal in Indonesia, the past Baitul

Maal has group of funds for their source of wealth

from the Sadaqah fund, Fay’ fund, spoils of wars,

mines, treasures of Trove, and another, whereas

today’s Baitul Maal institution in Indonesia only

obtained from the Sadaqah type of fund which is

consist of Zakat, Infaq, Sadaqah, Hibah, and Waqf.

Notwithstanding with this type of wealth limitation,

the Zakat potential in Indonesia is considered huge

and increasing, even though the present Baitul Maal

in Indonesia only obtained from the mentioned

source, they still able to sustain their operation and

activity and continuously provide the benefits to the

public from this source of wealth.

5) From the expenses aspect:

When this paper comparing the current Baitul Maal

expenditures with the past expenditures of Baitul

Maal we could see a huge gap between the two

institutions, the main reason is that because the

source of the wealth between the two generations of

Baitul Maal is different, the past generation has

wider range of income and revenue types, from

Sadaqah, Fay’, Spoils of War, minerals, mines, taxes

and so forth, whereas the modern Baitul Maal

generation in Indonesia is limited to the Sadaqah

type of fund only, hence, in term of expenses the

two also will be different, therefore, in this case, the

two generations of Institution has different type of

expenses, the past has the wider range of

expenditure and represent the state’s treasury, while

the current Baitul Maal especially in Indonesia has

limited type of expenses and only represent as the

philanthropy institution or charitable body.

6) From the organisational structure aspect:

The past Baitul Maal organizational structure is

formed and established based on inflows and

outflows of the fund in the Baitul Maal, hence, the

main division of past Baitul Maal simply consists of

revenues division and expenditure division, the

revenues division is responsible to manage all kind

of revenues earned by the past Baitul Maal from the

booties, land taxes, spoils of war, minerals and

sadaqah fund, while the expenditures division is

responsible and accountable for all kind of expenses

of Baitul Maal from strengthening the city defences,

enhancing the military equipment, helping the poor

An Analysis on the Changing Operational Nature of Baitul Maal Institutions in Indonesia

131

and the needy and any other expenses related to

Baitul Maal liability. While the modern Baitul Maal

organizational structure is formed and established

based on modern corporate governance structure,

current Baitul Maal operation depends on the

advanced technology system to simplify and

synchronize the great number of branches, they also

need a certain program to ensure the good quality of

Human resource, and need certain transparency

procedures such as audit committee to certify the

integrity and financial transparency, and furthermore

they need the marketing mechanism to increase the

awareness of the public about the importance of

zakat and sadaqah.

According to above information, The past Baitul

Maal does not have the advanced technology to

synchronize their department and does not have the

specific programs to enhance their Human Resource,

even though they do not have such sophisticated

program, the Human Resource in the age of

companions have the highest and excellent quality

due to their closeness to the Prophet Muhammad

SAW, moreover, the past Baitul Maal does not need

any marketing mechanism, since the past institution

can enforce their way to make people pay zakat, the

only similar aspect between the two generations of

the institution is the financial management system

aspect in ensuring the transparency and good

conduct, the past institution was represented by

department of control, whereas the present

institution was represented by the internal and

external audit committee.

In Summary, both Baitul Maal generation has

different organizational structure, the past used the

revenues and expenditures organizational structure,

while the present used the modern corporate

governance structure, additionally, the present Baitul

Maal has more complex organizational structure if it

was compared in the past, due to complex nature of

current financial system, managerial system, and

information technology.

3.2 Analytical Summary

The above comparison through the various types of

aspects can be simplified and summarised in the

form of Tabular comparison; the following table will

elaborate the comparative aspect between the past

Baitul Maal and present Baitul Maal in term of their

operation (See Table 1).

Table 1: Analytical Summary of the Past and Present

Generation of Baitul Maal Institution: Case of BMH.

Aspect Past Present

Definition Past Baitul Maal

serves as the State’s

treasury function

Present Baitul

Maal serves as the

Philanthropy or

charitable function

Concept The concept of past

Baitul Maal is to

make the Islamic

state as the welfare

state

The concept of

present Baitul

Maal is to make

the country as the

welfare country

Philosophy The past generation

of Baitul Maal

philosophy is to

construct the society

with the balance in

the spiritual and

material aspect

The present

generation of

Baitul Maal

philosophy is to

construct the

society with the

balance in the

spiritual and

material aspect

Source of

Wealth

Sadaqah, Fay’, Spoils

of War, mines,

minerals, taxes, etc.

(wider types of

revenues)

Sadaqah types

fund only

Expenditures Defence of the city,

enhancing military

equipment,

development of the

public facility,

helping the needy and

the poor, and serve as

the security for the

public well-being.

(wider types of

expenditures)

Helping the

needy and the

poor and serve as

the security for

the public well-

being

Organisational

structure

Division and

Department are

classified Based on

the revenues and

expenditures

Division and

Department are

classified based on

modern corporate

governance

3.3 Innovative Aspect of Present Baitul

Maal

When the researcher conducted the interview with

the respondent from Baitul Maal Hidayatullah

(BMH), there are several innovative aspects that

deemed as non-available in the past generation,

during the interview session, BMH respondent

reveals the two Innovations. First, is all about

advanced technological aspect, currently BMH has a

radio station, and it was utilised as the platform for

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132

educating the public about the importance of zakat

and sadaqah and increase their awareness to pay that

obligation, and moreover, BMH use all available

media to inform the public about their programs and

activity, such as website, newspaper, digital media,

social media, and any other technological media that

surely not available in the past generation of Baitul

Maal. Second, the respondent conveys that BMH

also has several charitable programs that were

manifested for the zakat delivery for eight

beneficiaries (asnaf), meaning that the BMH use the

different and innovative approach in delivering the

zakat fund rather than to give that zakat fund

immediately to the beneficiaries.

3.4 Issues and Challenges of Present

Baitul Maal in Conducting Its

Operation

During the interview session the researcher asks the

respondent of Baitul Maal Hidayatullah (BMH)

about the issues and challenges faced by BMH when

they conducting their operation and activities, and

what their strategies and planning to eliminate or

mitigate those issues and challenges, the BMH

respondent conveys that one of the issues and

challenges faced by BMH is the lack of capable

human resource, since the modern era is considered

fast-moving era, therefore, the staff and employee of

BMH must to keep their pace in order to follow the

rhythms of today’s workload condition and business

situation; and to mitigate this issues, BMH try to

increase its facilities that considered vital to enhance

the quality and quantity of the Human Resource of

BMH, namely the Amil’s school, and several

workshops and training programs. Another issues

and challenges faced by BMH is the legislation and

regulation issues, the respondent explains that every

province and district in Indonesia have their own

regulation and legislation regarding the National

Zakat management board (BAZNAS), the problem

comes when there is no specific regulation that

governs about the BAZNAS in particular region, and

to mitigate this issue, BMH need additional effort to

establish the branches and outlets using the

recommendation from the respective regional

department of religious affairs.

3.5 Future Prospect of Present Baitul

Maal in Indonesia

Indonesia is known as the largest Muslims

population in the world; currently, Indonesia is

home for more than 200 million of Muslim and

always counting, hence, the Islamic resurgence and

rebirth to its former glory can be achieved with the

increased awareness of today’s Muslims in

Indonesia. The case is not different for zakat, infaq,

sadaqah, and waqf (ZISWAF), the ZISWAF

potential in Indonesia has a bright prospect in term

of its development and progression, since the

Muslims in Indonesia began to understand the

importance of ZISWAF and the increasing number

of people who give the funds to be entrusted in

ZISWAF management. With the 4 trillion rupiahs of

collectable zakat funds, and always counting,

Indonesia indeed have a great potential to become

the powerful Muslim’s nation in the future provided

this Zakat is appropriately managed and distributed

fairly to the beneficiaries.

During the interview session with Baitul Maal

Hidayatullah (BMH) respondent, the researcher asks

about the potential and the prospect of BMH in the

future according to the respondent view, the BMH

respondent reveals that the BMH spirit when it was

established is to try to replicate the past function of

Baitul Maal, even though those functions are not

fully implemented, and BMH aspire to become a

beneficial and meaningful institution for the

development of the Ummah, currently we have the

aspiration that BMH is not only available in

Indonesia, but we hope that this institution also

available in the worldwide, so for now, that is our

prospect, aspiration, and spirits. For now, BMH has

more than hundreds of branches and outlets scattered

in the several provinces and districts in Indonesia

and continuously counting and expanding.

From above discussion and Information, The

Baitul Maal institution is indeed has a great potential

and bright prospect in the future, this potential and

prospect is caused by several determining factors,

the most critical factors for the bright prospect of

Baitul Maal in Indonesia is: the increase awareness

of the public about the importance of zakat and

sadaqah, the vast number of Muslim population in

Indonesia, and the continuous expansion of the

Baitul Maal Institution, with this three crucial

determining factors, the growth of Baitul Maal and

its development in Indonesia surely has great

potential and bright prospect in the future.

4 CONCLUSION

When the researcher conducting this research, the

main objective of this research is to identify and

compare the role of the past Baitul Maal and the role

of present Baitul Maal that was established in

An Analysis on the Changing Operational Nature of Baitul Maal Institutions in Indonesia

133

Indonesia to know the similarities and differences

between the two generation of Baitul Maal, in this

research, the researcher using Baitul Maal

Hidayatullah (BMH) as the case study for the

present Baitul Maal comparison by conducting the

interview in their headquarter, since this institution

has more than hundreds of branches and outlets

scattered across the country, and deemed as the

largest Baitul Maal institution in Indonesia,

therefore, conducting the study in this institution

represent almost the whole operation of Baitul Maal

in Indonesia.

As this research is conducted, there are several

findings when the researcher tries to compare the

role of the past Baitul Maal and present Baitul Maal,

there are some similarities between the two

generations and some of the differences, the

similarities between two institutions: The past and

present Baitul Maal have the same concept and

philosophy, the concept is to make the state as the

welfare state by implementing the policy that will

ensure the welfare of the public, while the

philosophy, the past and present Baitul Maal intend

to develop the society with the balance between the

spiritual and financial aspect.

The interesting point in this research when the

researcher tries to compare is the different aspect

between the two generations of institution, for

overall aspect, the past and present Baitul Maal has

different function, the past serves as the state’s

treasury and part of the government institution,

whereas today’s Baitul Maal is limited to the

function of philanthropy or as charitable body and

was separated from the government institution, due

to this condition, the past Baitul Maal has a wide

range of revenues and expenditures, while current

Baitul Maal is limited to certain types of fund, which

is sadaqah types of fund, hence, the expenditure of

current Baitul Maal is also limited in giving to the

zakat beneficiaries and needy people, moreover, the

past Baitul Maal has an absolute power to enforce

people to pay zakat, while today’s Baitul Maal in

Indonesia is only able to encourage and promote the

people to do so, and does not have such great

enforcement power. Furthermore, both institution

has a different organisational structure, the past

structure is established based on revenues and

expenditures, while present Baitul Maal

organisational structure is based on modern

corporate governance structure.

Additionally, the researcher reveals the

innovative aspect of current Baitul Maal where this

innovative activities and operation is deemed non-

available in the past generation of Baitul Maal,

beside, this research also state the issues and

challenges that the current Baitul Maal faced while

they conducting their activities and operation from

the lack of human resource, and unsupportive laws

and regulation that hinder the Baitul Maal

establishment in particular area, and in the end, the

researcher conduct the analysis for the prospect and

the potential of current Baitul Maal in the future in

Indonesia using the data gathered from the interview

session and unstructured data analysis obtained from

the annual report of Baitul Maal Hidayatullah

(BMH), the result of this analysis implies that the

present Baitul Maal has a great potential and

prospect in the future due to the several factors.

As this research is conducted, this research is

solely investigating and analyzing the role of Baitul

Maal in the present time by representing Indonesia

and Baitul Maal Hidayatullah as the case study,

while the result may differ if the researcher makes

the comparison between the past Baitul Maal and

present Baitul Maal that available in another country

or another institution. Hence, this research could be

expanded and developed more if the future

researchers are willing to do the cross country or

cross-institution analysis and comparison since

different country and institution may lead to the

different result and findings. Furthermore, it may

reveal a more interesting point to be uncovered and

investigated.

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