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Analysis of Collection and Reporting of Cash Waqf Fund by Islamic Cooperative in Indonesia

Dodik Siswantoro
By Dodik Siswantoro
3 months ago
Analysis of Collection and Reporting of Cash Waqf Fund by Islamic Cooperative in Indonesia

Waqf, Zakat

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  1. Analysis of Collection and Reporting of Cash Waqf Fund by Islamic Cooperative in Indonesia Dodik Siswantoro Universitas Indonesia E-mail : Abstract The aim of this research is to analyze how cash waqf institution by Islamic cooperative in Indonesia collects and reports their waqf fund. Cash waqf fund should be effectively collected by trusted cooperatives which have many members. They have to report the cash waqf fund to both the legal authority and the public. The research is conducted by qualitative method with in-depth interview and observation. Research objects are three registered Islamic cooperatives as cash waqf institution in Jakarta and Depok. The result shows that the collection process of cash waqf is not effective. Some front office staffs are not so familiar with the product. In addition, the report of allocated cash waqf fund may not be appropriately well presented. Keywords: Collection, report, cash, fund, waqf, Islamic, cooperative 1. Introduction The development of cash waqf in Indonesia is quite challenging. The trend of using money as waqf asset started in the 2000s. Act No. 42/2004 on waqf which regulates cash waqf fund was issued in 2004. Then, the first cash waqf institution is Tabung Wakaf Indonesia (TWI) which was established in 2005 while the waqf institution under government authority, Badan Wakaf Indonesia (BWI), was just established in 2007. However, the practice of cash waqf may have existed before 2000s, as has been commonly practiced in Islamic boarding school (Pondok Pesantren).1 So far, the society develops waqf based on such fixed asset type as land for such social buildings as like mosque and school. Act No. 42/2004 legalized the use of money as waqf asset. It can be allocated to productive asset, current or fixed asset. The current assets among others include sukuk, deposit, and Islamic capital market, while the fixed asset must be productive like house and shop rents. Shifting paradigm in managing waqf asset, especially the current asset, from social to productive asset may not be that easy. In 2014, there were 82 cash waqf institutions which consisted of 20 foundations, 1 governmental body, 1 organization, 2 zakat institutions and 58 Islamic cooperatives. Forty five out of 82 institutions have website. 1 The government should really monitor and control the performance institution. Otherwise, it can be a problem as it involves public fund and cause less reliable. So far the report may be internal to Badan Wakaf Indonesia (BWI) and Ministry of Religious Affairs, not to the public. 676
  2. Islamic cooperative which is known as Baitul Maal wat Tamwil (BMT) should have better fund raising collection program as they have niche market, their member. So far, the collected amount is not so huge and not many members would like to join in cash waqf program. This can be a problem also as cash waqf needs a big amount of fund to meet minimum scale of economics. The objective of this paper is to analyze how Islamic cooperative collects and reports cash waqf fund in Indonesia. Islamic cooperative in Indonesia has specific captive market which should have better collection to persuade Muslim to pay waqf. The reporting should be transparent and accountable as it is public fund. 2. Literature Review In Indonesia, waqf practice was previously regulated in Act No. 5/1960 on main agricultural regulation. This Act focuses on land for waqf, which is supported by government regulation No. 28/1977 on waqf land. This regulation permits nazhir (waqf manager) to change and reallocate waqf land to other places. In fact, some people still assume that waqf cannot be changed even for better purpose (Prihatini, Hasanah, and Wirdyaningsih, 2005; Mubarok, 2008). However, the practice of waqf has been conducted before 1960. People in Indonesia gave waqf mainly in the form of land, but only some gave in money and jewelry. Therefore, it is necessary to have a regulation for cash waqf management as productive asset especially for Islamic money and capital market. In Indonesia, this waqf type may not be as popular as the inflation rate is quite high and this type of waqf is still new. To be legalized, cash waqf institution must be registered by Badan Wakaf Indonesia (BWI). Of the 82 institutions, 58 Islamic cooperatives (BMT) are the biggest cash waqf institution. The 58 Islamic cooperatives consist of saving and loan cooperative (Koperasi Simpan Pinjam-KSP), multi business cooperative (Koperasi Serba Usaha-KSU) and Islamic financial service (Koperasi Jasa Keuangan Syariah-KJKS) (Alma & Priansa, 2009).Theoretically, cooperatives have better controlling function as they have annual meeting (Rapat Anggota Tahunan-RAT) by the members which evaluate the operational cooperative. Member of cooperative can actively monitor and control the activities of cooperative (Sitio & Tamba, 2001). Therefore, the role of BMT in developing cash waqf is appropriate as it has controlling function. Mohsin (2013) states that cooperative can be one of waqf scheme. This relates to group of community. In case of Indonesia, cooperative is practiced by society which is specific to related group. It is supervised by the Ministry of Cooperative and Small and Medium Enterprise. If cooperative can be cash waqf institution type, the income should not be shared to the members. 3. Research Methodology The research is based on qualitative method with post positivist paradigm. The research objects are two main Islamic cooperatives (BMT) in Jakarta and a branch of Islamic cooperative in Depok. Totally, there are six registered Islamic cooperative as cash waqf institution in Jakarta Bogor Depok Tangerang and Bekasi (Jabodetabek). All Islamic cooperative firstly are contacted by phone to early mapping study. In fact, not many cooperatives are familiar with cash waqf even though they have been registered at BWI. In addition, one cooperative is inactive and 677
  3. another one lacks of cash waqf program . From this screening, we can assume the management of cash waqf by Islamic cooperative may not be quite good. Trustworthiness of the research is ensured by checking the credibility, transferability, dependability and confirmability. Credibility is measured by triangulation, and other sources of information are gathered. Transferability is ensured by purposive sampling with multiple case studies. By doing so, we can see the similarity in other cases. Dependability is ensured by research procedure and method, and confirmability is measured by data trail and documentation. Table1.Filter case of cash waqf institution Description Total registered BMT Not active Not available Total Not clear Selected cases Branch in Depok Total selected cases Number 6 (1) (1) 4 (2) 2 1 3 Source: Data 4. Analysis As cash waqf institution, BMT collects cash waqf from their members and society. While it is mainly used for social activities, it should have been allocated in productive assets. The result can either be used for the beneficiaries or the institution’s operational activities. In addition, cash waqf activity is not discussed in the annual meeting (RAT). Functionally, BMT collects cash waqf and mainly allocates it to social programs. The observed BMTs have not particularly disclosed any financial statement of cash waqf, especially for financial position but they have claimed to have periodically reported to BWI every 3 month. Even worse, these institutions did not report the performance of waqf fund online even though they have website. Should they have reported financial statement by online, this can be a trigger for people to join in cash waqf program. Table2.Sample of registered cash waqf institution Name Al Azhar Daarul Quran Tamzis Membership Closed Requirement Open RAT Not discussed Not discussed Discussed Waqf type Mixed Social Mixed Website Info No Yes No Source: Data From those three BMTs, only BMT Daarul Quran promotes cash waqf in their website. They put information of cash waqf in the banner. They also have different types for membership and waqf type allocation. The government should regulate and standardize these differences in order to create better comparison. BMT Tamzis may have better characteristic for nazhir as they have open membership option for wakif. They also discuss cash waqf program in the annual meeting. While waqf 678
  4. program allocation is mixed , they allocate both to productive and social assets. But, they do not disclose waqf information explicitly in their website (see figure 1). Figure 1. Receipt of Waqf (BMT Tamzis) and website info Source: Data BMT Tamzis has prepared their staffs for providing information on cash waqf to customers. They respond some questions regarding waqf very well. They also separate waqf account and also in the form (see figure 1). In the brochure, it is stated that they manage cash waqf fund into productive asset (see figure 2) the result of which is allocated to beneficiaries. In the brochure, they state that money from wakif would be invested in productive asset. But, in the further explanation they also allocate directly to social assets such as praying clothes, Quran, sarong, etc. BMT Al Azhar has different characteristics of closed membership and does not discuss cash waqf fund management in the annual meeting. They do not specify in detail how they manage and allocate the cash fund. If they have closed membership for cooperative, so they may treat wakif only as depositor in Islamic bank. The cooperative may not have additional capital and wakif cannot monitor cash waqf fund as they are member of cooperative. In the form, the separate account for cash waqf is not available. They should have separate account for cash waqf and report to wakif in order that the fund may not be mixed with others. Figure 2. Information on Waqf (Brochure of BMT Tamzis) 679
  5. Source : Data Figure 3. Receipt of Waqf (BMT Al Azhar) Source: Data Figure 4. Receipt of Waqf (BMT Daarul Quran) and Brochure (website) 680
  6. Source : Data Only BMT Daarul Quran does have specific information on cash waqf in their website (see figure 4). It is stated that they would manage cash waqf fund in the productive asset. Then, the result of cash waqf fund investment would be allocated to social activities. In fact, cash waqf fund is socially allocated to the development of school building. This is different from the information in the website. Meanwhile, wakif can be a member of Islamic cooperation if they have business with the cooperative. While, the form of waqf fund is based on voucher with the amount of Rp250.000 and Rp500.000. The cooperative also provides specific form for larger amount of cash waqf. Figure 5. Bar chart Information on Waqf Payment (BMT Tamzis) 681
  7. Source : Data Figure 6. Information on Waqf Payment (BMT Tamzis) Source: Data The important issue in the cash waqf institution in Indonesia is the accountability. Cash waqf institution is obliged to prepare a report to Badan Wakaf Indonesia (BWI) and the Directorate of Wakaf Ministry of Religious Affairs. This is compliant with the government regulation No. 42/2006 article 13 and Regulation of the Ministry of Religious Affairs No. 4/2009 article 9. So far, these institutions do not publicly disclose the performance of cash waqf asset. Only BMT Tamzis does provide the amount of receipt from wakif in monthly bar chart for six months period (see figure 5). From figure 6, we can see that there are 44 wakifs who quite routinely pay cash waqf. The amount is quite small. From this we can argue that not all members of BMT join in cash waqf program. This may have implication to the economics of scale of cash waqf which needs quite large fund to get optimum income for social activities and operational expenses of the management. 682
  8. 5 . Conclusion The collection of cash waqf by Islamic cooperative BMT may not be effective as the fund raising program is passive and only few members of cooperative joined in the cash waqf program. This may result in ineffective management of cash fund and failure to meet the minimum economics of scale. The reporting of financial statement of cash waqf has not met the required standard. Cash waqf institution needs specific accounting standard as the characteristics is different from zakat institution. The characteristics of cash waqf institution are similar to Investment Corporation which manages their fund to generate income through such businesses as takaful, mutual fund, pension fund, and Islamic bank. In addition, the reporting to one government body should be effective to create clearer accountability. 6. Reference Abzug, R., & Webb, N.J. (1999). Relationships between nonprofit and for-profit organizations: A stakeholder perspective. Nonprofit and Voluntary Sector Quarterly, 28, 416-431. Alma, B. & Priansa, D. J. (2009). Manajemen Bisnis Syari’ah. Bandung: Alfabeta. Azmi, A. C. & Hanifa, M. H. (2015). TheSharia-compliance of financial reporting practices: a case study on waqf. Journal of Islamic Accounting and Business Research, 6 (1), 55-72. Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman. Kochan, T. A., & Rubinstein, S. A. (2000). Toward a stakeholder theory of the firm: The Saturn partnership. Organization Science, 11 (4), 367-386. Kasim, N., & Khalid, N. K. (2010). The influence of the concept of ‘taklif’ to accountants in preventing fraudulent financial reporting and auditing. Malaysian Accounting Review, 9 (2), 71-83. Mohsin, M. I. A. (2013). Financing through cash-waqf: a revitalization to finance different needs. International Journal of Islamic and Middle Eastern Finance and Management, 6 (4), 304-321. Mubarok. J. (2008). Wakaf produktif. Bandung: Refika Offset-Bandung. Nahar, H. S. & Yacoob, H. (2011). Accountability in the sacred context the case of management, accounting and reporting of a Malaysian cash awqaf institution. Journal of Islamic Accounting and Business Research, 2 (2), 87-113. Prihatini, F., Hasanah, U., & Wirdyaningsih. (2005). Hukum Islam zakat dan wakaf teori dan prakteknya di Indonesia. Jakarta: Penerbit Papas Sinar Sinanti. Puyvelde, S. V., Caers, R., Bois, C. D., & Jegers, M. (2012). The governance of nonprofit organizations: Integrating agency theory with stakeholder and stewardship theories. Nonprofit and Voluntary Sector Quarterly, 41 (3), 431-451. Sitio, A., & Tamba, H. (2001). Koperasi teori dan praktik. Jakarta: Penerbit Erlangga. Sternberg, E. (1997). The defects of stakeholder theory. Corporate Governance, 5, 3-10. Vinten, G. (2001). Shareholder versus stakeholder – Is there a governance dilemma?. Corporate Governance: An International Review, 9 (1), 36-47. 683
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