Amil Zakat Institutions and Digital Transformation

Content Manager • 16 July 2020
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      The collaborative research by the Zakat Forum (FOZ) and Filantropi Indonesia (FI) shows that LAZ (Amil Zakat Institutions) are ready to enter the digital era. The study results also show that the development of information and communication technology (ICT) has a positive impact on LAZ performance and zakat management. However, the amount of zakat funds raised via digital platforms is still small compared to conventional methods. The main cause is lack of public capacity to give zakat digitally. 

       The research findings were presented at a press conference to disseminate the research titled "LAZ Readiness in Facing the Digital Era", held in Jakarta, Monday afternoon (29th of June, 2020). Present during the online event are Erna Witoelar (Co-Chair of the FI Advisory Board), Bambang Suherman (Chairman of FOZ) and Hamid Abidin (FI Executive Director) as resource persons. The research used quantitative and qualitative methods and involved 104 LAZ and key stakeholders of the Indonesian zakat movement. 

    Hamid Abidin states that this research is both FI and FOZ's commitment in advancing the philanthropic sector, particularly Islamic philanthropy in Indonesia. The research topic is truly relevant because the rapid development of ICT requires all parties, including Amil Zakat institutions, to prepare themselves in the digital era. This demand found its momentum when the COVID-19 pandemic hit Indonesia, which restricted direct interactions and encouraged most activities to switch to online or digital. 

      During his presentation, Bambang Suherman explained that LAZ was ready to enter the digital era. This could be seen from several indicators: the readiness of the institution, the readiness of HR, the readiness of information and the readiness of ICT infrastructure. 

     "Research results show most LAZ managers (78%) expressed their readiness to transform into the digital era. This readiness is reflected in their view that the use of ICT is very important (84%) and support (88%) management of ZIS (zakat, infaq, and shodaqoh). Additionally, 96% of LAZ already have internet access in their office and manage digital media channels (97%). The majority of LAZ also has their own SOP (standard operational procedure) that regulates the use of digital platforms in managing ZIS, "Bambang said. 

     Related to human resources, Bambang continued, the results of the study illustrate that the majority of LAZ has the capacity to utilize digital platforms. The HR readiness is also seen from having IT division in most LAZ (63%). In fact, 54% of LAZ respondents specifically have a digital marketing division. "LAZ mangers also pay attention to developing amil digital capacity. This was demonstrated by 69% LAZ who developed a digital competency improvement program, while those who allocated a special budget for HR development reached 86%", he said. 

       Bambang added that this research also examines the impact of ICT that has changed how public interact and do transactions, including zakat payment. This change encouraged 98% of LAZ to develop various digital innovations, such as web development (93%), utilization of social media (99%) and crowdfunding platforms (17.3%) for ZIS management. "In addition, LAZ also innovates by promoting through digital channels (80%), hiring influencers (29%) and paying for digital ads (78%). While for the distribution and utilization of ZIS, digital platforms in general have a positive impact in facilitating, accelerating, and expanding the scope of LAZ programs and services," he explained. 

        However, according to Hamid, the amount of Zakat funds raised by digital platforms has not been as large as that collected conventionally. The analysis of the research team of 104 LAZ between 2016-2018 showed that the acquisition of ZISWAF funds (Zakat, Infaq, Shodaqoh and Waqf) was still dominated by conventional methods. In comparison, the results of conventional ZISWAF raising reached Rp 2.15 trillion, while those raised through digital methods were only Rp 155 billion. This means that only 6.74% have been raised through digital platforms. "This conditions is due to the low capacity of muzakki (alms giver) in using digital media and they are not used to it yet. In addition, LAZ activists are yet optimal in utilizing digital platforms in fundraising activities," he said. 

       "Several other challenges are related to the poor quality of internet networks (especially for LAZ in the suburbs and rural areas), power outages, and relatively expensive internet costs. In addition, LAZ also needs to anticipate the rise of cybercrime, such as data manipulation, system disruption, electronic system hacking, data theft, illegal access, online fraud, and so on," Hamid said. 

       Erna Witoelar hopes that the use of digital platforms within LAZ can encourage ZIS distribution and utilization programs to be more developed and inclusive. Currently, ZIS distribution and utilization programs, according to Erna, are not as developed as the collection methods that have more breakthroughs and innovations. In addition, the use of digital platforms is also expected to increase the role and contribution of LAZ in achieving the Sustainable Development Goals (SDGs) in Indonesia. 

      "Digital platform utilization can support LAZ to implement SDGs principles, which are universal, integration and leave no one behind. Digital platforms also help LAZ to communicate and synergize with different parties to create a more universal and inclusive programs. Digital platforms should be able to facilitate LAZ to involve and support vulnerable groups, as well as those in the outer, farthest, and most marginalized areas. Therefore, the programs developed by LAZ could be more participatory to reach vulnerable and marginalized groups," Erna said. 


Photo credit: UNDP Indonesia

DISCLAIMER:

The views expressed in the blog are the author's own and do not necessarily reflect those of the SDG Philanthropy Platform. The SDG Philanthropy Platform is a global initiative that connects philanthropy with knowledge and networks that can deepen collaboration, leverage resources and sustain impact, driving SDG delivery within national development planning. It is led by the United Nations Development Programme (UNDP) and Worldwide Initiatives for Grantmaker Support (WINGS), and supported by the Conrad N. Hilton Foundation, Ford Foundation, Oak Foundation, Brach Family Charitable Foundation, and many others.