Paying alms can solve poverty: A big ‘if’

In Ramadhan, Muslims are reminded of their obligation to pay alms to the poor. The Jakarta Post’s Prodita Sabarini looks at the collection and management of alms, which are now regulated by law.

For many years, Indonesian Muslims have channeled their alms through mosques or by giving directly to the needy. But the rise of professionally managed alms agencies is changing the way Muslims help their brothers and sisters in need.

From online bank transfers and monthly direct debits, to alms through premium text messages, alms giving has made a leap from the traditional cash-in-hand distribution to the Web 2.0 era of online transactions.

The consequences of the change are enormous, according to leaders of Islamic charitable organizations in Indonesia. Utilizing the principle of crowd-sourcing funds, these alms organization are brimming with optimistic intent to solve the problem of poverty in Indonesia.

Data from the Central Statistic Agency (BPS) states that 31.9 million people or 13.3 percent of the population in Indonesia are poor, living on under Rp 233,740 (US$24.7) per month.

The National Alms Agency (BAZNAS) last year conducted a joint study with the Bogor Institute of Agriculture’s (IPB) school of economy and management, stating that Indonesia has the potential to collect Rp 217 trillion in zakat (Islamic mandatory alms). This estimate is more than twice the amount of
the national budget allocated by the Finance Ministry for poverty alleviation, which stands at Rp 99.2 trillion this year.

“If we collect Rp 217 trillion of zakat, we can say: that’s it. The problem of poverty can be managed by zakat,” BAZNAS executive director Teten Kustiawan said recently.

There is only one small problem with Teten’s confident contention: a very big “if”.

In reality, zakat collection in Indonesia is less than one percent of the amount that BAZNAS and IPB conjured up. In 2011, the national collection of zakat through BAZNAS, its provincial chapters and all registered private alms foundations was Rp 1.7 trillion, a mere 0.8 percent of the BAZNAS and IPB figure for zakat potential.

This figure excludes zakat collection from 7 of 19 national private alms agencies who failed to send reports to BAZNAS. The data also excludes zakat collected and distributed by mosques and private individuals.

This small percentage of realized zakat against zakat potential is not to say that alms agencies and foundations are not growing, far from it. Between 2002 and 2012, zakat collection through Islamic charities rose by more than 1,000 percent: an average 24 percent increase each year.

Five years ago in 2007, zakat collected by agencies and foundations stood at Rp 770 billion. Money collected by zakat agencies and foundations continues to rise even faster than the growth in the number of zakat foundations, said Teten.

Dompet Dhuafa Republika now collects as much as Rp 200 billion, according to executive director
Ahmad Juwaini. The funds collected have grown from a mere Rp 88 million in 1993, when Dompet Dhuafa, with the support of the Islamic-leaning newspaper Republika, pioneered professional alms management.

The Community Caring Justice Post (PKPU), established in 1999 to answer the social crisis during the sectarian conflict in Poso, managed to raise Rp 3.5 billion in their first round of fundraising. Last year, they collected Rp 80 billion, according to PKPU deputy CEO and head of the Forum Zakat (FOZ) Sri Adi Bramasetia.

Alms agencies have become much more visible, taking an aggressive marketing approach with advertisements in the media. This Ramadhan, the PKPU is running the campaign “Jangan ditahan” (Don’t resist it), playing with the concept of resisting temptation during the fasting month.

“People become curious. What is this ‘don’t resist’ thing? And then they get it — that you shouldn’t just keep your money. You should pay zakat,” Bramasetia said.

While charitable fund managers are certain that zakat money will be more beneficially distributed under their management, skeptics argue that channeling zakat through agencies will only waste zakat intended for the poor, as agencies skim off the money for operational and campaign costs.

Dompet Dhuafa, for example, uses soccer star Bambang Pamungkas in their media campaign. However, according to Islamic law, some 12.5 percent of the donated funds belong to the Amil (zakat collector and manager).

Ahmad’s response is that zakat agencies enable large amounts of funds to be collected and utilized in various aid programs for the poor. Dompet Dhuafa’s health program for the poor includes a free hospital and 34 free polyclinics across the country. Ahmad said that the hospital building and equipment alone costs Rp 60 billion and operational costs are around Rp 20 billion.

“Where will you find a community here willing and able to spend Rp 20 billion for a free hospital? Nobody could afford that. But if Dompet Dhuafa collects the money — not only Rp 20 billion, even Rp 50 billion, we’ll cover it.

“That’s the difference between paying zakat alone and collecting zakat together,” he said.

To manage and ensure accountability of alms agencies, last year the House of Representatives passed a new law on zakat management, replacing the 1999 law. BAZNAS became the official national zakat collector and coordinator of all alms foundations.

This is not the first time the state has become involved in zakat collection. In 1968, Soeharto appointed himself as the national Amil and BAZ Jakarta, which later became BAZIS Jakarta, was established. The self-appointment of Soeharto as Amil, however, did not change the traditional face of zakat. Lacking appropriate social welfare and empowerment programs, people deem zakat management as “a job lacking any prestige”, Ahmad said.

“There was no sense of pride. Zakat was managed on the side, at the end of Ramadhan, and channeled through mosques, then distributed to the poor in the area. That pattern was the norm for decades,” Ahmad said.

As alms agencies grow with clear and effective programs, along with transparent financial reports — most alms agencies publish their audited financial reports on their website; the 2011 law obliges agencies to audit their finances — the charity organizations are gaining people’s trust.

For PKPU, transparency in fund management is not enough. They also have to withstand allegations of partisanship. PKPU was founded by cadres of the Justice Party, which later became the Prosperous Justice Party (PKS).

Bramasetia said in answer allegations of partisanship, PKPU registered with the UN for a special consultative status with the UN Economic and Social Council. One prerequisite for any NGO to be granted consultative status was independence. In 2008, PKPU became the sixth Indonesian organization to receive such status.

Most of the alms agencies have five main program areas: economic empowerment, education, health, disaster response and religious development. Bramasetia said that most of zakat money goes on economic empowerment programs, which include grant money to set up micro-finance co-ops or capacity building programs.

Once, PKPU helped guava farmers transform fresh produce into extracts or puree. “When the harvest season comes, the price of guavas falls, but with our training, farmers are able to sell with added value as well as preserve their harvest in different forms,” he said.

Ahmad of Dompet Dhuafa questions people who give their zakat in the form of cash hand outs, in which people queue, sometimes for hours, to receive a mere Rp 50,000.

“Isn’t that torture? And how long does the food that they give last? How does that help with health and education?

“I say this is an egotistical form of worship. It’s merely ‘I’m happy that I can observe this ritual. The poor are happy to receive my help. He kisses my hand with his lips trembling with prayers for me while his tears flow’,” Ahmad said.

“Our pride is satisfied by that kind of ritual. But is that really what we’re looking for?”

Prodita Sabarini, The Jakarta Post | Reportage | Tue, August 21 2012

Despite limits, mosques remain popular way to channel alms

Come Ramadhan, mosques in Indonesia bustle with people donating and collecting alms, or zakat, for the fasting month.

On the porch of one mosque in Condet, East Jakarta, a banner read: “Accepting zakat, infaq, and sedekah”. At another mosque in West Jakarta, three youngsters were seen setting up a post to receive alms. In Central Jakarta, after tarawih, or Ramadhan evening prayers, an official of another mosque reviewed his logbook on alms collection.

Islamic law obliges Muslims who are able to give two types of zakat. The first is zakat fitrah, or donations of food (or of cash earmarked for food), given at the end of Ramadhan. In Indonesia, recipients of zakat fitrah typically take home about 3.5 liters of rice. The second type of alms, zakat maal, comprises at least 2.5 percent of a person’s earnings and assets. Infaq and sedekah, meanwhile, are voluntary donations.

Despite the rise of zakat agencies and foundations in Indonesia, mosques remain prominent in collecting and channeling alms. However, mosques have been better at managing donations geared for consumption, according to leaders of zakat agencies and foundations.

At Baitul Huda Mosque in Kebon Kacang, Central Jakarta, Karto Suwiryo, known better as Ato, stands among sacks of rice piled three or four high. The zakat fitrah distribution organizer ordered a ton of rice to be disbursed to the poor during Idul Fitri.

A local trader sent the sacks of rice the night before, Ato, 48, said. The mosque will pay for the rice after it receives the last zakat fitrah payment on the eve of Idul Fitri.

Ato said that the mosque intended to deliver alms to 800 people this year, about Rp 27,000 (about US$ 2.85) per person. At Masjid At-Taqwa, in Pal-merah, West Jakarta, the organizers rounded the zakat fitrah payment up to Rp 30,000 per person.

Besides receiving zakat fitrah payments from donors each year, the mosque, located in the streets behind the Grand Indonesia, Plaza Indonesia and EX shopping malls, has also attracted donations from its well-healed neighbors.

Ato said that one of the malls donated Rp 100 million to renovate the mosque. Baitul Huda mosque treasurer Rubby Mudraf added that anonymous donors often sent building materials, such as a truckload of sand or cement, when the mosque was renovated last year.

There are nearly 9,000 mosques in Jakarta, according to the Religious Affairs Ministry. With Muslims comprising 88 percent of the nation’s population of almost 240 million people, Indonesia has almost 240,000 mosques.

Ato said that neighborhood leaders would start listing poor people eligible for zakat fitrah donations a week before Idul Fitri. Included in the list would be children with single parents. He said in his area, which was full of boarding houses for people working around Jl. MH Thamrin, there were less than 100 poor families.

Mosque volunteers from Baitul Huda would then deliver the donations to their homes, he said.

“We make it our policy to not let anyone line up for donations,” Ato said. Helmi Ryansyah, 17, a volunteer at At Taqwa mosque also said that local teens would deliver the alms to the doorsteps of the poor.

Mosques have learned from past experiences, especially from the deadly stampede during Ramadhan in Pasuruan, East Java in 2008, in which 21 people were killed while lining up for cash handouts.

According to Forum Zakat (FOZ) head Sri Adi Bramasetia, zakat fitrah provides donation for consumption, targeting people who are extremely poor.

“The poor who are so poor that they could not be reached through economic empowerment programs … like it or not, [the alms] have to be for consumption,” he said.

National Alms Agency (BAZNAS) executive director Teten Kustiawan said that funneling zakat fitrah through mosques was appropriate, as local mosques had more direct knowledge of the people who were in need.

However, due to the nature of the donations and the limited resources, alms collected by mosques had little chance in lifting people out of poverty, according to alms foundation Dompet Dhuafa executive director Ahmad Juwaini.

— JP/Prodita Sabarini

The Jakarta Post | Reportage | Tue, August 21 2012

The debate on tax breaks for ‘zakat’

The law already lets those who pay zakat contribute less to the state’s coffers, although some advocates want there to be more deductions for Muslims who pay alms.

The 2011 Law on Zakat Management and tax laws provide for zakat deductions to reduce a person’s taxable income.

For example, people who earn Rp 15 million (US$1,575) and pay 2.5 percent (Rp 375,000) of their income as zakat can reduce the base figure by which their taxes are determined by attaching proof of zakat payment to an official alms agency.

This, however, would not do much to reduce an individual’s tax burden, according to advocates. Dompet Dhuafa executive director Ahmad Juwaini wrote an open blog posting to the Finance Minister Agus Martowardojo requesting that a specific tax deduction be created for zakat.

This would allow, for example, zakat donors who pay 5 percent of their income to the state coffers to offset their tax burden by 2.5 percent, making zakat virtually part of taxes.

The proposal has been around since the dawn of the Reform era. Advocates lobbied the House of Representatives during deliberations on the Zakat Management law in 2009 and again in 2011, when it was revised.

The head of Forum Zakat (FOZ), Sri Adi Bramasetia, said that the deduction was a good idea but more incentives were needed.

He said that Indonesians could donate up to Rp 217 trillion in zakat and that giving alms for tax deductions would not reduce the state coffers. He said that in countries such as Saudi Arabia, taxation and zakat affairs were managed under one department.

On preferential treatment of Muslims, Bramasetia said that other faiths could also follow Islamic-based charities and demand tax deductions for those who give alms.

— JP/Prodita Sabarini

The Jakarta Post | Reportage | Tue, August 21 2012

‘Zakat’ programs change the lives of beneficiaries

 (Antara/M. Risyal Hidayat)
(Antara/M. Risyal Hidayat)

Abdul Karim is the first in his family to go to college.

The father of the 22-year-old died when he was in junior high school; his mother farms a small plot in his hometown of Cirebon, West Java. His three older sisters only finished junior high school. Some are currently migrant workers.

Coming from a poor family, Karim was once uncertain about his future. At school, he was smart, getting top grades and even entering an international class for talented students in high school. “There were 25 students and we started at 6 a.m.,” Karim said.

One day, a fellow graduate of his high school told Karim to apply for the Etos scholarship given by alms agency Dompet Dhuafa.

With his friends in tow, Karim traveled to Dompet Dhuafa’s offices in Bandung, West Java, and applied. Now, he is in his seventh semester at the University of Indonesia. He studies geophysics and aspires to be a geothermal expert.

Stories such as Karim’s are not rare. Since the 1990s, Indonesia has seen a rise in the number of alms agencies and foundations that focus on economic empowerment, education, health, disaster response and religious development.

Sri Adi Bramasetia, the head of Forum Zakat and the deputy chief of another charitable group, the Community Caring Justice Post (PKPU), provided a breakdown on where zakat money goes. “Around 30 up to 40 percent goes to economic empowerment,” he said. Education and health each receive around 20 percent while the rest went to disaster response and religious development, he said.

Dompet Dhuafa executive director Ahmad Juwaini said that his organization focused on education and health, although it also was involved in education. “Everywhere I go, I meet recipients of Dompet Dhuafa scholarships. Once I was interviewed by a TV journalist. After the interview he said that he was a recipient of our scholarship”. The organization currently funds 400 students and can boast of having helped more than 2,000 graduates.

The PKPU meanwhile, focuses on economic empowerment programs designed to lift people from poverty, according to Bramasetia. Its programs include providing grant money to set up micro-finance co-ops or for capacity building programs.

Bramasetia said that they changed their performance measures in 2010. “We no longer set our targets based on the zakat we collect, but on the number of people we help”. The group set a target of helping 1.5 million people last year. This year, its target is 1.6 million people.

“Our goal is for the programs to reach as many people as possible”.

Prodita Sabarini, The Jakarta Post, Jakarta | National | Tue, August 21 2012