Digitalizing zakat is more relevant now

Randi Swandaru

MSc student in Islamic Finance and Management, Durham University

Based on the World Giving Index 2016, Indonesia is the seventh most generous
country in the world. About three out of four Indonesians say that they donated money
in the last month prior to the interview, while only 63 percent of United States and 69
percent of UK citizens said they did the same thing.

On the contrary, according to National Zakat Board of Indonesia (BAZNAS)

only Rp3.65 trillion (Rp 272 million) or 1.68 percent of zakat been collected in 2015
out of Rp 217 trillion of its potential amount in Indonesia. Thus, digitalizing zakat and
other forms of charity could be a way to bridge philanthropy with charity.

Zakat is a form of alms-giving treated in Islam as a religious obligation.

Digitalizing zakat is not merely a shifting from cash based to a non-cash based
transaction. Its more than that. The scope of digitalizing zakat is relevant in at least
three areas. The first area is digital zakat collection.

A report by WeAreSocial states that there are about 88.1 million active internet
users in Indonesia as of January 2016. At that time, about 43 percent of the total adult
population owned at least one smartphone and spent about three hours and 33 minutes
on average accessing the internet.

Moreover, 20 percent of mobile activities were spent in mobile banking and 20

percent of mobile users admitted using a mobile phone to shop online. Those indicate
that there is a captive market for digital transactions in Indonesian society. Hence,
zakat operators should grab this opportunity by developing a zakat mobile application
that makes it easier for people to pay zakat.

Moreover, zakat operators also need to cooperate with bank and

telecommunications providers who offer electronic money services.

That will open a wider opportunity to establish hybrid donation channels for
the donators.

In addition, collaboration with the convenience store, insurance, stocks, travel

agents and other institutions will allow more people to participate in alleviating
poverty while gaining satisfaction through their daily consumption and investment.

Crowdfunding is a good example of digital charity. It enables everybody to

help anyone who needs help in a very simple and easy way.
 This institution also brings back reciprocity in our urban life. The key to its
success is in how they engage and inspire people to help others via social media. This
creates an impactful wave of giving and sharing in our daily activity.

Second, digitalizing zakat should take place in zakat distribution and

utilization. This becomes more relevant nowadays as our country is very wide and
remote in some areas.

Besides, Indonesia is vulnerable to natural disasters, which creates a genuine

need for a direct response. This makes digital zakat distribution much reliable than
cash distribution.

However, it is not merely about shifting from cash to transferring zakat

electronically. It also about the recipient database that will prevent redundancy and
promote more equal distribution based on the need in certain areas.

In addition, digital distribution will reduce operational costs so that charity

organizations can spend more on staff development. It also anticipates fraud in fund
distribution, since every single activity can be monitored via the system.

Third, digitalizing zakat is also urgent for data management. Law No. 23/2011
about national zakat management requires BAZNAS to give a report on national zakat
management to the President.

The report should capture the activity of all zakat operators including more
than 500 BAZNAS office at every level and private zakat operators (LAZ).

This report is crucial as the basis of decision-making and policy creation.

Wrong or even incomplete data may lead to invalid interpretation. Moreover,
integration of collected data is also a vital point.

Data is useless if it is scattered and unrelated. Realizing this point, BAZNAS

has developed a national zakat management information system called SIMBA since
2012. SIMBA allows zakat operators to record their collection and distribution
activities in a certain format so that SIMBA can capture national data reports in real
time online.

This system has been disseminated to all provinces and there was a national
data entry in October 2016. Now, some private zakat operators are also using it.

Finally, digitalizing zakat becomes more relevant in three domains, which are
zakat collection, distribution and utilization, and data management. It provides wider
access for donors, faster distribution process, fraud avoidance, operational cost
reduction and better national zakat report consolidation.

Shifting to a digital zakat operation is not a simple action but it is important to

start immediately. It is because the poor and needy are waiting to see this significant
improvement, which will give them a better opportunity to escape from poverty.