Iwan Purwanto Sudjali Thesis PDF

ACCOUNTING FOR ZAKAT: THE
ACCOUNTABILITY OF INDONESIAN
ZAKAT AGENCIES
Iwan Purwanto Sudjali

SE (Akt), M. Bus (Acc)
Submitted in fulfilment of the requirements for the degree of

Doctor of Philosophy
School of Accountancy
QUT Business School
Queensland University of Technology
2017
Keywords
Accountability, Alms, Charitable Organisation, Donor, Beneficiaries, Faith-based

Organisation, Indonesia, Islam, Not-for-profit, Stakeholder, Trust, Zakat, Zakat
Agency
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies iii

Abstract
Islam has a long and strong tradition of philanthropic giving. Islamic charitable
giving can take the form of voluntary charitable giving or sadaqah, and ‘mandatory’
alms-giving or zakat (Powell, 2009). Zakat holds an important position within the
Islamic faith because it is considered to be one of the five pillars of Islam (Ybarra,
1996).
This study focuses on the accountability of zakat agencies, as most Muslims

practise the giving of zakat, and it is the main form of Islamic charitable giving.
Zakat agencies are Islamic faith-based organisations engaged in a non-reciprocal
transfer of resources by collecting donations (primarily in the form of zakat) from
Muslims to be distributed to eligible beneficiaries. Similar to secular organisations
that engage in a non-reciprocal transfer of resources, such as charitable organisations,
trust is an important element that determines public support and ultimately ‘giving’
(Sari, Bahari, & Hamat, 2013).
In term of context, this study focuses on Indonesian zakat agencies because

Indonesia is the largest majority Muslim country and the giving of zakat is practised
widely by Indonesian Muslims (Public Interest Research and Advocacy Centre,
2007). In Indonesia, zakat is collected and distributed by three different types of
organisations: (1) local Imams; (2) government-sponsored zakat agencies; and (3)
private zakat agencies (Fauzia, 2008).
This study is motivated by an indication of a lack of trust and the possibility of

an accountability gap within Indonesian zakat agencies (Sari, et al., 2013). A number
of authors have claimed that an organisation can gain and maintain stakeholders’
trust by demonstrating accountability (Furneaux & Wymer, 2015; Irvine, 2002;
Parsons, 2003, 2007). Therefore, zakat agencies should meet stakeholders’
expectations in relation to information by communicating a sufficient and
appropriate level of accountability information.
This study is also motivated by limited accountability studies regarding Islamic

faith-based organisations. Prior studies on the accountability of faith-based
organisations have primarily focused on Christian or Western contexts (Yasmin,
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies v

Haniffa, & Hudaib, 2013). This study seeks to fill this gap by investigating the
accountability of Indonesian zakat agencies by exploring: (1) administrators’
perceptions on the core elements of accountability (to whom, for what, and how); (2)
donors’ perceptions on the core elements of accountability; (3) identifying the inter-
relationship amongst the core elements of accountability; and (4) identifying the
possibility of an accountability gap and, if so, identifying potential additional
disclosure that may bridge this gap.
Drawing on middle range thinking (MRT) perspectives (Laughlin, 1995, 2004,

2007), this study utilises the accountability literature to develop a skeletal
accountability framework to guide this research. To achieve the objectives of this
research and address the research questions, a mixed methods approach was adopted.
Interviews with the administrators of zakat agencies, and surveys of the donors of
zakat agencies were conducted to gain insight into administrators’ and donors’
perceptions of the concept of accountability. Content analysis of media used by zakat
agencies to discharge accountability was also conducted to gauge the actual practice
of accountability.
The findings of this study indicate that administrators and donors have both
similar and dissimilar perceptions regarding the core elements of accountability.
Administrators and donors agreed that zakat agencies should be accountable to a
wide range of stakeholders, including sacred (God) and secular stakeholders such as
regulators, the board, the parent organisation, donors, and beneficiaries.
Regarding the scope of accountability, administrators and donors held similar

views that indicate the scope of accountability of zakat agencies extends beyond the
dimension of accountability typically encapsulated in Stewart’s (1984) ladder of
accountability and includes Syari’ah accountability. This finding also indicates the
existence of sacred and secular dimensions in the accountability of zakat agencies.
The result of the factor analysis indicates that donors are interested in financial
and non-financial information. Several types of non-financial information considered
important by donors, such as information about future plan and beneficiaries, were
not mentioned by administrators. On the other hand, administrators mostly
mentioned financial and programme information. This finding indicates that there are
differences in the perceptions of administrators and donors regarding the types of
information that should be disclosed by zakat agency to discharge accountability.
vi
Administrators and donors agreed that zakat agencies should use formal and
informal mechanisms to discharge accountability. Most administrators and donors
stated that the annual report is an important mediun to discharge formal
accountability and zakat agencies should use the annual report to discharge
accountability. However, there are only a few zakat agencies that publish annual
reports. This finding indicates a gap between the source of information considered
important by administrators and donors and actual practice.
With regard to the association between the core elements of accountability, this
study does not make a prediction on the direction of the relationship between the
core elements of accountability due to the exploratory nature of this study. Non-
parametric correlation tests demonstrated that correlation exists between several
elements of “to whom”, “for what’, and “how”. For example, financial accountability
and financial information were related to primary stakeholders (regulators, donors,
and beneficiaries), and formal sources of information were related to financial
accountability.
Several limitations have been identified in this study. The size of the sample
was limited and is not representative of the general population, therefore, caution
should be exercised in the replication of the findings in other contexts. The
perceptions of donors about the understanding of accountability were limited
regarding propositions and items that were put forward in the questionnaires. This
study also only draws on the perceptions of accountability of one type of external
stakeholder, that of donors. Other external stakeholders may have different
perceptions regarding accountability. Nevertheless, the theoretical insights gained
from this study have the potential to enhance understanding regarding the notion of
accountability.
Future research in this area could explore the perception of accountability from
the perspective of a broader range of stakeholders, such as regulators, beneficiaries,
and academics. More quantitative research is also required to operationalise and
validate the inter-relationship between the core elements of accountability in other
settings and to explore the perceptions of accountability among individuals with
different demographic attributes.
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies vii

viii
Table of Contents
Keywords........................................................................................................................... iii
Abstract ............................................................................................................................... v
Table of Contents ................................................................................................................ix
List of Figures ...................................................................................................................xiii
List of Tables ..................................................................................................................... xv
List of Abbreviations and Acronyms ................................................................................. xix
Glossary............................................................................................................................ xxi
Statement of Original Authorship ....................................................................................xxiii
Acknowledgements .......................................................................................................... xxv
Chapter 1: Introduction.................................................................................... 1
1.1 Context ...................................................................................................................... 1
1.2 Research Motivations ................................................................................................. 4
1.3 Research Aim, Objectives, and Questions ................................................................... 6
1.4 Research Contributions .............................................................................................. 9
1.5 Thesis Outline .......................................................................................................... 12
Chapter 2: A Contextual Understanding of Zakat: Its Meaning, Impost, and
Administration ...................................................................................................... 17
2.1 Introduction ............................................................................................................. 17
2.2 An Overview of Zakat .............................................................................................. 17
2.3 Imposition of Zakat .................................................................................................. 19
2.4 Collection and Administration of Zakat .................................................................... 20
2.5 History of Zakat Administration in Indonesia ........................................................... 23
2.6 Zakat Regulation and Disclosure Requirement in Indonesia ...................................... 31
2.7 Summary.................................................................................................................. 33
Chapter 3: Literature Review and Research Perspective ............................. 35
3.1 Introduction ............................................................................................................. 35
3.2 Why Should Zakat Agencies be Accountable? .......................................................... 35
3.3 Empirical Evidence Regarding Sacred and Secular Accountability in Faith-Based
Organisations ........................................................................................................... 39
3.4 Donor’s Information Requirements and the Accountability Gap ............................... 42
3.5 Implications from the Literature Review ................................................................... 43
3.6 Philosophical Perspective to Accounting Research ................................................... 44
3.7 Middle Range Thinking Perspective ......................................................................... 47
3.8 Limitations of Middle Range Thinking ..................................................................... 51
3.9 Justification for the Adoption of Middle Range Thinking.......................................... 52
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies ix

3.10 Summary ................................................................................................................. 54
Chapter 4: Theoretical Framework ............................................................... 55
4.1 Introduction ............................................................................................................. 55
4.2 Meaning of Accountability ....................................................................................... 55
4.3 Who Should Zakat Agencies be Accountable to? ...................................................... 57
4.4 The Scope of Accountability and Information Required ........................................... 64
4.5 By What Means Should Accountability be Discharged? ........................................... 72
4.6 Inter-Relationship among the Core Elements of Accountability ................................ 76
4.7 Theoretical Understanding and Research Questions .................................................. 78
4.8 Summary ................................................................................................................. 80
Chapter 5: Research Methods ........................................................................ 83
5.1 Introduction ............................................................................................................. 83
5.2 Mixed Methods Research ......................................................................................... 83
5.3 Research Methods Used for Research Question 1 ..................................................... 86
5.4 Research Methods Used for Research Question 2 ..................................................... 95
5.5 Research Methods Used for Research Question 3 ................................................... 102
5.6 Research Methods Used for Research Question 4 ................................................... 102
5.7 Discussion of Research Findings ............................................................................ 104
5.8 Summary ............................................................................................................... 105
Chapter 6: The Accountability of Zakat Agencies: Administrators’
Perceptions .................................................................................................... 107
6.1 Introduction ........................................................................................................... 107
6.2 Administrators’ Perceptions on the Meaning of Accountability .............................. 107
6.3 Should Zakat Agencies be Accountable? ................................................................ 111
6.4 To Whom Should Zakat Agencies be Accountable? ............................................... 114
6.5 What Should Zakat Agencies be Accountable for? ................................................. 120
6.6 Type of Information Considered Important by Administrators ................................ 125
6.7 By What Means Should Zakat Agencies Discharge Their Accountability? .............. 129
6.8 Discussion ............................................................................................................. 133
6.9 Summary ............................................................................................................... 139
Chapter 7: The Accountability of Zakat Agencies: Donors’Perceptions ... 141
7.1 Introduction ........................................................................................................... 141
7.2 Donors’ Perceptions on the Meaning of Accountability .......................................... 141
7.3 Should Zakat Agencies be Accountable? ................................................................ 142
7.4 To Whom Should Zakat Agencies be Accountable? ............................................... 144
7.5 What Should Zakat Agencies be Accountable for? ................................................. 150
7.6 Types of Information Required by Donors.............................................................. 155
x
7.7 By What Means Should Zakat Agencies Discharge Their Accountability? .............. 167
7.8 Inter-relationship among the Core Elements of Accountability................................ 177
7.9 Do the Perceptions of Donors on the Core Elements of Accountability Differ among
the three Groups of Donors and among Donors Who Have Different Demographic
attributes? .............................................................................................................. 179
7.10 Discussion.............................................................................................................. 184
7.11 Summary................................................................................................................ 191
Chapter 8: The Accountability of Zakat Agencies: A Comparison between
Administrators’ and Donors’ Perceptions ......................................................... 193
8.1 Introduction ........................................................................................................... 193
8.2 Media Used to Discharge Accountability ................................................................ 194
8.3 A Comparison between Administrators’ and Donors’ Perceptions on the
Accountability of Zakat Agencies ........................................................................... 204
8.4 Discussion.............................................................................................................. 216
8.5 Summary................................................................................................................ 220
Chapter 9: Summary, Recommendations, and Conclusion......................... 221
9.1 Introduction ........................................................................................................... 221
9.2 Research Motivation and Questions ........................................................................ 221
9.3 Research Approach ................................................................................................ 223
9.4 Research Design..................................................................................................... 223
9.5 Research Findings .................................................................................................. 224
9.6 Research Contributions .......................................................................................... 241
9.7 Research Limitations .............................................................................................. 246
9.8 Future Research ..................................................................................................... 248
References ........................................................................................................... 251
Appendices .......................................................................................................... 278
Appendix A Human Ethics Approval Certificate and Participation Information Sheet ....... 278
Appendix B Interview Questions Matrix .......................................................................... 285
Appendix C Survey Instrument ........................................................................................ 288
Appendix D The Data Dictionary and Rules for Coding ................................................... 307
Appendix E Type of Information Identified in Literature .................................................. 308
Appendix F Initial Eigenvalues and Criterion Value from Monte Carlo Parallel Analysis . 310
Appendix G Scree Plot ..................................................................................................... 311
Appendix H Pearson Correlations of the Core Elements of Accountability........................ 315
Appendix I The Results of MANOVA Test for Factor Scores on to Whom Zakat Agencies
Should be Accountable by the Groups of Donors Who Give to Local Imam, Government-
Sponsored Zakat Agencies, and Private Zakat Agencies ................................................... 316
Appendix J The Results of MANOVA for Factor Scores on to Whom Zakat Agencies
Should be Accountable by Demographic Attributers of Donors ........................................ 317
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xi

Appendix K The Results of MANOVA for Factor Scores on the Scope of Accountability by
the Groups of Donors ....................................................................................................... 318
Appendix L The Results of MANOVA for Factor Scores on the Scope of Accountability by
Demographic Attributers of Donors ................................................................................. 319
Appendix M The Results of MANOVA for Factor Scores on Type of Information by the
Groups of Donors ............................................................................................................ 321
Appendix N The Results of MANOVA for Factor Scores on Type of Information by
Appendix O The Results of MANOVA for Factor Scores on Type of Information by the
Groups of Donors ............................................................................................................ 323
Appendix P The Results of MANOVA for Factor Scores on Type of Information by
Appendix Q The Results of MANOVA for Factor Scores on Medium to Discharge
Accountability by the Groups of Donors .......................................................................... 325
Appendix R The Results of MANOVA for Factor Scores on Medium to Discharge
Accountability by Demographic Attributers of Donors ..................................................... 326
Appendix S Cross-tabulation of Respondents by Demographic Profiles ............................ 327
xii
List of Figures
Figure 1-1 Thesis Structure ..................................................................................... 16

Figure 4-1 Skeletal Framework of Possible Stakeholders of Zakat Agencies ........... 64
Figure 4-2 Skeletal Framework of the Possible Scope of Zakat Agency
Accountability ........................................................................................... 66
Figure 4-3 Skeletal Framework of Possible Media to Discharge Accountability. ..... 76
Figure 4-4 Skeletal Framework of Possible Inter-relationship among the Core
Elements of Accoountability ..................................................................... 78
Figure 7-1 Factor Plot in Rotated Space for "To Whom Should Zakat Agencies
be Accountable" ...................................................................................... 149
Figure 7-2 Factor Plot in Rotated Space for the Scope of Accountability ............... 154
Figure 7-3 Factor Plot in Rotated Space for Medium used to Discharge
Accountability ......................................................................................... 176
Figure 7-4 Estimated Marginal Means of Accountability to Primary
Stakeholders ............................................................................................ 183
Figure 7-5 Estimated Marginal Means of Accountability to Secondary
Stakeholders ............................................................................................ 183
Figure 7-6 Estimated Marginal Means of Formal Sources of Information.............. 184
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xiii

List of Tables
Table 2-1 Comparison of Zakat al-fitr and Zakat al-mal .......................................... 20

Table 2-2 Comparison of Three Zakat Agencies in Indonesia .................................. 29
Table 4-1 Potential Stakeholders of Not-for-profit Organisations and the
Attributes of Stakeholders Linked to the Types of Accountability ............. 62
Table 4-2 Means to Discharge Accountability ......................................................... 73
Table 5-1 Research Methods Used to Answer Research Questions .......................... 85
Table 5-2 Sample Selection Process ........................................................................ 89
Table 5-3 Distribution of Interviewees .................................................................... 91
Table 5-4 Cross-tabulation of the Groups of Respondents Who Gave to Local
Imams, Government-sponsored Zakat Agencies, and Private Zakat
Agencies by Demographic Profiles .......................................................... 100
Table 6-1 Perceptions of Administrators on the Meaning(s) of Accountability ...... 108
Table 6-2 Perceptions of Administrators on “Why Should Zakat Agencies Be
Accountable?” ......................................................................................... 111
Table 6-3 Perceptions of Administrators on “To Whom Should Zakat Agencies
be Accountable?” .................................................................................... 114
Table 6-4 Perceptions of Administrators on the Scope of Zakat Agencies’
Accountability ......................................................................................... 120
Table 6-5 Perceptions of Administrators on Types of Information that Should
be Disclosed by Zakat Agencies .............................................................. 126
Table 6-6 Perceptions of Administrators on Media that Should be Used by
Zakat Agencies to Discharge Accountability ........................................... 130
Table 7-1 Perceptions of Donors on the Meaning(s) of Accountability .................. 142
Table 7-2 Cross-tabulation of the Importance of Demonstrating Accountability
to Stakeholders by the Groups of Donors................................................. 143
Table 7-3 Reasons Why Zakat Agencies Should be Accountable .......................... 143
Table 7-4 Reasons Why Zakat Agencies Should Not be Accountable .................... 144
Table 7-5 Cross-tabulation between the Groups of Respondents and their
Perceptions on the Stakeholders of Zakat Agencies ................................. 145
Table 7-6 Spearman’s rho Correlation Matrix for to Whom Zakat Agencies
Should be Accountable ............................................................................ 147
Table 7-7 Rotated Component Matrix of “To Whom Should Zakat Agencies be
Accountable" ........................................................................................... 147
Table 7-8 Perceptions of Donors on the Scope of Zakat Agencies
Accountability ......................................................................................... 151
Table 7-9 Spearman’s rho Correlation Matrix for the Scope of Accountability ...... 152
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xv

Table 7-10 Results of Factor Extraction on the Scope of Accountability ............... 153
Table 7-11 Perceptions of Donors on Types of Information that should be
disclosed by Zakat Agencies ................................................................... 157
Table 7-12 Spearman's rho Correlation on Types of Information that Should be
Disclosed by Zakat Agencies .................................................................. 161
Table 7-13 Results of Factor Analysis on the Perception of Donors on the
Types of Information .............................................................................. 165
Table 7-14 Perceptions of Donors on the Sources of Information.......................... 168
Table 7-15 Proportion of Donors with Access to Sources of Information about
Zakat Agencies ....................................................................................... 169
Table 7-16 Cross-tabulation of the Interest of Respondents in Relation to
Reading Annual Reports by the Groups of Donors .................................. 170
Table 7-17 Reasons for Reading Annual Reports or Financial Statements............. 171
Table 7-18 Reasons for Not Reading Annual Reports or Financial Statements ...... 172
Table 7-19 Spearman's rho Correlations for the Sources of Information ................ 173
Table 7-20 Pattern and Structure Matrix with Oblique Oblimin Rotation of the
Source of Information Variables ............................................................. 174
Table 7–21 Rotated Component Matrixa with Orthogonal Varimax Rotation of
the Source of Information Variables ........................................................ 175
Table 7-22 Results of Spearman’s rho CorrelationTest on Factor Scores of “To
Whom”, “For What”, and “How” ............................................................ 178
Table 7-23 Results of MANOVA on “To Whom”, “For What”, and “How” by
the Groups of Donors and Demographic Attributes of Donors................. 181
Table 7-24 Tests of Between-subjects Effects on Interaction Variables
Education x Sectors of Employment ....................................................... 182
Table 7-25 Classification of Zakat Agencies Stakeholders Compared to
Theoretical Framework ........................................................................... 186
Table 8-1 Media Used by Zakat Agencies to Discharge Accountability ................ 194
Table 8-2 Summary of Magazine Contents ........................................................... 195
Table 8-3 Type of Information Disclosed on Website ........................................... 197
Table 8-4 Type of Information Disclosed on Facebook ......................................... 200
Table 8-5 Type of Information Disclosed in Annual Reports ................................ 202
Table 8-6 A Comparison between the Perceptions of Administrators and
Donors on the Meaning of Accountability ............................................... 205
Table 8-7 Should Zakat Agencies be Accountable? .............................................. 206
Table 8-8 Why Should Zakat Agencies be Accountable? ...................................... 206
Table 8-9 Comparison of the Perception of Administrators and Donors on “To
Whom Zakat Agencies Should be Accountable” ..................................... 207
xvi
Table 8-10 A Comparison between the Perception of Administrators and
Donors on the Scope of Accountability of Zakat Agencies ...................... 209
Table 8-11 A Comparison between the Perception of Administrators and
Donors on Types of Information that Should be Disclosed by Zakat
Agencies ................................................................................................. 211
Table 8-12 A Comparison between the Perceptions of Administrators and
Donors on Media that Should be Used by Zakat Agencies to
Discharge Accountability ........................................................................ 215
Table 9-1 Summary of Findings ............................................................................ 225
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xvii

List of Abbreviations and Acronyms
AUD Australian Dollar

Ar Arabic
BAZNAS Badan Amil Zakat Nasional (refer to Glossary)
IAI Ikatan Akuntan Indonesia
LAZ Lembaga Amil Zakat (refer to Glossary)
MANOVA Multivariate Analysis of Variance
MRT Middle Range Thinking
MUI Majelis Ulama Indonesia (refer to Glossary)
KMO Kaiser-Meyer-Olkin
PA Parallel Analysis
PCA Principal Component Analysis
PSAK Pernyataan Standar Akuntansi Keuangan (Indonesian
Statement of Financial Accounting Standards)
QUT Queensland University of Technology
RT Rukun Tetangga (refer to Glossary)
RW Rukun Warga (refer to Glossary)
UK United Kingdom
US United States
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xix

Glossary
Amil Ar. A zakat collector. A zakat collector can be an

individual or an organisation
Amilin Ar. pl. of amil
BAZNAS Badan Amil Zakat Nasional; a general term for a
government-sponsored zakat agency. BAZNAS consists of
three tiers:
Central BAZNAS created by the Central Government
provincial BAZNASs created by provincial governments
local BAZNASs created by local governments
Fatwa Ar. An Islamic legal pronouncement or scholarly opinion
on a matter of Islam produced by an Islamic jurist
Fiqh Ar. Islamic jurisprudence, knowledge
Imam An Islamic spiritual leader who is also a mosque leader
Islamic jurists A Muslim scholar who is an expert in Islamic
jurisprudence or Islamic law
LAZ Lembaga Amil Zakat; a general term for a private zakat
agency
MUI Majelis Ulama Indonesia (The Indonesian Ulema Council).
MUI is a non-governmental organisation that consists of
Islamic jurists and clerics representing most Muslim
groups in Indonesia. While a fatwa issued by MUI is not a
legal regulation, most Muslims follow this fatwa.
Ramadan The ninth month of Islamic calendar where Muslims fast
RT An association of several households that live in a
neighbourhood
RW An association of several RTs
Sadaqah Ar. Denotes any act of kindness, such as voluntary
donation, endowment (waqf), and other forms of
kindness
Shari’ah Ar. Islamic law derived from the holy Qur’an and hadist
Hadith Ar. Hadith are sayings and behaviours of the Prophet
Sunnah Ar. Sunnah is documentation (recorded) of sayings and
behaviours of the Prophet. Hadith and Sunnah are used
interchangeably in this study
Zakat Ar. Islamic alms giving in which every Muslim who has
wealth or income above a certain threshold is required
by the Holy Qur’an to give a portion of her/his wealth or
income to specified beneficiaries
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xxi

Statement of Original Authorship
The work contained in this thesis has not been previously submitted to meet
requirements for an award at this or any other higher education institution. To the
best of my knowledge and belief, the thesis contains no material previously
published or written by another person except where due reference is made.
Signature: QUT Verified Signature
Date: 10 September 2017
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xxiii

Acknowledgements
I would like to take this opportunity to acknowledge and thank the following
individuals and organisations for their support of my research.
• The administrators and donors of the zakat agencies who gave so generously
of their time to participate in this study.
• My research supervisors, Associate Professor Stuart Tooley and Dr Craig

Furneaux for their wise counsel, scholarly guidance, and great support.
• The Director of Higher Degree Research Studies, Dr Stephen Cox.
• Badan Pemeriksa Keuangan – Republik Indonesia, for granting me paid study

leave.
• Australian Award Scholarship for providing me with a scholarship and

financial support.
• Dr Jonathan Bader, Gayleen Furneaux, Millen Tsefai, Dennis O’ Connell, and

Samantha Kenny, and the QUT Learning Advisor and Research Support Staff.
• Zia Song, Christine Wang, Jocelyn Tan, and the ASS Student Support
Services. Thank you for making this journey easier, especially during my first
year in Brisbane.
• Professional editors, Kylie Morris and Fiona Crawford, who provided

copyediting and proofreading services, according to university-endorsed
guidelines and the Australian Standards for editing research theses.
• My personal friends, Tanto dan Keluarga, Pak Muis, Mbak Elly, Mas Gede
dan Keluarga, Desi C. Hidayah, and all my Indonesian friends.
• My family – my wife Tina and my children Ega, Fio, and Kelvin, my mother,
the late Sri Mulyani, my father Eddy Sudjali, Ibu Kismiyati, Bp Suparman,
Mas Budi dan Keluarga, Mas Markus dan Keluarga, Peter dan Keluarga, Mas
Ari dan Keluarga – who have supported me selflessly. This thesis is dedicated
to these important people in my life.
Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xxv

Chapter 1: Introduction
1.1 CONTEXT
The practice of philanthropic giving is encouraged in many religions. This is

also true for Muslims, with philanthropic giving central to the Islamic faith
(Bremer, 2004). Muslims believe that charitable giving is not just as an act of
kindness but also an act of worship (ibadah) to become close to Allah (Arjomand,
1998). A survey in the UK indicated that Muslims donated an average of US $567
annually, higher than the followers of other religion (Austin, 2013). The exact
amount of global Islamic charitable giving is not known, however, it has been
estimated at between US $200 billion to US $1 trillion annually (Stirk, 2015).
Islamic charitable giving can be categorised as either a voluntary endeavour

– ‘sadaqah’ – or as faith-based expectation – ‘zakat’. Sadaqah means ‘sincere
giving’ and denotes any act of kindness, such as voluntary donation, endowment
(waqf), and other forms of kindness (Fauzia, 2008). Giving sadaqah is encouraged
and will be rewarded by God; however, those who refrain from giving sadaqah
will not be punished. Zakat is an Islamic alms giving in which every Muslim who
has wealth or income above a certain threshold is required by the Holy Qur’an to
give a portion of her/his wealth or income to particular beneficiaries (al Qardawi,
2000; Stirk, 2015). Muslims believe that God will reward those who give zakat
and punish those who do not. The centrality of zakat to the practice of Islamic
faith has seen the proliferation of Islamic charitable organisations designated to
collect and distribute zakat (Halimatusa'diyah, 2015; Weiss, 2007).
The Holy Qur’an specifies who has to pay zakat and the beneficiaries of
zakat. However, the Holy Qur’an does not provide guidance relating to the
processes for the transferring of zakat from the person who pays zakat (the donor)
to the zakat recipient (the beneficiary) (Salim, 2006). Therefore, the
administration of zakat varies in many countries, particularly with regards to the
role of the government in the administration and redistribution of zakat. In Islamic
countries, such as Saudi Arabia and Pakistan, the payment of zakat is state-
Chapter 1: Introduction 1
enforced and collected by a government agency, whereas in other predominantly
Muslim but secular countries, such as Turkey and Syria, the government is not
involved in the collection and administration of zakat (Powell, 2009). In these
secular countries, the payment of zakat is not enforced and Muslims can give their
zakat directly to beneficiaries or charitable organisations. Other predominantly
Muslim countries, such as Bangladesh, Egypt, and Indonesia, have an
institutionalised zakat collection and administration system (Hoque, Khan, &
Mohammad, 2015). In these countries, the respective governments create zakat
agencies; however, Muslims are not obliged to give their zakat to the intermediary
institution created by the government.
This study focuses on organisations that collect and distribute zakat

(hereafter referred to as zakat agencies) in a voluntary giving regime. Notably,
and of interest in the context of this research, the notions of zakat and zakat
agencies exhibit specific features that cannot be found in other charitable
activities. Zakat is different from voluntary giving, in that it is a form of faith-
based alms-giving and is expected to be performed by every pious Muslim.
However, the payment of zakat in most majority Muslim countries is not state-
enforced (Stirk, 2015). To provide a country context, this study focuses on
Indonesian zakat agencies, as Indonesia is the largest Muslim-majority country
based on population (Hasan, 2015). According to the latest census in 2010, the
Indonesian population is 237 million, with 87.18% identifying as Muslim (BPS
(Statistics Indonesia), 2011).
As a country with the largest Islamic population in the world, the amount of
zakat is potentially quite substantial. It has been estimated that the potential
annual economic value of zakat in Indonesia could be as much as US$ 83 billion
(Firdaus, Beik, Irawan, & Juanda, 2012). The exact amount of zakat collected in
Indonesia is unknown, as most Muslims give zakat directly to beneficiaries
(Fauzia, 2008) and the majority of zakat agencies do not report the amount of
zakat collected to the Central Government-Sponsored Zakat Agency (the Central
BAZNAS) or the Ministry of Religious Affairs. However, the Central BAZNAS
has estimated that the amount of zakat collected by all zakat agencies in Indonesia
in 2012 to be approximately USD 2.3 billion (Rinaldo, 2013).
2 Chapter 1: Introduction
Traditionally, Indonesian Muslims have given zakat directly to beneficiaries
or to a local Imam (the local Islamic spiritual leader who is also the local mosque
leader), who in turn distributes the zakat to local beneficiaries (Fauzia, 2008). In
collecting and distributing zakat, the local Imam may be guided and assisted by a
committee drawn from members of the mosque. Local Imams collect zakat on an
ad-hoc basis, usually during Ramadan (a month in the Islamic calendar where
Muslims fast) (Fauzia, 2008). Because the scope of zakat collection and
distribution by local Imams is within a local community, there is arguably a high
level of transparency about the amount of zakat collected and the identity of
beneficiaries individually. Thus, it is possible to demonstrate informal
accountability without providing formal reporting due to the close connection
between donors and beneficiaries.
The collection and distribution of zakat changed in Indonesia as a result of

the establishment of local and provincial government-sponsored zakat agencies in
the 1970s and private zakat agencies in the 1980s (Abdullah, 1991). Muslims now
have more choices in distributing their zakat than prior to the establishment of
government-sponsored zakat agencies and private zakat agencies. However, there
are differences between local Imams and the government-sponsored zakat
agencies and private zakat agencies. While local Imams mostly only collect and
distribute zakat from and to the members of their congregation, government-
sponsored zakat agencies and private zakat agencies operate in larger areas. The
donors of government-sponsored zakat agencies and private zakat agencies might
not know every individual who administers a zakat agency and the beneficiaries
of the zakat agency. In these circumstances, informal means might be insufficient
to discharge accountability, thus requiring formal reporting. A growing body of
literature indicates the importance of demonstrating accountability to gain trust
and public support for charitable organisations (Buchheit & Parsons, 2006;
Furneaux & Wymer, 2015; Irvine, 2002; Parsons, 2003, 2007; Tinkelman &
Mankaney, 2007). Because transparency and accountability are required to build
trust, it is important to understand the notion of accountability from the
perspective of administrators and donors of zakat agencies.
Accountability 1 can be defined as “the giving and demanding of reasons for
conduct” (Roberts & Scapens, 1985, p. 447). This definition implies that an
organisation has an obligation to explain its actions and the results of its actions
(Unerman & O'Dwyer, 2006b). The dissemination of information to stakeholders
is the key element of accountability and can be provided through formal and
informal channels (Gray, Bebbington, & Collison, 2006). Annual reports are
widely used as a mechanism to discharge accountability as they provide visibility
regarding the activities and performance of organisations (Connolly, Hyndman, &
McConville, 2012; Hyndman & McMahon, 2010; Torres & Pina, 2003; Tower,
1993). However, annual reports are not the only mechanism available to discharge
accountability. Accountability information can also be disseminated through
informal mechanisms, such as social relations and web reporting (Avina, 1993;
Connolly & Dhanani, 2013; Hammack, 1995). In the context of zakat agencies,
both formal and informal mechanisms may assist Muslims to obtain information
that is important for making an informed judgement about continuing or
discontinuing the giving of zakat to a particular zakat agency.
1.2 RESEARCH MOTIVATIONS
The motivation for this study arose from calls for zakat agencies to
demonstrate accountability echoed by the government, media, and zakat
practitioners. President Yudhoyono stated in his speech at a National Symposium
of Zakat organised by the Central Government-sponsored Zakat Agency (the
Central BAZNAS) in 2011 that “Many people are concerned that zakat agencies
are not accountable and zakat fund is not distributed to the eligible beneficiaries”
(RUU Zakat dan kesejahteraan umat, 2010). Likewise, the Minister of Religious
Affairs in his speech at the award-giving ceremony of the Central BAZNAS
Award 2015 for government-sponsored zakat agencies that had outstanding
performance asked government-sponsored zakat agencies and private zakat
agencies to improve their professionalism, public accountability, and ability to
foster public trust (BAZNAS, 2015; emphasis added). The Indonesian public also
demanded more accountability from zakat agencies, as seen in several media
1 A more comprehensive discussion of accountability is presented in the Theoretical Framework.
articles, for example, Kompas (Revianur, 2012) and Republika (Zuhri, 2013).
These articles argue that zakat agencies need to be transparent and accountable to
foster public trust.
Several authors have also argued that zakat agencies should demonstrate
accountability to foster trust (Fernandez, 2009; Halimatusa'diyah, 2015; Lessy,
2012; Powell, 2009). Powell (2009) argued that giving zakat is not only a matter
of religious duty; it is also influenced by trust and the accountability of the zakat
agency. Specifically, in selecting between giving directly to beneficiaries, a local
Imam, a government-sponsored zakat agency, or a private zakat agency, trust may
influence the decision of Muslims. Arguably, Muslims are more likely to give
their zakat to a zakat agency that is accountable than to a zakat agency that is not
accountable. On the other hand, there is public concern regarding the
accountability of zakat agencies that discourages Muslims from giving zakat to
zakat agencies (Lessy, 2012). For example, a lack of transparency means that
donors do not have information regarding the amount of zakat collected and
distributed (Lessy, 2012).
Although the President, the Minister of Religious Affairs, several authors,

and the public have asked for zakat agencies to be accountable, the practical
output of accountability has not been specified, especially in relation with to
whom, for what, and how accountability should be discharged by zakat agencies.
As a consequence, this has created confusion for zakat agencies, as reflected in the
following statement from the Chief of Forum Zakat (a peak body/an association of
zakat agencies), which stated “guidance on what should be reported by zakat
agencies to parliament does not exist and it is not clear what should be accounted
for by zakat agencies to government” (Revisi UU Zakat: Spirit transparansi dan
akuntabilitas pengelolaan zakat, 2008). These factors motivated this study to
investigate the understanding of accountability from the perspective of
administrators and donors of zakat agencies, especially in relation to the key
element of accountability: to whom, for what, and how.
This study is also motivated by the call for more research to understand the
notion of accountability in various organisations (Godwin, Northcott, & Stewart,
2011; O'Dwyer & Unerman, 2008; Unerman & O'Dwyer, 2006a) and the paucity
of research about accountability in Islamic faith-based charitable organisations
(Yasmin, et al., 2013). Yasmin et al. (2013) suggested that religious beliefs may
influence accountability practised by faith-based charitable organisations.
Previous research on the accountability of charitable organisations has mostly
concentrated on the accountability of Western or secular organisations (for
example Dhanani & Connolly, 2012; Hyndman & McDonnell, 2009; O'Dwyer &
Unerman, 2008). On the other hand, prior studies examining the accountability of
faith-based organisations have largely focused on religious organisations such as
the Church of England (Laughlin, 1988, 1990), the Salvation Army of England
(Irvine, 2002; Joannides, 2012), the Roman Catholic Church (Bigoni, Deidda
Gagliardo, & Funnell, 2013; Quattrone, 2004), the Wesleyan Methodists in New
Zealand (Cordery, 2006), State Islamic Religious Councils (Abdul-Rahman &
Goddard, 1998), and Hindu and Buddhist temples (Jayasinghe & Soobaroyen,
2009). Therefore, little is known about how accountability is understood and
exercised in Islamic faith-based charitable organisations. In addition, to the best of
my knowledge, no research has been published specifically investigating the
understanding of accountability in the context of Indonesian zakat agencies. This
study seeks to fill this gap and contributes to the literature on the accountability of
faith-based charitable organisations and, in particular, zakat agencies.
1.3 RESEARCH AIM, OBJECTIVES, AND QUESTIONS
It has been argued that accountability is a socially constructed concept and

different individuals may have a different understanding of accountability
(Ebrahim, 2003b; Shearer, 2002; Sinclair, 1995). The aim of this study is to
examine the understanding of accountability and identify potential gaps between
the expectations of donors in terms of disclosure and the disclosure practised by
Indonesian zakat agencies. In order to achieve the research aim, it was therefore
important to gain an understanding of accountability from the view and
perceptions of internal and external stakeholders, and to identify how
accountability is actually discharged by zakat agencies. The research aim was
supported by four research objectives.
The first objective of this study focuses on the understanding of
accountability from the perspective of internal stakeholders. Administrators were
selected to represent internal stakeholders as administrators are involved in the
daily activities of zakat agencies. It was expected that they would have a good
understanding of the accountability of zakat agencies. This research objective was
addressed through the following research questions.
RQ.1 How is accountability understood by the administrators of zakat agencies?

a) To whom do the administrators of zakat agencies believe zakat
agencies should be accountable?
b) What is the scope of accountability of zakat agencies according to the
administrators of zakat agencies?
c) What information (financial and non-financial) do the administrators
of zakat agencies consider necessary to be disclosed by zakat agencies
to discharge their accountability?
d) According to the administrators of zakat agencies, by what means
should zakat agencies discharge their accountability?
The second objective of this study is to gain an understanding of the

perceptions of external stakeholders of zakat agencies regarding the notion of
accountability. Donors were selected to represent external stakeholders. Donors
are an important resource provider to charitable organisations and their views
were deemed to be important (Ebrahim, 2003b; Waters, 2009). Because zakat
agencies share similarities with charitable organisations in terms of channelling
donations from donors to beneficiaries, the support of donors is also important for
zakat agencies. This research objective was addressed through the following
research questions:
RQ.2 How is accountability understood by the donors of zakat agencies?

a) To whom do the donors of zakat agencies believe zakat agencies
should be accountable?
donors of zakat agencies?
c) What information (financial and non-financial) do the donors of zakat
agencies expect and consider necessary to be disclosed by zakat
agencies to discharge their accountability?
d) According to the donors of zakat agencies, by what means should
zakat agencies discharge their accountability?
The third objective was to investigate the inter-relationship among the core
elements of accountability. A number of authors have suggested that inter-
relationship exists among the core elements of accountability: (1) to whom
accountability should be discharged (to whom); (2) the scope of accountability
and types of information to satisfy every aspect of the scope of accountability (for
what); and (3) mechanisms to discharge accountability (how) (Connolly,
Hyndman, & McConville, 2011; Hyndman, 1990, 1991; Stewart, 1984; Waters,
2009). However, previous studies have only partially explored the relationship
between the core elements of accountability and have not explored the inter-
relationship between all core elements of accountability. For example, Waters
(2009) only explored the relationship between the mechanism to disseminate
accountability (organisational website) and the scope of accountability (financial
accountability and information about audited financial statements, programmes,
and services). Waters (2009) did not take into account stakeholders (to whom)
who may use financial information from the internet. Therefore, this study also
aims to explore the inter-relationship between these core elements of
accountability. Because the nature of this study is exploratory, this study does not
predict the direction of inter-relationships between these core elements of
accountability. This research objective was addressed using the following research
question.
RQ.3 What inter-relationships exist amongst the core elements of accountability

in the context of zakat agencies?
An accountability gap can exist if inconsistencies occur between the

perceptions of administrators, the perceptions of donors, and the disclosure
practised by an organisation (Hyndman, 1990, 1991). Therefore, the fourth
research objective was to identify the possibility of an accountability gap, and to
identify additional disclosures that could improve the accountability of zakat
agencies. This research objective was addressed through the following research
question.
RQ.4 Is there an expectations gap in the scope and disclosure of zakat agency
accountability between administrators and donors?
a) What media and type of information is currently used and disclosed?
b) Do administrators and donors have different views on to whom, for
what, and how to discharge accountability?
c) Is there an expectations gap?
1.4 RESEARCH CONTRIBUTIONS
This study has both theoretical and practical contributions.
1. The novelty of this study lies in the context of study. This study
provides empirical insight about the understanding of accountability
within a specific context, namely in the context of Islamic faith-based
organisations in developing countries. While previous research has
provided rich descriptions and exploration of accountability within
Christian faith-based organisations and secular charitable organisations
in Western countries, there is a limited number of studies regarding the
accountability of Islamic organisations, especially those organisations
that administer zakat. The findings of this study aim to fill this gap.
2. This study identifies the stakeholders of Islamic faith-based charitable

organisations based on the perceptions of the administrators and donors
of zakat agencies. This study finds that the ultimate stakeholder of zakat
agencies is God. The existing literature mostly related a bond of
accountability to stakeholders (Stewart, 1984) with power derived from
the ownership of resources, regulation or contractual relationship
(Carroll, 1989; Cordery & Baskerville, 2011; Pfeffer, 1981). However,
this study finds that a bond of accountability can result from the
spiritual belief that God will ask accountability in the hereafter. This
finding indicates that power to hold accountability is more complex
than the current understanding.
3. In addition to God, several secular stakeholders are identified. These
stakeholders include resource providers (such as donors, volunteers, and
the board), regulators (such as government and the Central BAZNAS),
beneficiaries, and other stakeholders (such as media and academics).
Although administrators and donors acknowledge that zakat agencies
should be accountable to a broad range of stakeholders, the results of
the factor analysis suggest that two different classifications of
stakeholders exist. The primary stakeholders mostly consist of those
who have a contractual relationship or bond of accountability with zakat
agencies, such as donors and the government; while the secondary
stakeholders mostly consist of those who do not have a contractual
relationship, or only have a link of accountability, such as the media.
This finding supports the concept of “bonds and links of accountability”
proposed by Stewart (1984, p. 25); however, it differs from the
classification of stakeholders proposed by Carroll (1989) and Flack
(2007).
4. Based on the framework of Stewart’s (1984) ladder of accountability,

this study identifies the scope of accountability for zakat agencies.
Previous studies, for example, Laughlin (1988, 1990) and Yasmin et al.
(2013), also adopted this framework. The findings of the current study
confirm that Stewart’s (1984) ladder of accountability is applicable in
the context of zakat agencies. However, the use of Stewart’s (1984)
ladder of accountability in the context of Islamic faith-based charitable
organisations should be modified, as the accountability of zakat
agencies also includes Syari’ah accountability, amil fund
accountability, and ethics accountability. The finding regarding
Syari’ah accountability indicates that the scope of accountability of
zakat agencies also includes sacred accountability.
5. The results of factor analysis suggest that the scope of accountability of

zakat agencies can be clustered into ‘financial and sacred
accountability’ and ‘governance and performance accountability’. The
financial and sacred accountability factor consists of accountability for
finance, ethics, Syari’ah, and the amil fund; while ‘governance and
performance accountability’ consists of legal accountability, mission
accountability, governance, and performance accountability (efficiency,
effectiveness, and outcomes). Financial and sacred accountability can
be considered primary accountability, while governance and
performance accountability can be considered secondary accountability.
This finding provides a new insight into the understanding of sacred
and secular dichotomy. Previous studies have mostly found that sacred
and secular dichotomy exist (Laughlin, 1988, 1990) or do not exist
(Abdul-Rahman & Goddard, 1998; Bigoni, et al., 2013; Irvine, 2002).
The result of factor analysis provides empirical support for Laughlin
(2007), who argues that sacred and secular is a relative concept.
Financial accountability can be considered sacred if this scope of
accountability determines the sustainability of an organisation
(Laughlin, 2007). In the view of zakat agency donors, financial
accountability is as important as Syari’ah accountability, which
represents sacred accountability.
6. With regards to the type of information that should be disclosed by

zakat agencies, the administrators and donors of zakat agencies agreed
that zakat agencies should disclose financial and non-financial
information. Although donors expect non-financial information, the
finding indicates that administrators and donors place strong emphasis
on financial information.
7. Zakat agencies use several types of media to discharge accountability.

Although many donors do not have access to, and most do not read,
annual reports, they expect zakat agencies to disclose annual reports.
This finding indicates that donors expect zakat agencies to demonstrate
accountability using formal media.
8. While previous qualitative studies have identified that the types of

stakeholders, the scope of accountability, and the means of discharging
accountability were correlated (Connolly, et al., 2012; Kilby, 2006;
O'Dwyer & Boomsma, 2015), this study provides preliminary
quantitative evidence that to whom, for what (the scope of
accountability and type of information), and how accountability should
be discharged are statistically correlated. This finding makes a practical
contribution in regard to zakat agencies because the finding indicates
that every area of accountability requires different types of information
and media to discharge accountability.
9. This study provides evidence about to whom zakat agencies should be

accountable, the scope of accountability of zakat agencies, the
information needs of donors, and the media that should be used by
zakat agencies to disseminate accountability information. These
findings might be useful for regulators to determine the type of
information that should be disclosed by zakat agencies and the media
that should be used to discharge accountability. For example, this study
finds that all zakat agencies have a website and donors consider the
internet as a very important source of information. However, the
findings in this study indicate that the website has not been fully
utilised to discharge accountability. Therefore, it is recommended that
zakat agencies regularly publish their financial and non-financial
information on their website.
1.5 THESIS OUTLINE
As depicted in Figure 1.1, this thesis consists of nine chapters, as follows.
Chapter 1: Introduction
Chapter 2: A Contextual Understanding of Zakat: Its Meaning, Impost, and

Administration
This chapter provides a contextual understanding of zakat by presenting an

overview of the meaning of zakat, the subject of zakat and its rates, and the
history of zakat administration. This chapter also highlights the current zakat
administration and regulation in Indonesia.
Chapter 3: Literature Review and Research Perspective
This chapter discusses the empirical literature on accountability to provide

the justification for this research and to outline the research methodology of this
study. This chapter provides insight into the rationale for the demand of
accountability of zakat agencies. This is followed by a discussion of the previous
literature investigating accountability in the context of faith-based organisations.
The implications from the literature review are then discussed. This chapter also
highlights the philosophical perspective and research design adopted in this study.
Middle range thinking was selected as the philosophical perspective. Central to
middle range thinking is the view that existing theory is contextually incomplete
(skeletal) and empirical data is required to ‘flesh out’ the theory.
Chapter 4: Theoretical Framework
This chapter presents the core concepts of accountability: (1) who an

organisation should be accountable to (to whom); (2) what an organisation should
be accountable for and what kind of information should be disclosed by an
organisation to discharge accountability (for what); and (3) by what means an
organisation should discharge its accountability (how).
Chapter 5: Research Methods
Consistent with middle range thinking perspective, a mixed methods

approach was selected for data collection and analysis. A mixed methods
approach is appropriate for a study such as this, where different research questions
require different information and data analysis. The methods included interview,
survey, and content analysis. Interviews were used to collect data regarding the
understanding of accountability in the context of zakat agencies from the
perspective of administrators. A survey of donors was used to collect information
about the view of donors on the accountability of zakat agencies. In addition,
website and document analysis were conducted to identify the media used to
discharge accountability and information provided by zakat agencies.
Chapter 6: The Accountability of Zakat Agencies: Administrators’ Perceptions
This chapter presents the findings of the first research question regarding
administrators’ perceptions on to whom, for what, and how accountability should
be discharged by zakat agencies. The insights are based on the analysis of the
interview transcripts with administrators. The analysis of the interview data was
conducted by coding the data. The code was derived from existing theory (theory-
driven code) and the key themes that emerged from transcripts (data-driven code).
Chapter 7: The Accountability of Zakat Agencies: Donors’ Perceptions
This chapter presents the findings of the second research question regarding
the understanding of accountability from the perspective of donors of zakat
agencies and the third research question regarding the inter-relationship among
the core elements of accountability. The insights are based on an analysis of the
survey data. This chapter reports on: (1) the profile of the respondents; and (2) to
whom, for what, and how accountability should be discharged. Factor analysis
was used to condense variables in every core element of accountability.
Specifically, to answer the third research question, this chapter also reports the
results of a non-parametric correlation test on factor scores of the core elements of
accountability and the results of the multivariate analysis of variance in relation to
whom, for what, and how.
Chapter 8: The Accountability of Zakat Agencies: A Comparison between

Administrators’ and Donors’ Perceptions
The aim of this chapter is to establish if an accountability expectations gap

exists between the views of administrators (as presented in Chapter 6) and the
views of donors (as presented in Chapter 7) and, if so, explore the nature of this
expectations gap. This chapter consists of a comparison of administrator and
donor perceptions regarding the meaning of accountability, to whom zakat
agencies should be accountable, the scope of accountability, types of information
that should be disclosed, and the forms of media that should be used by zakat
agencies to disseminate accountability. To answer research question 4, this
chapter also reports the results of the comparison between media and the types of
information considered important by administrators and donors with the actual
media and types of information disclosed by zakat agencies.
Chapter 9: Summary, Recommendations, and Conclusion
This chapter provides the summary of this thesis, key contributions, the
implications for theory and practice, the limitations of this study, and
recommendations for future research.
Chapter 2: A Contextual Understanding of Chapter 3: Literature Review
Chapter 1: Introduction Zakat – Its Meaning, Impost, and • Why should zakat agencies be accountable?
• Context Administration • Empirical evidence regarding sacred and secular accountability
• Research motivations • An overview of zakat • Donor information requirement and accountability gap
• Research aims, objectives, • Imposition of zakat • Implication from literature review
and questions • Collection and administration of Zakat • Philosophical perspective to accounting research
• Research contributions • History of Zakat administration in Indonesia • MRT perspective
• Thesis outline • Zakat regulation and disclosure requirement in • Limitation of MRT
Indonesia • Justification for the adoption of MRT
Guide Understanding
• The meaning of accountability
Enrich Understanding • To whom?
• For what?
Empirical Details • How to discharge accountability?
• Inter-relationship among the core element of accountability
• Theoretical understanding and research questions
Chapter 6: The Accountability of Zakat
Agencies: Administrators’ Perceptions
Chapter 9:
Chatpter 8: The Accountability of Zakat
Summary, Chapter 5: Research Methods
Agencies: A Comparison between
Recommendations, Mixed methods: Interview, survey, and document analysis
Administrators’ and Donors’ Perceptions
and Conclusion

Agencies: Donors’ Perceptions
Figure 1-1 Thesis Structure
Chapter 2: A Contextual Understanding of
Zakat: Its Meaning, Impost,
and Administration
2.1 INTRODUCTION
Central to this study is the concept of zakat, its collection, administration,

and distribution. This chapter provides a contextual understanding of zakat. To
achieve this aim, this chapter is divided into seven sections. Section 2.2 provides
an overview of the meaning of zakat. Section 2.3 highlights the zakat base (what
zakat is imposed on) and its rates. Section 2.4 presents the history of zakat
administration, while Section 2.5 describes zakat administration in Indonesia. A
discussion regarding zakat regulation is presented in Section 2.6. Finally, Section
2.7 provides the summary of this chapter.
2.2 AN OVERVIEW OF ZAKAT
Zakat literally has two meanings: “purity” and “growth” (Samad & Glenn,
2010, p. 303); however, in a religious context, zakat is usually translated as ‘alms’
and is similar in meaning to the concept of ‘tithe’ within the Christian context
(Powell, 2009). Zakat is different from voluntary donations, because the
payment/contribution of zakat is considered to be a faith-based duty ordered by
God to Muslims who have assets and/or income above a certain threshold
(Retsikas, 2014).
Zakat is recognised as an essential element of worship in Islam. It is

considered to be one of the five pillars of Islam, along with the declaration of
faith, performing daily prayers, fasting during Ramadan, and the pilgrimage to
Mecca (Lewis, 2001). Zakat is mentioned 30 times in the Holy Qur’an (Ahmed,
2004), such as the following: “And in their wealth is the right of him who asked
and him who is needy” (51:19).
Chapter 2: A Contextual Understanding of Zakat: Its Meaning, Impost, and Administration 17

The beneficiaries of zakat are specified in the Holy Qur’an. The Holy
Qur’an (9: 60) determines eight categories of beneficiaries to whom zakat can be
given: (1) those who cannot meet their daily needs yet refrain from begging (faqir
or fuqara(pl)); (2) those who have resorted to charity (miskin or masakin (pl)) 2;
(3) those who collect and distribute zakat or zakat administrator (amylin or amil
(pl)); (4) new converts to Islam or those whose hearts have been inclined towards
Islam (mullafatul qulub); (5) for ransoming of slaves and captives (riqab); (6)
persons in debt or debtors (gharimin); (7) those who defend the way of God (fi-
sabilillah); and (8) travellers (ibn-as-sabil) (Ahmed, 2004).
Although the Holy Qur’an clearly states the eligible beneficiaries of zakat, it
does not provide guidance in relation to the allocation of zakat to every category
of beneficiary (Kuran, 2002). Al Qardawi (2000) suggested that the allocation of
zakat to every category of beneficiary should be dependent on the amount of zakat
collected and the urgency for assistance of every category. If the amount of zakat
collected is plenty, zakat must be distributed to all categories of beneficiary that
exist in a region. If a category of beneficiary requires more assistance than the
other categories, this category of beneficiary should receive more assistance than
the other categories. If the amount of zakat collected is small, the priority of
distribution should be given to the poorest (al Qardawi, 2000). This discussion
indicates that zakat agencies should have policies and procedures to ensure that
zakat is administered and distributed in accordance with the Holy Qur’an.
An individual or an organisation that collects, administers, and distributes

zakat is referred to as amil. There is a general agreement that an amil should not
take more than one-eighth of the zakat collected for an amil fund (Ariff, 1991b).
An amil fund is used to finance general and administrative expenses, including
staff salaries.
2 Several Islamic jurists, such as Abu Yusuf, Ibn al-Qasim, and Yaacob do not differentiate between the
meaning of fakir and miskin because they consider both categories to be poor and eligible beneficiaries of
zakat (Mahamod, 2011).
18 Chapter 2: A Contextual Understanding of Zakat: Its Meaning, Impost, and Administration

2.3 IMPOSITION OF ZAKAT
There are two categories of zakat, zakat al-fitr and zakat al-mal. Zakat-al-
fitr is an annual poll tax that is due when the sun sets on the last day of Ramadan 3
and must be paid before the Eid al-Fitr prayer (Siddiqi, 1991). 4 Zakat-al-fitr can
be given in the form of cash or local staple food. Zakat al-mal (hereafter referred
as zakat) is an obligation of every Muslim who has assets or income above a
certain threshold or nisab to give a portion of their assets or income to eligible
beneficiaries (Bakar & Rashid, 2010).
During the era of the Prophet, gold and silver were the main currency of
exchange and the main sources of income for Muslims came from trading and
agricultural activities (Samad & Glenn, 2010). Therefore, the objects of zakat
during that era were gold, silver, inventory merchandise, agricultural produce, and
livestock. The imposition of zakat on wages and salaries was not practised during
the era of the Prophet. At the present time, many Muslims earn from wages,
salaries, or professional activities. Therefore, the majority of Islamist jurists
contend that zakat should be imposed on income from wages and salaries, and
professional activities (al Qardawi, 2000).
Table 2.1 reports the basic elements of zakat, including the base of zakat,
the threshold of zakat, the rate of zakat, and the due date of both zakat al-fitr and
zakat al-mal. The basic principles of zakat presented in Table 2.1 are applied in
Indonesia and quite similar throughout the majority of the Islamic world (Fauzia,
2008). These basic principles have been applied reasonably consistently
throughout the existence of Islam, as the primary sources of the jurisprudence of
zakat have been the Holy Qur’an and the tradition of the Prophet in dealing with
zakat (al Qardawi, 2000). 5
3 The Ramadan is the ninth month of the Islamic Calendar during which Muslims undertake fasting.
4 The Eid-al-Fitr prayer is performed after sunrise on the first day after Ramadan has ended or 1st day of
Shawwal (the tenth month of the Islamic calendar).
5 Islamic jurists may differ in regard to several details about zakat, for example, on the role of the state in the
collection of zakat (see Section 2.4). In several Middle East states, the government appoints a mufti (a
person with the highest religious authority) who has an authority to issue a fatwa (religious edict) on
matters where Islamic jurists have a difference of opinion (Alterman & Hunter, 2004). In Indonesia, the
government does not appoint a mufti. Several Islamic non-governmental organisations created an
Indonesian Ulema Council (MUI) that usually issues a fatwa based on the consensus of its members

Table 2-1 Comparison of Zakat al-fitr and Zakat al-mal
Zakat al-fitr Zakat al-mal
Zakat base Zakat al-fitr is a poll- (1) Zakat is imposed on the total amount of assets
and tax for every Muslim or income;
threshold (including a baby (2) the threshold for gold, cash, merchandise, and
born before the sun other financial assets is equivalent to the value
sets on the last day of of 85 grams of gold;
Ramadan). The head (3) the threshold for silver is 595 grams;
of the household has (4) the threshold for agricultural products is 950
an obligation to pay kilograms;
zakat on behalf of his (5) the threshold for grazing animals is 5 for
family members. camels, 30 for bovine animals, and 40 for sheep
and goats;
(6) the threshold for income from salaries and
professional activities is equal to the threshold
of gold (equivalent to the value of 85 grams of
gold).
Rate 2 kg of local staple (1) 2.5% of all types of income and assets, except
food such as wheat, for agricultural products;
dates, or rice (or can (2) 5% of agricultural harvests from irrigated land;
be paid in cash that is (3) 10% of agricultural harvests from non-irrigated
equal to the market land;
value of 2 kg of local (4) 20% of buried treasure;
staple food). (5) the rate of zakat for livestock depends on the
amount and category of the livestock (for
details, see al Qardawi, 2000; Samad & Glenn,
2010);
(6) the amount of zakat can be based on the
quantity (non-financial value) of the asset or
the market value of the asset.
Due Date The obligation to give (1) Zakat for income from salary or professional
zakat al-fitr is due activities must be paid promptly after the
when the sun sets on income is earned;
the last day of (2) Zakat for agricultural products also must be
Ramadan and must be paid promptly after the agricultural crop is
paid before the Eid al- harvested;
Fitr prayer. However, (3) Zakat for assets such as gold, silver and
it may be paid before livestock is due annually or after the ownership
that date. of each asset reaches one Islamic (lunar)
calendar year.
(Sources: Ahmed, 2004; al Qardawi, 2000 ; Samad & Glenn, 2010)
2.4 COLLECTION AND ADMINISTRATION OF ZAKAT
The Holy Qur’an does not clearly state who must collect and administer
zakat (Fauzia, 2008). If guidance on a particular issue is not found in the Holy
(www.mui.or.id). Although Indonesian Muslims usually refer to a fatwa issued by MUI, it is worth noting
that this fatwa is not part of the formal legal system.

Qur’an and the Sunnah, 6 Muslims usually follow an Islamic legal pronouncement
(fatwa) issued by an Islamic scholar or jurist. Islamic jurists use several methods
to reach a decision that is consistent with Islamic principles, such as analogical
deduction, scholarly consensus, custom, public interests analysis, judicial
discretion, and others (Powell, 2009). Every jurist has a different preference for
the methods that they use to produce an Islamic legal pronouncement (Powell,
2009). There are four prominent Islamic jurists whose Islamic legal
pronouncements are followed by the majority of Muslims, namely Hanafi, Maliki,
Shafi’i, and Hanbali (Powell, 2009).
Because Islamic jurists use different methods to produce Islamic legal

pronouncements, they may have different opinions on a particular issue, including
matters that relate to zakat. Those who support the argument that zakat must be
collected and administered by the state mostly refer to the practice of zakat
administration during the life of the Prophet (al Qardawi, 2000). During his life,
the Prophet had the roles of head of state and head of religion. He appointed
several of his companions as zakat officers and instructed them to collect and
distribute zakat in the Arabian Peninsula (al Qardawi, 2000). After the Prophet
passed away, the four Rightly-Guided Caliphs 7 replaced him as the head of state
and head of religion. During the eras of the Caliphs Abu Bakr and Umar, zakat
was collected and administered by the state, much like tax. This past practice is
used to justify the collection and administration of zakat by the state by those who
argue in favour of the role of the state in zakat collection.
During the era of Caliph Uthman, Islamic jurists classified assets subject to
zakat into two categories: ‘apparent assets’ and ‘non-apparent assets’ (al Qardawi,
2000, p. 117). ‘Apparent assets’ are assets that can be seen and counted by zakat
officers, such as agricultural produce and livestock, whereas ‘non-apparent assets’
are assets that cannot be easily seen and counted by zakat officers such as gold,
silver, or money because these assets can be easily hidden by the owner (al
6 Muslims believe that the Holy Qur’an is “the verbatim word of Allah or God, revealed to the Prophet
Muhammad”, while Sunnah or Hadith are recorded sayings and behaviours of the Prophet (Beekun &
Badawi, 2005, p. 113).
7 The four Rightly-Guided Caliphs consist of Abu Bakr (632-634 A.C.), Umar (634-644 A.C.), Uthman
(644-656 A.C.), and Ali (656-661 A.C.).

Qardawi, 2000). Caliph Uthman’s policy was that the state would only collect and
administer zakat from ‘apparent-assets’ because it was difficult to identify and
collect zakat from ‘non-apparent assets’ if the owner of assets was not cooperative
(Kahf, 2000). Uthman entrusted Muslims to calculate their zakat for ‘non-
apparent assets’ and distribute it directly to eligible beneficiaries (Kahf, 2000;
Samad & Glenn, 2010). Thus, the payment of zakat for ‘non-apparent assets’ then
became ‘a voluntary charitable activity’ that depended on an individual’s
conscience and religious piety.
Following the era of the four Rightly-Guided Caliphs, leaders of Islamic

states no longer have authority as religious leaders (Fauzia, 2008). There is a
separation between a political and religious leader. As a result, several Islamist
jurists have questioned the legitimacy of the state in the collection and
administration of zakat for both ‘apparent assets’ and ‘non-apparent assets’.
Jurists from the Maliki School of Law contend that the collection of zakat on both
‘apparent’ and ‘non-apparent’ assets must be state-enforced, while jurists from the
Hanafi and Shafi’i School of Law maintain that the government can only enforce
the collection of zakat for ‘apparent’ assets (al Qardawi, 2000). In contrast, jurists
from the Hanbali School of Law argue that the government may facilitate the
collection of zakat for both ‘apparent’ and ‘non-apparent’ assets, however,
Muslims are not obliged to give their zakat to the government (al Qardawi, 2000).
Because the Holy Qur’an and the Sunnah do not clearly state who must
collect zakat, and Islamic jurists have different opinions about the authority of the
State to enforce the collection of zakat, zakat collection and administration varies
across predominantly Muslim states (Kahf, 2000; Powell, 2009). A number of
Islamic states, such as Saudi Arabia and Pakistan treat zakat as a ‘tax’ that is
enforced and administered by a government authority, while a number of
predominantly Muslim states, such as Turkey and Syria, are not involved in the
collection and administration of zakat (Powell, 2009). Other predominantly
Muslim states, such as Egypt and Bangladesh, have facilitated the collection and
administration of zakat by creating a government-sponsored zakat agency,
however, the payment of zakat is voluntary (Powell, 2009). In states where the
payment of zakat is not enforced by law, the obligation to pay zakat is in practical

terms ‘voluntary’, as no institution or individual has a legal authority to impose its
payment and the government does not impose sanctions on individuals who do not
pay zakat (Ariff, 1991a; Salim, 2006).
2.5 HISTORY OF ZAKAT ADMINISTRATION IN INDONESIA
Islam was introduced to Indonesia by merchants from Gujarat, India, around

the 12th century (Wanandi, 2002) and has become the religion of choice for the
majority of the Indonesian population. The dominance of Islam is also reflected in
the number of mosques located within Indonesian communities – there were
approximately 644,000 mosques in 2010 (Melisa, 2012). Although the majority of
the Indonesian population is Muslim, Indonesia is not an Islamic country or a
totally secular country. It has a government ministry that is responsible for
administering religious affairs; however, religious choice and practice is left to
every individual. The freedom of religious choice and the practising of religious
obligations also extends to the giving of zakat.
Traditionally, Indonesian Muslims have given their zakat directly to the

poor or to the leader of their local mosque, who is usually the local Imam (Fauzia,
2008). The method of giving zakat to local Imams has been practised since the
beginning of Islam in Indonesia 8 (Salim, 2008). During the Dutch colonisation
period, 9 the colonial government prohibited native government officials from
being involved in the collection and distribution of zakat because the colonial
government was concerned that local government officials might misuse zakat,
which could lead to social unrest (Salim, 2008) 10. Indonesia was under Japanese
occupation from March 1942 to August 1945 and the Japanese occupation
authorities were also not involved in the collection and administration of zakat
(Fauzia, 2008). Indonesia gained independence in 1945 and the newly established
government continued the Dutch and Japanese policy with regards to the
8 C. Snouch Hurgronje – a prominent Dutch orientalist - provided an explanation that Islam was introduced
to Indonesia by merchants, not by conquest of the Arabic Kingdom, therefore the tradition of enforcing
zakat by the State is not recognised in Indonesia (Salim, 2008)
9 The Dutch colonisation period was from 1602 to 1943 (Kartodirdjo, 1987).
10 An example of the misuse of zakat funds during the colonial era was the unpaid loan by the Regent of
Cirebon. From 1903 – 1905, the Regent of Cirebon borrowed ƒ 400.00 from the Mosque Fund10 and this
was not paid back until his death (Fauzia, 2008, p. 123).

collection and administration of zakat (Salim, 2008). Thus, local Imams played an
important role in the collection and distribution of zakat during these periods
(Abdullah, 1991; Fauzia, 2008).
A local Imam collects and distributes zakat within his local neighbourhood,
with both donors and beneficiaries coming from his local congregational
membership. In performing his duty, a local Imam may be guided and assisted by
a committee drawn from the membership of the congregation. This committee is
run by volunteers who work part-time and temporarily, mostly during Ramadan
(Fauzia, 2008). The local Imam and the committee administers the collection of
zakat, the selection of zakat recipients, and the distribution of zakat to people who
are eligible in their neighbourhood (Fauzia, 2008).
The Indonesian government’s policy towards zakat administration changed

slightly during the Suharto era (1965–1998). During the early years of his
presidency, there was increased public demand for the involvement of the Central
Government in zakat collection and distribution. In response to this demand,
Suharto tasked three senior military officers to establish a national zakat
collection agency. He also stated that he would act as a national amil until the
national zakat agency was established. Suharto urged all government officials to
support zakat collection by the State (Abdullah, 1991; Salim, 2008). In response
to Suharto’s appeal, several provincial and local governments created provincial
and local government-sponsored zakat agencies. 11 For example, the Province of
11 The structure of BAZNAS follows the structure of Indonesian governmental system that consists of:
a. The Central Government
b. Provincial governments. The executive head of the provincial governmental system is a Governor
who is directly elected by its citizens. There is also a parliament at the provincial level that
monitors provincial government and produce legislation.
c. Local government. Local governments consist of a regency or city. A regency is led by a regent
while a city is led by a mayor. A regency covers a rural area where most of its citizens depend on
farming. A city is an urban area. Local parliament exists at the regency or city levels.
d. District. Regencies and cities are divided into districts. A district is led by a civil servant called
“Camat”. There is no parliament at the district level.
e. Village. The district is divided into villages. Villages in cities are led by a civil servant appointed by
the local government while villages in rural areas are led by a person who is elected by the
villagers.
f. RW (Rukun Warga) and RT (Rukun Tetangga). A RT is an association of several households that
live in a village. A RW is an association of several RTs. RW and RT are not part of a formal
governmental system. The Chiefs of RT and RW are elected by individuals who live in a
neighbourhood. The Chiefs of RT and RW are usually a local informal leader and have a good
knowledge about poor households in their neighbourhood. Therefore, their voices are considered

Jakarta created a government-sponsored agency at the provincial level in 1968 and
the Province of East Kalimantan created a government-sponsored agency at the
provincial level in 1972 (Salim, 2008).
During his time as the national amil, Suharto was only able to collect zakat
of approximately Rp20 million annually (Salim, 2006). He considered the amount
of zakat collected to be too small and, therefore, resigned from his role as a
national amil and aborted the plan to establish a national zakat collection agency
in 1974 (Salim, 2006). Following his resignation, provincial and local government
zakat agencies continued to collect and distribute zakat at provincial and local
levels.
A provincial government-sponsored zakat agency (provincial BAZNAS) is

created by a provincial government, while a local government-sponsored zakat
agency (local BAZNAS) is created by a local government. There are 33 provincial
BAZNAS and 434 local BAZNAS (Meutia, 2012). A provincial BAZNAS
collects donations from the employees of the provincial government and
provincial government-owned companies. A local BAZNAS collects zakat
donations from the employees of the local government and local government-
owned companies and other individuals who live in the local city or regency.
Provincial and local BAZNASs receive funding from the level of government that
created them and are required to report to the provincial or local government that
created them.
Provincial and local BAZNASs faced public criticism in the 1980s.

Although provincial and local BAZNASs received support from local and
provincial governments, they did not perform well. Critics argued that provincial
and local BAZNASs did not provide sufficient information to the public about the
amount of zakat collected and the usage of zakat funds (Lessy, 2012), while
others stated that provincial and local BAZNASs did not have sufficient human
resources with the expertise to execute their programmes (Abdullah, 1991).
Consequently, provincial and local BAZNASs could not gain public trust and
important by government and zakat agencies. Zakat agencies usually ask for a recommendation
from the Chief of RT and RW before giving assistance to a poor individual.

were only able to collect a small amount of zakat compared to the potential
economic value of zakat (Abdullah, 1991; Fauzia, 2008). This motivated a
number of pious and well-educated altruistic Muslims to create private zakat
collection agencies or Lembaga Amil Zakat (LAZ) (Fauzia, 2008). The first
private zakat agency was created by the employees of the Bontang LNG Company
in 1986. It was followed by the establishment of other private zakat agencies, such
as Dompet Dhuafa Republika and Pos Keadilan Peduli Umat, in the early 1990s.
The exact number of private zakat agencies is currently unavailable. Forum

Zakat – an association of zakat agencies 12 – states on its website that the
membership of Forum Zakat is 200 zakat agencies. However, only 18 private
zakat agencies are officially registered with the Indonesian Taxation Office and
the Ministry of Religious Affairs (Halimatusa'diyah, 2015). The registered zakat
agencies have mostly been created by large private companies or large Islamic
not-for-profit organisations. Several not-for-profit organisations that collect zakat
have not sought legal status as an official private zakat agency due to the
difficulty in obtaining a licence from the Government (Fauzia, 2008). In addition,
regulations that prohibit unlicensed not-for-profit organisations from collecting
zakat are not enforced.
Private zakat agencies vary in many aspects, such as their size and the focus
of their activities. Large private zakat agencies operate across many regions in
Indonesia, whereas small private zakat agencies may only operate in one or two
regions. Several private zakat agencies focus on poverty eradication, while others
focus on Islamic proselytisation. A small private zakat agency collects
approximately AUD 150,000 of zakat, while the largest private zakat agency can
collect approximately AUD 10,000,000 of zakat annually (Meutia, 2012).
Most private zakat agencies are managed by full time professionals who
receive a salary for their work (Fauzia, 2008). The governance structure of a
private zakat agency generally consists of a Board of Trustees and executives.
12 Only two government-sponsored zakat agencies have become a member of the Forum Zakat.

Private zakat agencies do not receive funding from the government and Syari’ah 13
prescribes that a zakat agency is only allowed to allocate one eighth of zakat
collected to finance its operating expenses. This Syari’ah provision restricts the
amount of zakat funds that can be used for administrative purposes. Therefore,
efficiency in collecting and distributing zakat is important (Evidia, 2012). This
indicates that financial performance is important for the survival of private zakat
agencies.
Although many private and provincial/local government-sponsored zakat

agencies exist, several Islamic scholars have argued that the Central Government
should be involved in the collection and distribution of zakat (Fauzia, 2008;
Lessy, 2012). This argument resurfaced following Suharto’s resignation in 1998.
The Parliament responded to this demand by passing Law 38/1999 on Zakat
Management that stipulated the establishment of a Central Government-sponsored
zakat agency. The Central Government established a national zakat agency or the
central Badan Amil Zakat National (BAZNAS) in 2001. Following the
establishment of the Central BAZNAS, three tiers of government-sponsored zakat
agencies exist and follow the structure of the Indonesian governmental system.
Law 38/1999 was subsequently amended by Law 23/2011 on Zakat

Management. It worth noting that both zakat management laws do not enforce the
payment of zakat. Both laws only advise Muslims to self-assess their zakat
obligation and pay their zakat to zakat agencies. Therefore, payment of zakat in
Indonesia is voluntary. Zakat Management Law 23/2011 gives dual roles to the
Central BAZNAS. First, as a national zakat collection agency that collects zakat
from the employees of the Central Government, Central Government-owned
companies, and national and multinational corporations that have a head office in
Jakarta to be distributed to eligible beneficiaries in all regions in Indonesia.
Secondly, the Zakat Management Law also gives authority to the Central
BAZNAS to issue zakat regulations and to monitor the collection and distribution
13 Syari’ah refers to Islamic rules based on the teachings of the Holy Qur’an and Sunnah that guides
Muslims on how they must/should behave in all spheres of life (El-Halaby & Hussainey, 2015; Rammal
& Parker, 2012).

of zakat by other zakat agencies. Table 2.2 summarises and compares the three
different types of zakat agencies in Indonesia.

Table 2-2 Comparison of Three Zakat Agencies in Indonesia
Local Imam – Community- Government-sponsored Zakat Agencies Private Zakat Agencies

based Zakat Committees Central BAZNAS BAZNAS Province BAZNAS Local (LAZ)
Form Local Imam is a leader of An organisation created by the An organisation created by a An organisation created a A not-for-profit
local Mosque and is usually Central Government but does provincial government but local government but does organisation
assisted by a community- not form part of the does not part of the not part of governmental
based zakat committee. governmental system. governmental system. system
Continuity of • Temporary – ad-hoc. Continuously Continuously Continuously Continuously
Organisation • Usually only collect zakat
during the fasting month.
• The committee is usually
established before the
fasting month and
dissolved after the fasting
month has ended.
Report to Community President through the Minister • Central BAZNAS • Central BAZNAS • Central BAZNAS
of Religious Affairs • Governor • BAZNAS Province • Public
Public • Public • Regent or mayor
• Public
Governance Local Imam assisted by a • A board and executive. • A board and executive. • A board and Executive. • Board and executive
community-based zakat • Board members consist of 3 • Board members consist of 5 • Board members consist • The composition of
committee government officials and 8 persons of 5 persons board and executive
public representatives. • No government officials sit • No government official varies across private
• Appointed by the President on the board sits in board zakat agencies
based on a recommendation • The executive and staff • The executive and staff • The executive and
from Parliament. consist of full time paid consist of full time paid staff consist of full
• The executive and staff employees and they are not employees and they are time paid employees
consist of full time paid a civil servant. not a civil servant.
employees and they are not
civil servants.
Board Tenure Ad-hoc Every term is 5 years and the Every term is 5 years and the Every term is 5 years and Not regulated by
maximum tenure is 2 terms or maximum tenure is 2 terms or the maximum tenure is 2 legislation and depend on
10 years 10 years terms or 10 years every organisation policy

Local Imam – Government-sponsored Zakat Agencies Private Zakat Agencies
Community-based Zakat
Central BAZNAS BAZNAS Province BAZNAS Local (LAZ)
Committees
Management Local Imam assisted by a Professional (Full time-paid staff) Professional (Full time-paid Professional (Full time-paid Professional (Full time-paid
community-based staff) staff) staff)
committee
Legal Basis Formed by the members of President Decree Governor Decree Regent or Mayor Decree Foundation based on legal deed
a local mosque
congregation
Funding Zakat (Amil Fund) • Zakat (Amil Fund) • Zakat (Amil fund) • Zakat (Amil Fund) Zakat (Amil fund)
• The Central Government • Provincial government • Local government
Working Area Local community All regions in Indonesia Provincial, according to the Local, according to the Depends on the size of LAZ, a
geographical region of the geographical region of the large LAZ can cover all regions
provincial government local government, although it in Indonesia but a small LAZ
although it is not prohibited to is not prohibited to distribute may only focus on a local or a
distribute zakat to other zakat to other regions. provincial area.
provinces.
Donors Local Muslims The employees of: The employees of: The employees of: • Muslims from all regions
• The Central Government • Provincial government • Local government in Indonesia.
institutions institutions institutions, • Private zakat agencies can
• State-owned companies. • Provincial government- • Local government-owned open a branch at every
• National and multinational owned companies companies province or region.
private (for-profit) companies • Muslims who reside in a
local region.
Beneficiaries Local Muslims Muslims in all regions in Muslims who live in a Muslims who live in a city or Muslims in all regions in
Indonesia province where the provincial regency where the local Indonesia
BAZNAS is established. BAZNAS is established.
Programmes and Giving financial assistance Focuses on community Similar to the programmes Ssimilar to the programmes Every private zakat agency has
activities to poor people development, poverty eradication, and activities of the Central and activities of the Central a different focus but their
health, education, Islamic BAZNAS because provincial BAZNAS, because local activities are mostly related to
proselytistion and disaster relief BAZNASs follow the BAZNASs follow the poverty eradication, health,
assistance, for example, merit- programmes and activities of programmes and activities of education, providing
based scholarships for students the Central BAZNAS the Central BAZNAS humanitarian assistance,
from low income families, free Islamic proselytisation, and
medical services, and financial disaster relief assistance.
assistance for small businesses.
Source: Fauzia (2008, p.203)

2.6 ZAKAT REGULATION AND DISCLOSURE REQUIREMENT IN
INDONESIA
Zakat Management Law 39/1999 was the first regulation that regulated
reporting and disclosure information by zakat agencies. Law 39/1999 states that
all government-sponsored zakat agencies must report to Parliament annually,
while private zakat agencies were not obliged to report to Parliament. However,
Law 39/1999 did not state what should be reported by government-sponsored
zakat agencies. Law 39/1999 also states that zakat agencies can appoint a public
accountant to audit their financial statements. Because Law 39/1999 only states
that “zakat agencies can appoint public accountants to audit their financial
statement”, it implies that a financial audit is not mandatory. Although it is not
mandatory, several private zakat agencies voluntarily appoint public accountants
and publish the results of their audits (Fauzia, 2008).
The provision for zakat agencies to undertake a voluntary audit has

prompted the Indonesian Institute of Accountants (Ikatan Akuntan Indonesia or
IAI), as the accounting standard setter in Indonesia, to issue PSAK (Pernyataan
Standar Akuntansi Keuangan) 109 on Accounting Standard for Zakat and Islamic
Voluntary Donations on 6 April 2010. This accounting standard serves as a guide
for zakat agencies on the content of information that should be reported in a
financial statement. Although the accounting standard is not part of the legislation
in Indonesia, a zakat agency must comply with the accounting standards issued by
the IAI to obtain an unqualified audit opinion.
PSAK 109 states that general purpose accounting standards apply to zakat
agencies, except for matters that are specifically regulated in this standard, such as
the requirement to report halal and non-halal funds separately. According to this
standard, the financial statements of the zakat agency consist of:
1. balance sheets (statement of financial position);
2. statement of changes in funds;
3. statement of changes in managed assets;
4. statement of cash flows;

5. notes to the financial statements.
In their financial statements, zakat agencies must:
1. separately disclose funds from zakat, funds from voluntary donations,

funds for the amil, and funds from non-halal 14 sources;
2. disclose the policy in the zakat distribution, such as the policy of

selecting beneficiaries;
3. disclose the policy in allocating zakat funds to beneficiaries and amil

(the proportion for beneficiaries and for the zakat administrators);
4. disclose the methods used to determine the fair value of non-monetary

zakat;
5. disclose information about the amount of zakat used to finance the

activities of zakat agencies and the amount of zakat distributed to
beneficiaries;
6. disclose any related party transactions between zakat administrators and

zakat beneficiaries.
In addition to financial information, PSAK 109 states that zakat agencies

must disclose performance information in collecting and distributing zakat.
However, this standard does not provide further guidance on the definition of
performance, how to measure performance, and what kind of performance
information should be disclosed by zakat agencies.
Zakat Management Law 38/1999 was amended by Zakat Management Law

23/2011 to improve the accountability and transparency of zakat agencies
(Islahudin, 2012). This new law states that all zakat agencies must be audited
without exception, even small agencies. Article 19 Zakat Management Law
23/2011 stipulates that every organisation that collects and distributes zakat is
required to submit a report to the Central BAZNAS. The report must contain audit
information about zakat collection and distribution. Zakat Management Law
14 Non-halal funds are all revenues from sources that are not permissible according to Syari’ah, such as
interest from a non-Islamic bank.

23/2011 also states that the Central BAZNAS must report to the Central
Government on the usage of government funding, the administration of zakat
collected by the Central BAZNAS, and a national aggregated account of zakat
collected by all zakat agencies in Indonesia.
In addition, government issued Government Regulation 14/2014 on the

Implementation of Zakat Management Law. This Government Regulation
provides guidance relating to the implementation of Zakat Management Law.
Chapter IX Article 76 Government Regulation 14/2014 states that zakat agencies
must report to the Central BAZNAS. This report must contain “accountability and
performance [information] on the utilisation of the zakat fund and other voluntary
donations”. However, this regulation does not provide further explanation
regarding the contents of this accountability and performance information.
Furthermore, this legislation also does not specify whether zakat agencies must
publish their audited financial reports to the public.
2.7 SUMMARY
This chapter has provided an overview about zakat and zakat administration.
Zakat is different from voluntary charitable giving, as it is a religious duty and the
beneficiaries of zakat are determined in the Holy Qur’an. However, the Holy
Qur’an is silent on who should collect and administer zakat. Because the Holy
Qur’an does not clearly specify who must collect and administer zakat, the system
of zakat collection and distribution is different in every Muslim dominated
country.
In Indonesia, the government takes a voluntary approach with regards to the

payment, collection, and administration of zakat. Traditionally, Muslims gives
zakat directly to beneficiaries or local Imams. The government created
government-sponsored agencies to collect and administer zakat in 1968, while the
first private zakat agency was established in 1986. Therefore, there are three types
of zakat agencies in Indonesia: local Imams; government-sponsored zakat
agencies; and private zakat agencies. This study explores the understanding of
accountability from the perspective of both the administrators of zakat agencies
and the donors.

Chapter 3: Literature Review and
Research Perspective
3.1 INTRODUCTION
The aim of this chapter is to discuss the empirical literature on

accountability in faith-based organisations and the research perspective adopted in
this study. This chapter is structured as follows. Section 3.2 discusses why zakat
agencies should be accountable. This is followed by a discussion of the empirical
evidence on accounting and accountability in faith-based organisations in Section
3.3. Section 3.4 highlights donor’s information requirements and the
accountability gap. The implications from the literature review for the current
study are discussed in Section 3.5. Following this, the philosophical perspectives
adopted in this study are discussed in Sections 3.6 to 3.9. Finally, Section 3.10
provides a summary of this chapter.
3.2 WHY SHOULD ZAKAT AGENCIES BE ACCOUNTABLE?
Accountability is important for any organisation and giving an account is “a

pervasive feature of organisational and social life” (Roberts, 2001, p. 1555).
However, justification is required as to why an individual or an organisation has
an implicit and/or explicit obligation to render an account to another (Day &
Klein, 1987). The obligation to give account can arise from a transfer of resources
from resource providers to an organisation (Cordery & Baskerville, 2011;
Ebrahim, 2003b; Hyndman & McMahon, 2010).
Most organisations are not self-sufficient; therefore, they require financial

and non-financial resources from individuals or other organisations. Resources are
not free to obtain, because resource providers expect their interests to be satisfied
by the organisation that received the resources (Hill & Jones, 1992). For example,
shareholders provide financial capital to a private (for-profit) organisation,
expecting that the private organisation will provide a return on their investment. In
charitable organisations, resource providers, such as donors and volunteers, do not
Chapter 3: Literature Review and Research Perspective 35

receive a direct benefit from providing resources because the resources are used
for the benefit of beneficiaries. Although resource providers do not receive a
direct benefit from providing resources to a charitable organisation, they do
expect that the organisation will use the resources entrusted to achieve
organisational missions that the donors support. To assess to what extent an
organisation has used its resources to achieve its organisational mission, the
disclosure of information is needed. Therefore, transfer of resources provides
legitimacy for resource providers to demand accountability from an organisation.
Accountability is also linked to trust and the continuity of support from

society. Many studies have indicated that accountability can induce trust and trust
is required to attract resources (Furneaux & Wymer, 2015; Palmer, 2013; Ryan &
Irvine, 2012a; Swift, 2001; Yasmin, et al., 2013). Trust is particularly important
for organisations that are involved in a non-reciprocal transfer of resources, such
as charitable organisations. Because the welfare of resource providers is not
affected by the activities of charitable organisations, resource providers can easily
sever their support of a charitable organisation if they find a charitable
organisation is not trustworthy. Resource providers are more likely to trust
charitable organisations that are accountable than charitable organisations that are
not accountable (Furneaux & Wymer, 2015). Therefore, demonstrating
accountability by providing information to justify the appropriateness of the usage
of resources is important for charitable organisations.
Yasmin et al. (2013) claimed that trust for an organisation can be based on
identity (“identity-based trust”) or knowledge (“knowledge-based trust”) (p. 117).
In identity-based trust, familiarity with individuals who administer an organisation
creates trust, while in knowledge-based trust, it is through familiarity with the
activities of an organisation that trust is developed (Yasmin, et al., 2013).
Accountability can create and foster knowledge-based trust because it can be used
to demonstrate a good stewardship of resources (Broadbent, Dietrich, & Laughlin,
1996; Connolly, et al., 2011, 2012; Furneaux & Wymer, 2015; Ijiri, 1983;
Parsons, 2007; Swift, 2001; Tinkelman & Mankaney, 2007).
36 Chapter 3: Literature Review and Research Perspective

The importance of demonstrating accountability to foster trust is also true
for zakat agencies (Fernandez, 2009; Halimatusa'diyah, 2015; Lessy, 2012;
Powell, 2009). Similar to charitable organisations, zakat agencies also engage in
non-reciprocal transfers of resources because zakat agencies collect zakat and
other donations from Muslims to support their charitable activities for the benefit
of beneficiaries (Fauzia, 2008). While the donors of zakat agencies do not expect
to receive direct material benefit from giving zakat to zakat agencies, a zakat
agency still needs to provide a range of information, such as the amount of zakat
collected and the usage of the zakat funds to demonstrate its accountability. By
disclosing accountability information, it is expected that public trust in zakat
agencies will increase, as well as the number of Muslims who give zakat to them.
Another reason for why a charitable organisation should be accountable is

the increasing competition for donations in charitable sectors. A number of
authors have argued that competition between charitable organisations for
donations encourages charitable organisations to disclose accountability
information (Connolly & Hyndman, 2004; Schmitz, Raggo, & Bruno-van
Vijfeijken, 2012). Several charitable organisations use accountability to
demonstrate that they are better than other charitable organisations; in other
words, accountability gives them a competitive advantage over their competitors
(Hyndman & McMahon, 2010; Schmitz, et al., 2012).
Indonesian zakat agencies also operate in a competitive environment

because many zakat agencies collect zakat. Furthermore, Indonesian Muslims also
have choices regarding whether to give zakat directly to beneficiaries or to a zakat
agency. Arguably, accountability can be used by a zakat agency to gain a
competitive advantage over its competitors to attract donations. Muslims are more
likely to give zakat to a zakat agency that is accountable than to a zakat agency
that is not accountable (Powell, 2009).
On the other hand, limited disclosure of information can discourage

Muslims from giving zakat to zakat agencies. An example of limited disclosure
that discourages Muslims from giving zakat to zakat agencies was reflected in a
study about peasants’ resistance to giving zakat to the Malaysian Zakat Agency

(Scott, 1987). Scott (1987) noted that Malay peasants described the Malaysian
Zakat Agency as “something of a Bermuda Triangle into which their contributions
disappear, never to be seen again” (p. 433). This does not mean that the Malaysian
Zakat Agency misappropriated zakat funds, but that a lack of transparency and
communication provided the public with limited knowledge about the usage of
zakat (Scott, 1987). As a result, Malay peasants only gave a portion of their zakat
to the Malaysian Zakat Agency and distributed the rest of their zakat directly to
poor individuals in their neighbourhood (Scott, 1987). A lack of transparency in
zakat distribution also occurred in Indonesia (Lessy, 2012), in which it was argued
that “if they (Muslims) give zakat through institutions they might not know who
would receive the zakat” (p. 112).
The rationale for a charitable organisation to be accountable also emanates

from legal requirements. Crofts (2014) provided evidence that regulation can
drive an organisation to be accountable. Usually a market mechanism is used to
force an organisation to be accountable; however, this mechanism is absent in
charitable organisations, which do not have shareholders (Collier, 2008; Goodin,
2003). In the absence of shareholders and a market mechanism, regulations are
required to ensure that the acts of a charitable organisation are in accordance with
the interests of their stakeholders (Connolly, et al., 2011; Hyndman & McDonnell,
2009; Weidenbaum, 2009). Regulations provide an explicit expectation about
obligation that should be met by an organisation and lead to legal accountability
(Crofts, 2014; Hill & Jones, 1992). For example, the Internal Revenue Service
(the US tax authority) requires not-for-profit organisations in the US to publish
their tax return forms (Form 990), making the financial and non-financial
information of not-for-profit organisations accessible to the general public
(Ebrahim, 2009). While regulations for the disclosure of information are limited,
legislation requires zakat agencies to report regularly to the Central BAZNAS and
government, indicating a legal obligation to provide information about the usage
of zakat to the government and the Central BAZNAS.

3.3 EMPIRICAL EVIDENCE REGARDING SACRED AND SECULAR
ACCOUNTABILITY IN FAITH-BASED ORGANISATIONS
The main characteristic of faith-based organisations is the influence of

religious teaching on their identity and mission (Berger, 2003). A faith-based
organisation is not necessarily involved in religious activities, however, their
values are shaped by religious beliefs (Yasmin, et al., 2013). The influence of
religious beliefs can be very dominant in faith-based organisations (Goodin,
2003), influencing their views on the importance of financial accountability.
Because financial accountability is usually disseminated through financial
reporting (Stewart, 1984), discussion of financial accountability in faith-based
organisations also involves the role of accounting and financial reports in the
accountability of faith-based organisations.
The literature on accountability in faith-based organisations is dominated by

debate focused on sacred and secular tension in faith-based organisations.
Laughlin (1988, 1990) introduced the concept of ‘sacred versus secular’ when he
investigated the accountability of the Church of England. He described sacred and
secular affairs as mutually exclusive. Accounting is a secular activity that
facilitates secular accountability. As a secular activity, accounting should not
interfere with the core sacred activity of the Church in preserving the Christian
belief. The Church will support secular accountability practices, if these activities
do not interfere with the sacred mission of the Church. The existence of a sacred
and secular divide was cautiously supported by Booth (1995). Although he
supported its existence, he admitted that an individual’s belief, and the need for
external resources, might influence the level of support or opposition to secular
activities in the Church (Booth, 1995).
The existence of sacred and secular tension has been questioned by a

number of commentators (e.g. Hardy & Ballis, 2005; Irvine, 2002; Jacobs &
Walker, 2004; Jayasinghe & Soobaroyen, 2009; Quattrone, 2004). These authors
argued that secular accountability in religious organisations is influenced by many
elements beyond the sacred and secular dichotomy. Focusing on the role of
financial reporting in the accountability of the Salvation Army in England, Irvine
(2002) found that secular accountability mechanisms, such as a financial reports,

were important for the Salvation Army to gain public support. She argued that
sacred and secular tensions might only occur in well-established religious
organisations that do not depend on public funding (Irvine, 2002). In the Roman
Catholic Church, Bigoni, Gagliardo, and Funnell (2013) also found that
accounting is used to provide assurance that the wealth of the Church is used to
achieve religious agendas. Therefore, the accountability of faith-based
organisations is impacted by the need for external resources.
On the other hand, some researchers have suggested that the development of
accountability in religious organisations is more complex than the sacred and
dichotomy and the need for resources (Abdul-Rahman & Goddard, 1998;
Jayasinghe & Soobaroyen, 2009; Quattrone, 2004). Based on an investigation into
the development of sophisticated accountability practices in the Society of Jesus
from the 16th to the 17th centuries, Quattrone (2004) suggested that the sacred and
secular dichotomy and the need for external resources is not sufficient to explain
the role of accounting in religious organisations. He maintained that the
development of accounting in a religious organisation is a result of the interaction
of many elements, such as theological, religious, institutional, and social factors.
Jacobs (2005) argued that sacred and secular tension depends on the religious
beliefs of every individual who leads an organisation and reflects the worldview
of Christians. Drawing on Studstill (2000), Jacobs (2005) suggested that sacred
and secular affairs are not mutually exclusive but rather a continuum of
experience. The position of individuals in this spectrum depends on their
perceptions, values, and attitudes toward secular and religious activities.
The accountability of faith-based organisations is also influenced by the

attitude of several organisational actors to the role of accounting to discharge
accountability. The presence of occupational groups that support or oppose the
use of accounting for accountability can influence the role of accounting in faith-
based organisations (Booth, 1993). Abdul-Rahman and Goddard (1998)
investigated the role of accounting in management and accountability in two
Malaysian Islamic organisations. Although the individuals who managed these
organisations shared similar understandings of sacred and secular affairs, the role
of accounting was very different in these organisations. Thus, the authors argued

that the sacred and secular dichotomy was not sufficient to explain the role of
accounting in the accountability of these Islamic religious organisations (Abdul-
Rahman & Goddard, 1998). They contended that the attitude of leaders towards
accounting determines the role of accounting in accountability. If the leaders
consider accounting information to be useful, accounting will play an important
role in the discharge of accountability, otherwise accounting is considered to be an
insignificant activity in organisational life.
Laughlin (2007) argued that secular and sacred activities are relative
concepts, and that all core and important activities for an organisation are
considered sacred activities, while less important activities are considered secular
activities. Therefore, the understanding of sacred and secular differs in every
organisation. An organisation might consider financial accountability to be a
sacred activity, while another organisation might consider financial accountability
to be a secular activity (Laughlin, 2007). As an example, Laughlin (2007)
suggested that accounting is a sacred activity in a for-profit organisation, but not
in the Church of England.
Crofts (2009) argued that the debate on sacred and secular accountability in
a faith-based organisation is caused by the ambiguity of the classification of
financial accountability as either a sacred or secular activity. If financial
accountability is considered to be part of stewardship activities, it will be
considered a sacred activity and important (Cordery, 2006; Crofts, 2009).
Otherwise, financial accountability will be considered a secular activity and less
important than sacred activities.
Previous reviews of the literature have indicated that the accountability of

religious organisations is influenced by many factors, such as the views on sacred
and secular affairs (Crofts, 2009; Laughlin, 2007), the need for external resources
(Bigoni, et al., 2013; Irvine, 2002), the religiosity of individuals (Booth, 1993;
Jacobs, 2005), the presence of occupational groups and organisational actors that
support or oppose the use of accounting (Abdul-Rahman & Goddard, 1998;
Booth, 1993), the level of trust for an organisation (Jayasinghe & Soobaroyen,
2009), and the understanding of external stakeholders regarding the notion of

accountability (Hardy & Ballis, 2013). However, these studies focused only on
one type of faith-based organisation, that is, religious organisations such as
churches or temple (Bigoni et al., 2013; Hardy & Ballis, 2013; Irvine, 2002; Jacob
2005; Jayasinghe & Soobaroyen, 2009). Therefore, an investigation into how
accountability is understood and practised in different types of faith-based
organisations is required to enrich understanding of the notion of accountability.
3.4 DONOR’S INFORMATION REQUIREMENTS AND THE

ACCOUNTABILITY GAP
As discussed in Section 3.2., resource providers can legitimately ask an

organisation to give an account. Resource providers can sever their support to an
organisation if they consider the organisation is not accountable because the
organisation cannot provide information that satisfies the need of resource
providers. Thus, it is crucial for an organisation to disclose relevant and
appropriate information for accountability purposes.
Previous accountability studies in the not-for-profit sector have pointed to

the existence of an accountability gap, because the information provided by an
organisation does not meet the information required by donors (Connolly &
Hyndman, 2004; Hyndman, 1990, 1991). Hyndman (1990) asked donors to rank
the importance of 14 types of information that can usually be found in annual
reports. He then compared the information preferred by donors with information
that could be found in annual reports. His study concluded that an accountability
gap existed because information deemed important by donors was not available in
the annual reports. For example, donors consider information about organisational
goals and performance to be important, but this information is not provided by
not-for-profit organisations. On the other hand, the most frequently disclosed
financial information for not-for-profit organisations, such as an audited funds
flow statement and audited balance sheets, is considered the least important
information by donors.
Further study by Hyndman (1991) suggested that this accountability gap

was not caused by a lack of understanding of the types of information required by
external stakeholders. Hyndman (1991) found that the administrators and the

auditors of not-for-profit organisations are aware that performance information is
important for donors but they do not disclose this information. He indicated that
the accountability gap might be caused by limited motivation to provide
performance information and complacency regarding the adequacy of existing
reporting practices (Hyndman, 1991).
Although smaller, such an accountability gap was also observed in

subsequent studies in the UK. Connolly and Hyndman (2004) compared
performance information disclosed by British and Irish charities with information
required by the donors identified in Hyndman’s (1990) study. They found that the
disclosure of several performance indicators increased; however, the
accountability gap still existed and the disclosure of efficiency information, such
as administration costs to total costs ratio decreased significantly (Connolly &
Hyndman, 2004). Connolly and Hyndman (2004) suggested that cost constraints,
the possibility of information misinterpretation, and satisfaction with the existing
reporting practices might discourage charitable organisations from voluntarily
disclosing accountability information.
Ryan and Irvine (2012a) found that Australian not-for-profit organisations

do not disclose sufficient information to explain unusual expenditure patterns in
their annual reports. Their study indicated that this lack of narrative information
can lead to an accountability gap. While their study does not make a comparison
between the expectation of stakeholders and the information provided by a not-
for-profit organisation, their studies has identified that not-for-profit organisations
may not sufficiently disclose information to their stakeholders and this can lead to
an accountability gap.
3.5 IMPLICATIONS FROM THE LITERATURE REVIEW
A number of studies have investigated accountability in the context of faith-

based and secular not-for-profit organisations. Berger (2003) defined a faith-based
organisation as an organisation in which its mission is derived from religious
teachings. Based on this definition, zakat agencies can be classified as a faith-
based organisation because zakat agencies are created to collect and distribute
zakat or Islamic faith-based alms giving. However, zakat agencies differ from

most faith-based organisations investigated in previous studies because zakat
agencies are only involved in charitable activates and do not provide religious
services; previous studies have mostly focused on the accountability of
organisations that provide religious services, such as a church or temple (Cordery,
2006; Irvine, 2002; Jacobs & Walker, 2004; Jayasinghe & Soobaroyen, 2009;
Laughlin, 1988, 1990; Quattrone, 2004) or in the context of developed countries
(Crofts, 2009, 2014; Yasmin, et al., 2013). In the context of secular charitable
organisations, previous studies have demonstrated the existence of an
accountability gap (Connolly & Hyndman, 2004; Hyndman, 1990, 1991). This
suggests that there is scope to make a significant contribution to the literature by
examining the understanding of accountability in a different organisational
context, that is, Islamic faith-based charitable organisations in a developing
country.
This study aims to fill this gap by investigating the accountability of

Indonesian Islamic zakat agencies. As discussed in Section 3.2, zakat agencies are
similar to charitable organisations because zakat agencies engage in a non-
reciprocal transfer of resources by collecting and distributing faith-based alms
giving. Therefore, this study extends the literature on accountability by
investigating the understanding of accountability in Islamic faith-based charitable
organisations. The following sections highlight the research perspective adopted
to investigate the accountability of Indonesian zakat agencies.
3.6 PHILOSOPHICAL PERSPECTIVE TO ACCOUNTING RESEARCH
Every research project should be based on a set of basic beliefs about the
world (Laughlin, 1995). These basic beliefs are referred to as ‘worldviews’
(Creswell, 2009) or ‘paradigms’ (Guba & Lincoln, 1994). Research paradigms
guide the whole process of inquiry and provide perspectives or lenses for
explaining or understanding an empirical phenomenon (Laughlin, 2007).
Accountability, which is the main focus of this study, is a socially constructed
concept (Bovens, 2007; Cooper & Owen, 2007; Messner, 2009), a chameleon like
phenomenon that may be interpreted differently by different people in different
contexts (Sinclair, 1995). Thus, this study subscribes to the view that

accountability is a product of human interaction and accepts that a comprehensive
accountability theory may not exist.
Research paradigms represent the assumptions that a researcher makes

about the nature of social science and the nature of society (Burrell & Morgan,
1979; Chua, 1986; Hopper & Powell, 1985). The nature of social science consists
of four interconnected elements – ontology, epistemology, human nature, and
methodology – while the nature of society can be assumed to be either orderly or
disorderly (Burrell & Morgan, 1979, p. 1&10). These four elements are distinct,
but inter-related in such a way that a certain position in one element will influence
the position that should be taken in other elements (Chua, 1986; Hopper &
Powell, 1985).
Ontology refers to the basic assumptions about the fundamental nature of

the empirical phenomenon being investigated (Neuman, 2011). There are two
opposing positions within social science: realism and nominalism (Chua, 1986). A
realist will argue that reality exists external to the observer and can be discovered
using scientific methods (Hopper & Powell, 1985). In contrast, a nominalist will
argue that reality that is independent from human perception does not exist,
because social reality consists of labels and concepts that are constructed by
humans during their interactions (Chua, 1986).
Epistemology deals with the issue of how researchers understand the

phenomenon being investigated, what the nature of the relationship between the
researcher and the object of study is, and what criteria should be used to determine
the validity of the observer’s understanding about the reality (Neuman, 2011).
Epistemological positions are related to assumptions about reality or ontological
beliefs. A realist, who argues for the existence of reality in social science, will
have a positivist epistemological perspective (Burrell & Morgan, 1979).
Positivists use observation to gather empirical evidence to test hypotheses that are
developed from existing theories. Theory is considered valid as long as empirical
evidence does not falsify the theory (Chua, 1986). Research findings extend
existing theories and can be generalised to other contexts. In contrast, a nominalist
will have an anti-positivist epistemological perspective. Anti-positivists argue that

observations will not produce an understanding on the empirical reality, because
what is considered to be ‘truth’ is actually a result of human interaction with the
particular object or phenomenon (Chua, 1986). Anti-positivists believe that
knowledge can only be produced by investigating the subjective interpretation of
individuals who experience empirical phenomena in specific settings (Chua,
1986). Because truth is subjective and research findings are context specific, prior
theory was not relevant for the present study. Every empirical investigation will
produce a new theory, however, they cannot be applied to other contexts
(Laughlin, 1995).
Perspectives on human nature are based on assumptions about the

relationship between human agency and the environment (Hopper & Powell,
1985). There are two opposing views with regards to the nature of human
behaviour: determinism and voluntarism. These are also related to ontological and
epistemological beliefs. Realists believe that human actions are deterministic and
that human behaviour is a function of social pressure and situations; therefore,
human actions can be predicted by identifying the variables that drive the
behaviour (Neuman, 2011). On the other hand, a nominalist believes in
voluntarism (Neuman, 2011). Voluntarism assumes humans have the capacity to
make conscious decisions and manipulate their environments (Neuman, 2011).
Individual actions are determined by subjective individual consideration and
social settings; however, people are also capable of changing those settings.
The methodology chosen to investigate a social phenomenon is dependent

on ontological and epistemological perspectives and assumptions about human
nature (Hopper & Powell, 1985). Methodology deals with selecting the
appropriate research methods to collect empirical evidence. Those who believe
that reality exists and can be observed objectively, and that human behaviour is
predictable, will use a nomothetic approach to investigate an empirical
phenomenon (Neuman, 2011). A nomothetic approach puts emphasis on adhering
to systematic procedures and techniques in conducting research. Empirical data is
collected using quantitative methods and statistical analysis to test hypotheses. On
the other hand, those who hold a nominalist, anti-positivist, and voluntarist view
use an ideographic approach to investigate an empirical phenomenon (Neuman,

2011). The ideographic approach emphasises the importance of people’s
subjective experience on a particular empirical phenomenon. An ideographic
approach prefers qualitative methodology because it can collect information
directly from the persons who experience the social phenomenon.
On the nature of society, the researcher can assume society to be stable and
orderly, or chaotic and subject to fundamental conflict (Burrell & Morgan, 1979).
The objective of research for those who assume the orderliness of society is to
understand and explain it (Hopper & Powell, 1985). On the other hand, those who
assume that society is subject to fundamental conflict will conduct research to
reveal the injustices in society and promote radical change (Hopper & Powell,
1985).
Previous discussion has shown that every research perspective has its
strengths and weaknesses. The limitations that are inherent in every perspective
only provide a partial and incomplete understanding of an empirical phenomenon
(Chua, 1986; Laughlin, 1995). Laughlin (1995) suggested that every researcher
should determine his/her research paradigms before conducting any research. A
clearly stated position on research paradigms will make the researcher and the
readers aware of the impact of the selected research perspectives on research
insights, what is included and excluded in the research, and the bias in her/his
empirical investigation (Laughlin, 1995). Following Laughlin’s (1995)
suggestion, the next section discusses the research perspective adopted in this
study.
3.7 MIDDLE RANGE THINKING PERSPECTIVE
Based on Burrell and Morgan’s (1979) sociological works, Laughlin (1995,

2004, 2007) proposed a middle range thinking (MRT) perspective for accounting
research. Laughlin (1995) clustered the four elements of social science (ontology,
methodology, human nature, and methodology) and the perception of society
(orderly versus disorderly) into three dimensions of research: theory,
methodology, and change. Laughlin (1995) used three different scalars ranging
from low, medium, and high to describe the position of researcher in terms of
theory, methodology, and change.

Theory refers to the ontological and epistemological beliefs of the researcher
that determine the assumption of reality and the role of prior theories for future
research. A high position on theory means that the researcher assumes the
existence of reality in accounting that can be studied objectively and empirical
results that can be generalised to other phenomenon. Existing knowledge is
important for current research because hypotheses are derived from existing
theories and previous research findings. Observation is used to test hypotheses
and to falsify or verify a theory. Those who hold alternative views to positivists
mostly question the validity of positivist assumptions about the existence of
objective reality and the generalisation of research findings in social science,
which are described by Laughlin (1995) as a “considerable leap of faith” (p. 83).
In contrast, a low position on theory assumes that reality is subjectively

created by human interactions. Accounting is seen as a social practice where
people are assumed to be creators of empirical phenomenon (Chua, 1986). This
perspective is held by interpretivists who assume that people’s perceptions of an
empirical phenomenon are subjective and every empirical phenomenon is distinct
and unique, rendering existing theories for the phenomenon under investigation
irrelevant, and making generalisation impossible (Neuman, 2011). Since
interpretivists are not looking for generalisation, their empirical investigation is
focused on obtaining an understanding of empirical phenomenon by receiving
knowledge directly from the perspective those who have experienced the
phenomenon (Hopper & Powell, 1985). The total rejection of possible shared
common attributes between different social phenomenon is seen as a weakness of
taking a low position on theory (Broadbent & Laughlin, 2013). Those who
criticise interpretivists argue that some general patterns may exist in social science
that are important to guide future research (Laughlin, 1995).
Methodology consists of assumptions regarding human nature that relate to

the role of researcher subjectivity in the discovery process and the impact of
theoretical closure on the choice of methodological approach (Broadbent &
Laughlin, 2013; Laughlin, 1995). A high position on methodology is supported by
positivists who argue that researchers should avoid subjectivity during empirical
investigation. A high position on methodology also implies that existing

theoretical frameworks will determine the research methods adopted and the
researcher is seen as only executing a specific set of research methods. According
to the opposing perspective, those who hold a low position on methodology
assume that prior knowledge does not have relevance for the current research
(Laughlin, 2004). A low level of prior theorising also means that the researcher is
free from theoretical rules in selecting research methods and is allowed to bring
subjectivity into the empirical investigation (Laughlin, 1995). This
methodological perspective leads to the use of a qualitative approach, such as
document analysis or interviews.
Both high and low positions on methodology have weaknesses. Accounting

theory is sometimes ambiguous and complex, and employing a tight theoretical
definition in methodology is considered inappropriate because it can lead to a
limited understanding of the empirical phenomenon (Laughlin, 1995). For
example, a highly formalised survey or document analysis used by positivists will
limit the researcher’s understanding of reality with a predetermined set of
constructs, because other possible explanations are not accommodated (Broadbent
& Laughlin, 2013). In contrast, a low position on methodology means that the
analysis of empirical phenomenon is based on the perceptual powers of the
researcher (Laughlin, 1995). However perceptual powers differ between
individuals, making replication by other researchers near impossible (Broadbent
& Laughlin, 2013)
Change relates to the position of the researcher toward the status quo. In this
dimension, those who have a high position on change believe that the current
situation is imperfect; therefore, change is necessary, while those who have a low
position believe that the current situation is perfect and change is not necessary
(Laughlin, 1995). Both positivists and interpretivists assume that societies and
organisations are relatively stable, and therefore adopt a similar low position on
change (Chua, 1986). Positivists and interpretivists have different arguments to
justify their low position on change. Positivists argue that research should be
neutral and not involved with moral judgements about maintaining or changing
the existing institutional structure because it can obstruct the objectivity of
research, while interpretivists argue that research should take the empirical

phenomenon for granted and leave the object of the investigation unchanged
(Chua, 1986). Both positivist and interpretive perspectives on change are
questioned by critical researchers, who argue that research should have an
evaluative dimension, reveal injustice in society, and transform society for the
better (Broadbent & Laughlin, 1997; Laughlin, 1987).
To address the limitations of high and low positions, Laughlin (1995, 2004,
2007) suggested accounting researchers take a middle position on theory,
methodology, and change. He called this perspective middle range thinking
(MRT). The objective of holding a middle position between two extreme research
perspectives is to reap the strength while avoiding the weaknesses of each
perspective (Laughlin, 1995).
By taking the middle position in theory, MRT encourages researchers to

employ existing theories to guide their research (which is the strength of a high
position on theory) and also acknowledge that the empirical detail may be
different in every accounting phenomenon (which is the strength of a low position
on theory) (Laughlin, 1995). The middle position on theory means that MRT
acknowledges the existence of reality in social science, but recognises that this
reality is different from the objective reality that is usually found in natural
sciences (Laughlin, 1995). Reality in social science is a product of ‘inter-
subjective consensus’ among people (Broadbent & Unerman, 2011, p. 9). Inter-
subjective reality occurs when people try to make a subjective matter into an
objective reality based on consensus (Broadbent & Unerman, 2011). For example,
there is a consensus amongst accountants on how to record and report a specific
financial transaction. This consensus enables most people, and especially
accountants, to interpret the meaning of financial statements; although subjectivity
is involved in generating the financial statements. The fact that most people can
understand accounting numbers does not mean that a grand theory can be
formulated in accounting (Broadbent & Unerman, 2011). As a social practice, it is
impossible to find a grand theory in accounting that is applicable in all contexts
(Laughlin, 1995). However, it is possible to identify a ‘skeletal theory’ that may
capture general patterns of empirical phenomenon in accounting (Laughlin, 2004).

With respect to methodology, the middle position uses ‘skeletal theory’ in a
process of continually refining the research design (Laughlin, 1995, 2004, 2007).
The researcher may engage in a discovery process but should follow some
structured rules to enable replication by other researchers (Broadbent & Laughlin,
2013). MRT endorses a “critical discursive analysis” for its methodological
approach whereby the researcher and the researched can be involved in a
discursive process to arrive at a consensus that leads to an understanding of the
phenomenon under investigation and formulate a change response if appropriate
(Broadbent & Laughlin, 2013, p. 51). An MRT perspective has a preference for a
qualitative data narrative, although descriptive quantitative data, such as
questionnaires, are also acceptable for certain purposes (Laughlin, 2004).
In the change dimension, MRT also adopts a middle position that allows for
proposing change; however, careful consideration must be taken before arguing
that change is appropriate (Laughlin, 1995, 2004, 2007). Suggestions for change
must be preceded by several careful steps, including: (1) gaining an understanding
of the relevant empirical phenomenon based on the existing skeletal theories; (2)
engagement between the researcher and the researched to gain a mutual
understanding of the empirical phenomenon; and (3) formulating strategic change
based on this mutual understanding. This process may not result in a change
proposal if both the researcher and the researched conclude that change is
unnecessary (Broadbent & Laughlin, 2013).
3.8 LIMITATIONS OF MIDDLE RANGE THINKING
Several criticisms have been directed toward MRT. Lowe (2004) and
Roslender (2013) claimed that the accuracy of Laughlin’s (1995) classification of
the dominant schools of thought in accounting is questionable. For example, it can
be found in accounting research that positivists who have a high change
orientation or interpretivists employ sophisticated methodology. However, this
criticism is weak because the simplistic classification of the dominant schools of
thought in accounting is not directed towards producing an accurate categorisation
of accounting research, but to triggering philosophical thinking about the diversity
of research approaches in accounting.

Lowe (2004) also raised issues regarding Laughlin’s (1995) use of rhetoric
language to justify the superiority of MRT over other research perspectives.
Responding to this comment, Laughlin (2004) acknowledged that there are
researchers who take other perspectives and that there are many possible ways to
understand empirical phenomenon in accounting (Laughlin, 2004). However, the
chosen research perspectives should be justified appropriately (Laughlin, 2004).
Dey (2002) claimed that the MRT position related to theories that encourage
the researcher to gain an understanding of the existing skeletal theory can lead to
theoretical closure and research results that are driven by existing theories. This
limitation can be avoided by elaborating the fitness of empirical data with the
skeletal theory (Laughlin, 2004). Thus, although the theories are determined in
advance, MRT allows the researcher to elaborate the theories employed based on
the data found during the empirical investigation (Laughlin, 1995, 2004, 2007).
Specific to this study, given the nature of accountability as a socially

constructed concept and research perspective adopted in this study, subjectivity
and bias could occur. Although MRT acknowledges that social reality exists, the
researcher might inadvertently bring bias in understanding the empirical
phenomenon (Laughlin, 1995). In order to reduce this bias, communication with
research participants in the current study was conducted by phone for matters that
required further clarification. In addition, intensive consultation on the findings
and their interpretation was conducted with the research supervisors to reduce
interpretation bias.
3.9 JUSTIFICATION FOR THE ADOPTION OF MIDDLE RANGE

THINKING
This study adopted the MRT paradigm as proposed by Laughlin (1995,

2004, 2007) for the following reasons. First, given that the number of studies on
accountability in Islamic organisation is limited, this study seeks to understand,
rather than predict. There are ‘skeletal’ patterns that can be used as a conceptual
framework to understand an empirical phenomenon, however, they never fully
capture the detail and diversity that exist in every empirical phenomenon
(Laughlin, 2004). MRT offers an opportunity for the researcher to gain insight

from the existing accountability literature as a conceptual framework to
investigate the accountability of Indonesian zakat agencies. The ‘skeletal’
guidance offered by the existing theories enlightens the researcher in analysing the
empirical phenomenon and streamlines the research process. Although
generalisation to other contexts may not be possible, the insight from a new
empirical study will enrich existing theory (Laughlin, 2004). Therefore, this
empirical study seeks to enrich understanding of the concept of accountability by
providing new angles, perspectives, and interpretations.
Second, the position of MRT towards the status quo (change dimension)
supports the normative element of this study. While the main contribution of this
research is to extend the accountability literature in Islamic organisational
contexts, this study also has a normative element. MRT encourages researchers to
investigate the possibility of reforming the status quo to create a better society
(Broadbent & Laughlin, 2013). Based on the findings, several measures were
proposed to improve the accountability of zakat agencies.
Prior accounting studies have used MRT as a framework to analyse various

empirical accounting phenomenon (Bracci & Llewellyn, 2012; Broadbent, Gallop,
& Laughlin, 2010; Broadbent & Laughlin, 1997; Kraus, 2012). Broadbent and
Laughlin (1997) demonstrated how MRT could be used to examine an empirical
accounting phenomenon. They used MRT to gain an understanding of the impact
of new legislation that linked accountability indicators with the level of resources
given to an organisation. Bracci and Llewellyn (2012) investigated the impact of
accounting reforms in two different Italian social care providers. In their study,
Bracci and Llewellyn (2012) showed that individuals’ understanding of the
concept of accountability has an impact on how they perform their duties. Kraus
(2012) used the MRT perspective to investigate the impacts of the increased use
of accounting on the core values and work practices of Swedish home care
providers. These studies acknowledged that MRT provides a sound approach to
understanding an empirical accounting phenomenon based on existing skeletal
theories. Therefore, it is argued that MRT is also fit to be used as a framework in
investigating how administrators and donors of zakat agencies understand

accountability and its impact on the accountability mechanisms practised by zakat
agencies.
3.10 SUMMARY
To summarise, the above review of the literature indicates that

accountability is important for charitable organisations because these
organisations engage in a non-reciprocal transfer of resources. Zakat agencies are
similar to charitable organisations, as they receive donations from Muslims, that
is, the zakat is to be used for the welfare of beneficiaries. Zakat agencies can also
be considered faith-based organisations because zakat is faith-based alms giving.
While there are many types of organisations, most studies have primarily focused
on religious organisations or charitable organisations in a Western context. This
suggests that there is scope to contribute to the literature by investigating
accountability in a different organisational setting. By focusing on the
accountability of zakat agencies, this study aims to address the lack of empirical
research on accountability in Islamic faith-based charitable organisations. This
study extends existing research by examining the understanding of accountability
from the perceptions of administrators and donors in different regulatory and
cultural environments, specifically, in Indonesian zakat agencies. The middle
range thinking research perspective was adopted to investigate the perceptions of
administrators and donors on the accountability of zakat agencies. MRT was
adopted because it allowed the researcher to gain insight from existing theories to
understand the accountability of Indonesian zakat agencies.

4.1 INTRODUCTION
The MRT research perspective adopted in this study posits that literature
can be used to guide the understanding of a research phenomenon. The aim of this
chapter is to discuss the accountability literature that guides this study and
provides the theoretical basis for the research questions. This chapter is structured
as follows. Section 4.2 provides insight into the meanings of accountability. The
core concepts of accountability that include to whom, for what, and how to
discharge accountability are then articulated in Sections 4.3 to 4.5. This is
followed by a discussion of the inter-relationships between the core concepts of
accountability in Section 4.6. The research questions are highlighted in Section
4.7. Finally, Section 4.8 presents the summary of this chapter.
4.2 MEANING OF ACCOUNTABILITY
The notion of accountability has been widely discussed in the literature from
various perspectives, for example, from the principal–agent perspective
(Broadbent, et al., 1996; Ebrahim, 2003b), stakeholder-agency perspective
(Collier, 2008; Kreander, Beattie, & McPhail, 2009), public accountability
perspective (Coy & Dixon, 2004; Coy, Fischer, & Gordon, 2001; Stewart, 1984),
and the identity and social relationship perspective (Unerman & O'Dwyer,
2006b); however, the meaning of accountability remains elusive and under
theorised (Connolly & Dhanani, 2013; Ebrahim, 2005; Mulgan, 2000; Ryan &
Irvine, 2012b; Sinclair, 1995). The difficulty of giving a precise definition for
accountability is related to the nature of accountability being a socially
constructed concept (Ebrahim, 2003b; Shearer, 2002; Sinclair, 1995). As a
socially constructed concept, the meaning of accountability varies from person to
person, time to time, and one discipline to another. Every discipline may have a
different interpretation of accountability, and this definition might not necessary
be applicable to other disciplines (Cooper & Owen, 2007; Sinclair, 1995).
Chapter 4: Theoretical Framework 55

Accountability is often associated with the concepts of responsibility,
liability, transparency, and responsiveness (Koppell, 2005), and answerability or
justification (Ebrahim & Weisband, 2007). However, this association does not add
clarity to the meaning of accountability, because these concepts are also “umbrella
concepts” that “need extensive operationalisation” (Bovens, 2010, p. 950).
Accountability is broader than responsiveness, liability, responsibility,
transparency, answerability, or justification, because accountability also includes
the dissemination of information (Unerman & O’Dwyer, 2012) and an
examination of this information to determine future actions (Bovens, 2007).
Accountability can be interpreted as a social relationship between

organisational players (Ebrahim, 2005; Kreander, et al., 2009; Unerman &
O'Dwyer, 2006b) that involves “the giving and demanding of reasons for conduct”
(Roberts & Scapens, 1985, p. 447), or “the obligation to explain and justify
conduct” (Bovens, 2007, p. 450). As a social relationship, it involves two parties:
(1) individual(s) or an organisation(s) that has a legitimate right to hold another
party to give account, usually referred to as the ‘accountor’; and (2) individual(s)
or an organisation(s) that has an obligation to give account or the ‘accountee’
(Stewart, 1984; Unerman & O'Dwyer, 2006b).
From the perspective of the accountee, accountability can be understood as a

process of providing information to explain and justify the reasonableness of
every action or inaction and the results (Arrington & Francis, 1993; Messner,
2009; Shearer, 2002; Sinclair, 1995). Accordingly, the discharge of accountability
necessitates the disclosure of information to facilitate external scrutiny (Bovens,
2010; Hood, 2010; Koppell, 2005). This also includes the accountee taking
ownership and responsibility for what has happened or is happening within one’s
jurisdiction (Dunsire, 1978).
From the perspective of the accountor, accountability is an exercise of

power to judge or evaluate the performance of the accountee (Stewart, 1984)
against pre-determined standards or expectations (Dunsire, 1978). Because
accountability involves an evaluation against pre-determined standards, it is also
associated with responsiveness or the ability to meet the implicit and explicit
56 Chapter 4: Theoretical Framework

expectations of stakeholders (Koppell, 2005). The results of the evaluation are
used by the accountor to determine future actions that include rewards and
punishments against the accountee (Bovens, 2007). The rewards may include
continuous financial and non-financial support for an organisation, while the
punishments may include the discontinuation of financial and non-financial
support. In this context, both rewards and punishments can influence the survival
of organisations.
This study adopted the definition of accountability as an obligation of an

individual or organisation (the accountee) to provide explanations and justification
for every action and the results of every action to the accountors (Edwards &
Hulme, 1995; Roberts & Scapens, 1985). This definition implies that the process
of rendering an account will include these elements: to whom (who are the
accountors?); for what (what should be explained or justified?); and how (how
should the explanation or justification be rendered) (Murtaza, 2012; Najam, 1996;
Ospina, Diaz, & O’Sullivan, 2002; Ryan & Irvine, 2012a; Tower, 1993). With
regard to zakat agencies, this definition leads to the following questions:
1. Who should zakat agencies be accountable to (to whom)?
2. What should zakat agencies be accountable for (for what)?
3. By what means should zakat agencies discharge their accountability

(how)?
4.3 WHO SHOULD ZAKAT AGENCIES BE ACCOUNTABLE TO?
4.3.1 Identification of accountors

A number of authors have argued that an organisation should be accountable
to various stakeholders groups (Connolly & Hyndman, 2013b; Ebrahim, 2003a;
Gray, Owen, & Adams, 2009; Unerman & O'Dwyer, 2006b). Initially,
stakeholders were defined as “those groups without whose support the
organisation would cease to exist” (Stanford Research Institute (1963) cited in
Freeman & Reed, 1983, p. 89). This narrow definition of a stakeholder suggests
that an organisation only needs to be accountable to those who can influence the
sustainability of an organisation (Donaldson & Preston, 1995; O'Dwyer &

Unerman, 2008; Sternberg, 1997; Woodward & Marshall, 2004). Recently,
stakeholders have been defined more broadly as “any group or individual who can
affect or is affected by the achievement of the organisation’s objectives”
(Freeman, 1984, p. 31).
Ebrahim (2003b) suggested that the stakeholders of not-for-profit

organisations can be classified into three broad groups: resource providers;
regulators; and beneficiaries and communities. Resource providers not only
provide financial assets but also human resources, raw materials, information,
social support, and other forms of resources (Pfeffer & Salancik, 2003). Thus,
resource providers may consist of small or large donors (Connolly & Hyndman,
2013a; Hyndman & McDonnell, 2009; Najam, 1996; O'Dwyer & Unerman,
2007), the board (Schmitz, et al., 2012), employees (Collier, 2008), the parent
organisation of a not-for-profit organisation (Fletcher, Guthrie, Steane, Roos, &
Pike, 2003), and volunteers (O'Brien & Tooley, 2013). It is also common for
governments to provide funding to not-for-profit organisations; therefore, the
government can also be classified as a resource provider (Ebrahim, 2009;
O'Dwyer & Unerman, 2007). Empirical findings also suggest that resource
providers are legitimate stakeholders of not-for-profit organisations (Christensen
& Mohr, 2003; Connolly & Hyndman, 2013a; Cordery & Baskerville, 2011;
Dixon, Ritchie, & Siwale, 2006; Flack, 2007; Schmitz, et al., 2012; Woodward &
Marshall, 2004).
The second category of stakeholders is regulators, which consists of the

government and a network of peer organisations that actively produce codes or
standards of behaviour (Ebrahim, 2003b; Hyndman & McDonnell, 2009; Najam,
1996; Schmitz, et al., 2012). Regulators gain legitimacy to demand accountability
from an organisation through legal means (Cordery & Baskerville, 2011).
Regulation gives power to the government to hold an organisation accountable. In
most countries, the involvement of the government is intended to protect the
interests of stakeholders who do not have the power to enforce accountability
(Flack, 2007). This involvement is reflected in regulations about reporting
standards and disclosure requirements that must be adhered to by organisations
(Ebrahim, 2009; Hyndman & McDonnell, 2009). An empirical investigation of

Australian not-for-profit organisations found that the management of not-for-
profit organisations in Australia considered the network of peer organisations or
peak bodies to be stakeholders (Flack, 2007; Woodward & Marshall, 2004). The
network of peer organisations can also publish standards or codes of conduct. In
most cases, it is not mandatory to obey the standards issued by the network of
peer organisations; however, complying with these standards can improve public
confidence.
The third category of stakeholder is beneficiaries (Connolly & Hyndman,

2013a; Ebrahim, 2003a; Najam, 1996). A number of empirical studies have also
suggested that not-for-profit organisations consider beneficiaries to be their
stakeholders (Connolly & Hyndman, 2013a; Flack, 2007; Kilby, 2006; Schmitz, et
al., 2012; Woodward & Marshall, 2004). Beneficiaries can be users of the services
or broad community members (Najam, 1996). Beneficiaries have a legitimate
demand to ask for accountability because their welfare is affected by the activities
of the organisations (Unerman & O'Dwyer, 2006b) and discharging accountability
to beneficiaries can increase organisational credibility and reputation and public
trust (Connolly & Dhanani, 2013). Ironically, beneficiaries are often neglected
because they do not have the power to enforce their demands (Ebrahim, 2003b;
Gray, et al., 2006; Najam, 1996; O'Dwyer, 2005).
Other categories of stakeholders have been identified in the empirical

literature, such as religious bodies (Woodward & Marshall, 2004), charity
‘watchdog’ organisations, advisors (Flack, 2007), the media, and academics
(Candler & Dumont, 2010; Connolly, et al., 2012; Flack, 2007; Friedman &
Miles, 2002; Hyndman & McMahon, 2010). The media and academics may not
have legitimacy and power to demand accountability. However, in special
circumstances, such as in the occurrence of fraud in a not-for-profit organisation,
the media and academics can become powerful stakeholders. The media may
report mismanagement or fraud that has occurred in an organisation and bring it to
the public’s attention, forcing the organisation to provide an explanation to the
public. Some academics in the UK have used publications to promote the
development of statements of recommended practice and performance reporting
by not-for-profit organisations (Hyndman & McMahon, 2010). Likewise,

academics have also played an important role in shaping regulations about
financial reporting in the Australian not-for-profit sector (Palmer, 2013).
Prior studies on faith-based organisations have identified that these

organisations are not only accountable to stakeholders but also to God. In a study
of Malaysian Islamic not-for-profit organisations, Abdul-Rahman and Goddard
(1998) found that the ultimate accountability of Malaysian Islamic not-for-profit
organisations is to God. This understanding is related to the Islamic belief that all
human beings have to account to God for their actions and inactions (Abu-
Tapanjeh, 2009; Nahar & Yaacob, 2011; Rice, 1999). Likewise, previous studies
of Christian faith-based organisations also found that they were accountable to
God (Crofts, 2009; Joannides, 2012).
Because every stakeholder has different levels of power to impose their

interests on an organisation, several authors have tried to classify stakeholders
based on their power and other attributes. Stewart (1984) explained that an
organisation only has an accountability relationship with those who have the
power to enforce accountability. The ability to hold an organisation to account
creates a bond of accountability. The relationship with those who do not have the
power to enforce accountability is referred to as a link of accountability (Stewart,
1984). The link of accountability is not a genuine accountability relationship,
because it only represents an act of responsiveness to stakeholder demands
(Stewart, 1984).
Mitchell et al. (1997) classified stakeholders into salient and non-salient

stakeholders based on three different attributes: power; legitimacy; and urgency.
Power relates to the ability of a stakeholder to impose their interest on an
organisation (Mitchell, et al., 1997). A legitimate stakeholder is a stakeholder that
has a moral or legal right to demand an organisation to satisfy their interests
(Mitchell, et al., 1997). Urgency is the degree of immediate attention that should
be given to the demands of a particular stakeholder (Mitchell, et al., 1997).
Carroll (1989) classified stakeholders into primary and secondary

stakeholders. Primary stakeholders are those who have a contractual relationship
with an organisation, such as large resource providers and regulators; while

secondary stakeholders are those who do not have a contractual relationship, such
as small resource providers and beneficiaries (Carroll, 1989). Because primary
stakeholders have a contractual relationship, they have the power to enforce
accountability. On the other hand, secondary stakeholders do not have a
contractual relationship and hence only have a limited ability to impose their
interests (Carroll, 1989).
Flack (2007) classified stakeholders into internal and external stakeholders.

Flack (2007) defined internal stakeholders as those who provide resources, such
as employees, donors, and volunteers; and external stakeholders as those who
perform oversight functions, such as regulators and mass media. Van Puyvelde,
Caers, Bois, and Jegers (2012) classified stakeholders into internal stakeholders,
external stakeholders, and interface stakeholders. Internal stakeholders consist of
executives, managers, staff, and volunteers. External stakeholders consist of
donors, suppliers, beneficiaries, peer organisations, and others. Interface
stakeholders represent an organisation to the public. The board is an interface
stakeholder because it has a connecting role between internal and external
stakeholders. Table 4.1 reconciles the concepts of bond and link accountability
proposed by Stewart (1984) and the classification of stakeholders proposed by
Mitchell et al. (1997) and Carroll (1989), based on a framework of accountability
relationship provided by Cordery and Baskerville (2011).

Table 4-1 Potential Stakeholders of Not-for-profit Organisations and the
Attributes of Stakeholders Linked to the Types of Accountability
Stakeholder Attributes Category of Type of
Potential
(Mitchell, et al., 1997) Stakeholder Accountability
Stakeholders
Power Legitimacy Urgency (Carroll, 1989) (Stewart, 1984)
Government Yes, Yes, through legal Unlikely Primary – A bond of
granted means Contractual accountability
by statute
Major Donors Possibly • Yes, through Possibly Primary – A bond of
donations contractual accountability
• Moral
dimension/shared
values
Small Donors Unlikely • Yes, through Possibly Secondary – A link of
And donations non-contractual accountability
Volunteers • Moral
dimension/shared
values
Beneficiaries Unlikely • Yes, through Possibly Secondary – A link of
charity mission non-contractual accountability
Media Unlikely • Possibly, moral Unlikely Secondary – A link of
dimension/shared non-contractual accountability
values
Academic Unlikely • Possibly, moral Unlikely Secondary – A link of
dimension / non- contractual accountability
shared values
Source: Adapted from Cordery and Baskerville (2011)
Organisations usually give a high priority to meeting the interests of primary

or salient stakeholders and a low priority to meeting the interests of secondary and
non-salient stakeholders. It is worth noting that a powerful stakeholder will not
always impose their interests on an organisation. In several cases, powerful
stakeholders may have no intention of imposing their interests, because they may
see no urgency to exercise their power (Mitchell, et al., 1997). On the other hand,
secondary or non-salient stakeholders may be able to enforce their interests by
influencing public opinion toward an organisation (Carroll, 1989; Cordery &
Baskerville, 2011). A study conducted by Cordery and Baskerville (2011)
documented that beneficiaries of a not-for-profit organisation in Singapore, who
have urgent interests but do not have sufficient power to enforce their interests,
used the media to escalate their demands. As a result, the not-for-profit
organisation had to satisfy the demand of its beneficiaries because it realised that a
failure to provide adequate responses to negative publicity could damage its
reputation and discourage potential resource providers from providing them with

resources (Cordery & Baskerville, 2011). This means that not-for-profit
organisations should not only be accountable to primary or salient stakeholders
who have a bond of accountability, but also to secondary or non-salient
stakeholders who only have a link of accountability because their interests may be
urgent and legitimate (Cordery & Baskerville, 2011; Dhanani & Connolly, 2012;
Gray, Owen, & Adams, 1996; O'Dwyer & Unerman, 2007).
4.3.2 Possible stakeholders of zakat agencies and their relative importance

Figure 4.1 depicts the possible stakeholders of zakat agencies that consist of
sacred and secular stakeholders. Drawing on stakeholder theory, the secular
stakeholders of zakat agencies may consist of resource providers, regulators,
beneficiaries, and others. Transfer of resources justifies the obligation to give
account to donors (Cordery & Baskerville, 2011; Ebrahim, 2003b) while
regulation justifies the obligation to give account to government (Crofts, 2014).
Zakat agencies should also be accountable to those affected by the activities of
zakat agencies, such as beneficiaries and other parties. Solid arrows indicate that
zakat agencies need to discharge accountability to these stakeholders through
various mechanisms. The mechanisms to discharge accountability will be
discussed in Section 4.5.
Previous literature also indicates that faith-based organisations are

accountable to God (Abdul-Rahman & Goddard, 1998; Crofts, 2009; Joannides,
2012). Therefore, it is expected that zakat agencies would be accountable to God
as described by a strong dashed arrow. There are also sacred accountability
relationships between the secular stakeholders of zakat agencies and God as
described by soft dashed arrows. This sacred accountability relationship may
influence the accountability expectations of secular stakeholders to zakat
agencies.

Sacred
Accountability God
Resource Providers Regulators
Secular
Accountability Zakat Agencies
Beneficiaries Other Parties
Legend:
: Sacred accountability relationship
: Sacred accountability relationship
: Secular accountability relationship
Figure 4-1 Skeletal Framework of Possible Stakeholders of Zakat Agencies
4.4 THE SCOPE OF ACCOUNTABILITY AND INFORMATION

REQUIRED
Inherent in the concept of accountability is the scope of accounts or “what

should be accounted for” by an organisation (Patton, 1992, p. 169). Stewart’s
(1984) ladder of accountability provides a basic framework to analyse the scope
of accountability. Stewart (1984) proposed a hierarchical scope of accountability
that consists of five different elements: accountability for probity and legality;
process accountability; programme accountability; performance accountability;
and policy accountability. Every element of Stewart’s (1984) ladder of
accountability outlines different areas or scope of accountability and different
information requirements. Although this framework was developed for the public
sector context, Stewart (1984) argued that this framework is also applicable in
other organisational sectors. For example, Laughlin (1990) used this framework to
investigate the accountability of the Church of England, while Yasmin et al.

(2013) used this framework to investigate the accountability of Christian and
Muslim charitable organisations in England and Wales.
Similar constructs have been developed in the not-for-profit sector. For

example, Kearns (1996) stated that the accountability of not-for-profit
organisations consists of accountability for resources, accountability for
outcomes, and accountability for processes. Goodin (2003) claimed that
organisations can be held accountable for their actions, their results, and their
intentions. The scope of accountability can also be classified into functional and
social accountability (Najam, 1996; O'Dwyer & Unerman, 2007). Ebrahim (2010)
suggested that the accountability of not-for-profit organisations covers four
different areas: finances; governance; performance; and mission. Dhanani and
Connolly (2012) proposed four areas of accountability: fiduciary accountability;
financial accountability; procedural accountability; and strategic accountability.
As discussed in Section 3.3, a number of authors have indicated that sacred

accountability exists in faith-based organisations (Crofts, 2009; Joannides, 2012;
Laughlin, 1990), including Islamic faith-based organisations (Abdul-Rahman &
Goddard, 1998; Nahar & Yaacob, 2011). As faith-based organisations, it is
expected that the scope of accountability of zakat agencies also includes ‘secular
and sacred elements of accountability’.
Figure 4.2 presents the possible scope accountability of zakat agencies. It is

expected that an interaction exists between sacred and secular accountability.
Several areas of accountability (i.e. mission, amil fund, and ethical accountability)
are more aligned with sacred (Syari’ah) accountability while other areas of
accountability (i.e. financial, programmes, performance, and legal accountability)
are more aligned with secular accountability (as indicated by solid arrows).
Mission, amil fund, and ethics accountability can be classified as a subset of
Syari’ah accountability. Syari’ah accountability is also expected to influence other
areas of secular accountability, including financial, programmes, performance,
and legal accountability as indicated by a dashed arrow. These areas of
accountability are now discussed in more detail.

The Scope of
Accountability of
Zakat Agency Legal
Mission
Sacred (Syari’ah) Governance
Accountability
Amil Programme
Performance
Secular
Ethics Accountability
Financial
Legend
Influenced alignment / interaction

Strong alignment / interaction
Figure 4-2 Skeletal Framework of the Possible Scope of Zakat Agency

Accountability
1. Syari’ah Accountability
In Islamic organisations, sacred accountability is related to compliance with

Syari’ah requirements (Lewis, 2001; Nahar & Yaacob, 2011). Syari’ah is
based on the teachings of the Holy Qur’an and Sunnah that guides Muslims on
how they must/should behave in all spheres of life (El-Halaby & Hussainey,
2015; Rammal & Parker, 2012).Shari’ah does not only deal with religious
rituals, but also many aspects of human activities, such as business, trading,
and others (Abu-Tapanjeh, 2009; Wilson, 2006). Therefore, Shari’ah
accountability is an overaching concept that influences the understanding
accountability in other areas of accountability.
Because zakat agencies are Islamic faith-based organisations, zakat agencies

have a responsibility to comply with Syari’ah requirements. As discussed in
Chapter 2, there are Syari’ah requirements regarding zakat collection and

distribution. Therefore, it is expected that the scope of the accountability of
zakat agencies also includes Syari’ah accountability.
2. Mission Accountability
An organisation is created by individuals who share core values and want to

achieve common goals. In several not-for-profit organisations, these core
values are rooted in religious belief (Lyons, 2001). The core values and
common goals are reflected in the mission of an organisation. Thus, the
mission will reflect why an organisation exists and the shared core values
among its members.
Because, an organisation is created by individuals who share core values, it is

reasonable that there are demands on the administrators of an organisation to
demonstrate their complainace with these core values. This demand will lead to
mission accountability in which the administrators of not-for-profit
organisations are required to justify their policies and actions in achiving
organisational goals. Mission accountability may relate to policy in selecting
beneficiaries, the allocation of financial resources for programmes, and future
plans (Ebrahim, 2010). Mission accountability is similar to the concept of
strategic accountability (Dhanani & Connolly, 2012) or social accountability
(O'Dwyer & Unerman, 2007).
In the case of zakat agencies, these shared core values may include the
motivation to help others by using zakat fund and to practise religious
teachings (Fauzia, 2018). The mission of zakat agencies is not only to help
poor individuals but also to perform Syari’ah or Islamic religious obligation.
Especially for donors, Muslims will not give zakat to a zakat agency if the
mission of this zakat agency discords with Syari’ah. Because giving zakat is
not only a charitable activity but also a religious ritual, it is reasonable to argue
that Syari’ah accountability will have a strong interaction with mission
accountability as described by a solid arrow in Figure 4.2.
3. Amil Fund Accountability
Related to Syari’ah accountability is accountability for the amil fund.

According to Syari’ah, the administrators of zakat agencies are allowed to

retain up to one eighth (12.5%) of the zakat collected (al Qardawi, 2000). This
fund is referred to as the amil fund. Generally, this fund is used to finance the
activities of zakat agencies. While Syari’ah does not provide specific guidance
on how the administrators of zakat agencies must use this fund, it is expected
that the usage of this fund complies with Syari’ah requirements (Azhar, 2012).
The administrators of zakat agencies should provide an account on the usage
of the amil fund, including the appropriate use of the amil fund from a
Syari’ah perspective. Therefore, the amil fund is also expected to have a
strong interaction with Syari’ah accountability.
4. Ethical Accountability
Candler and Dumont (2010) argued that the accountability of not-for-profit

organisations should also include ethical accountability. Crofts (2009)
identified the presence of ethical accountability in his study on the
accountability of Australian faith-based organisations. Ethical accountability is
a product of implicit public expectations that are reflected in professional
norms and social values (Kearns, 1996).
In the context of zakat agencies, such professional norms and social values
would be expected to be framed within a sacred, Syari’ah, context. Therefore,
it is also expected that ethical accountability is stongly influenced by Syari’ah
accountability. The application of ethical accountability in zakat agencies may
relate to behaviour and remuneration for the administrators of zakat agencies.
While Syari’ah does not limit remuneration for zakat administrators as long as
the amil fund does not exceed one eight of the amount of zakat collected, it is
not ethical for the administrators to use excessive amil funds for their personal
benefits (Azhar, 2012). It is expected that zakat agencies will comply with
professional norms and social values.
5. Financial accountability
Financial accountability is concerned with the appropriate use of resources

(Ebrahim, 2010; O'Dwyer & Unerman, 2010) and similar to the concept of
accountability for probity (Stewart, 1984) or accountability for resources
(Kearns, 1996), or functional accountability (O'Dwyer & Unerman, 2007). It

represents the stewardship function of management, which has been recognised
as the traditional focus of accountability (Basnan, 2010). Financial
accountability provides comfort to stakeholders that organisational resources
are not being misappropriated and are only used to achieve the objectives of an
organisation.
While financial accountability is the main domain of secular accountability, in

the context of zakat agencies, financial accountability also relates to Syari’ah
accountability. In addition to providing information about the the amout of
zakat revenue and the usage of zakat funds, it is expected that zakat agencies
also provide information that the usage of zakat fund complies with Syari’ah
requirements.
6. Legal Accountability
Legal accountability relates to compliance with regulations (Stewart, 1984).

The existing literature indicates that regulation was used to improve the
accountability of not-for-profit organisations (Chisolm, 1995; Ebrahim, 2009;
Weidenbaum, 2009). Regulation was also the main driver for faith-based not-
for-profit organisations to disclose accountability information (Crofts, 2014).
Regulations are usually created to protect public interests and guide the
activities of organisations. Several regulations relate to how an organisation
should account for its activities and the usage of financial resources. For
example, the financial reporting of charitable organisations in England must
comply with Statements of Recommended Practice (Hyndman & McMahon,
2010).
In the secular context, legal accountability only interacts with secular

accountability. However, in several predominantly Muslim but secular
countries, Syari’ah may influence legal regulations. For example, in Indonesia,
the Parliament passed Zakat Management Law 23/2011 to ensure that zakat
agencies report to government and comply with Syari’ah requirements. This
Zakat Management Law states that zakat agencies should undergone Syari’ah
audit to ensure that zakat agencies comply with Syari’ah requirements.

Therefore, legal accountability in the context of Indonesian zakat agencies is
also influenced by Syari’ah.
7. Governance Accountability
Governance accountability is concerned with the existence of mechanisms to

ensure that every action adopted by an organisation complies with the existing
code of conducts, procedures, and regulations (Dhanani & Connolly, 2012;
Ebrahim, 2010). This concept is similar to process accountability (Stewart,
1984; Yasmin, et al., 2013) or procedural accountability (Kearns, 1996). In
charitable organisation contexts, governance accountability focuses on the
application of good governance in organisational activities, such as fund-
raising activities and the usage of resources. In the context of zakat agencies,
good governance is not only needed to ensure compliance with the existing
code of conducts, procedures, and regulations but also compliance with
Syari’ah requirements.
8. Programme Accountability and Performance Accountability
Programme accountability is concerned with organisational effectiveness or

whether the objectives of a programme have been achieved, while performance
accountability is concerned with organisational efficiency or whether the
results of a programme meet pre-determined standards (Cordery & Sinclair,
2013; Kearns, 1996; Stewart, 1984). In the context of zakat agencies,
programme accountability relates to Syari’ah accountability because every
programme created by zakat agencies must comply with Syari’ah requirements.
The application of performance accountability in the context of zakat agencies
may include several financial performance and non-performance metrics.
Programme and performance accountability indicates that organisations have a

responsibility to spend their resources effectively and efficiently to generate
optimal outputs and outcomes (Dhanani & Connolly, 2012). Concepts
Statement No 5 Service Efforts and Accomplishments Reporting (GASB,
2008) explained the concepts of inputs, outputs, outcomes, and efficiency as
the following:

• Input is the measure of effort. Information about the amount of financial
and non-financial resources that are used to deliver a programme is
required to measure input. For example, information about the amount
of zakat funds spent on a programme to provide scholarships for
students from poor families.
• Outputs and outcomes are the measures of accomplishments. The

following information is required to measure the accomplishment of an
organisation. First, information about the amount of services or goods
produced, such as the number of scholarship recipients. Secondly,
information about the results of the provision of services or the
consumption of goods, such as an increase in the income of
beneficiaries. In the context of zakat agencies, information about
outputs may include the number of beneficiaries that received
assistance from a programme, such as the number of students who
received scholarships; while information about outcomes may include
information about the results of assistance and social impacts, such as
the number of students who finished their study and found a job.
• Efficiency is a ratio between effort (inputs) with accomplishments

(outputs and outcomes). The efficiency of a programme can be
measured by comparing resources used (inputs) and the amount of
service delivered or the amount of goods produced (outputs).
A number of authors have argued that every area of accountability requires

different types of information (Parker & Gould, 1999; Stewart, 1984; Yasmin, et
al., 2013). Ideally, information disclosed by an organisation should enable its
stakeholders to evaluate the accountability of an organisation from every area of
accountability (Broadbent, et al., 1996; Stewart, 1984).
Syari’ah accountability relates to compliance to Syari’ah requirements, and

therefore requires the disclosure of information about how far an organisation
complies with Syari’ah requirements (Belal, Abdelsalam, & Nizamee, 2015). A
zakat agency should provide information about Syari’ah compliance and disclose
the results of Syari’ah audits to satisfy information requirements about Syari’ah

accountability. It is also expected that the disclosure of Syari’ah compliance can
satisfy ethical accountability because ethical accountability in Islamic
organisations is framed in Syari’ah values. Amil fund accountability is related to
the use of financial resouerces and Syari’ah compliance, therefore, the disclosure
of financial information and Syari’ah compliance are needed. Mission
accountability requires information about the impacts of activities on stakeholders
and information about future plans, including the issue of sustainability (Yasmin,
et al., 2013). Syari’ah compliance information is also useful to evaluate mission
accountability because mission accountability is stongly influenced by Syari’ah
accountability.
Financial accountability is related to the use of financial resources, therefore

financial information, such as organisational revenue and expenditure, is
considered sufficient for discharging financial accountability (Connolly, et al.,
2012; Stewart, 1984; Yasmin, et al., 2013). Legal accountability requires
information about compliance with legal regulations while information about
governance, organisational structure, and internal control adequacy are required to
satisfy governance accountability (Yasmin, et al., 2013). Programme and
performance accountability can be evaluated provided that information about
inputs, outputs, and outcomes is available (Hyndman, 1990, 1991; Stewart, 1984;
Yasmin, et al., 2013). In addition to input, output, and outcome information,
Connolly and Hyndman (2004) stated that information about a statement of goals
and objectives, budget information, and future target information is required to
evaluate performance accountability, while Ryan and Irvine (2012a) contended
that explanatory expenditure information is also required to evaluate performance
accountability.
4.5 BY WHAT MEANS SHOULD ACCOUNTABILITY BE

DISCHARGED?
It is important that accountability information can be reached, accessed, and

understood by both internal and external stakeholders. It is common for an
organisation to use formal and/or informal means to discharge accountability;
therefore, accountability information can be reached and accessed through a wide
range of stakeholders (Ebrahim, 2003a; Gray, et al., 2006; Patton, 1992; Unerman

& O'Dwyer, 2006b). Table 4-2 describes formal and informal means to discharge
accountability.
Table 4-2 Means to Discharge Accountability

Means to
Discharge Examples Prior Studies
Accountability
Formal Reporting Annual reports, annual reviews, Dhanani and Connolly (2012);
financial reports, customised O'Dwyer and Unerman (2007);
report, and letters. (Steccolini, 2004)
Informal Any methods except formal Ebrahim (2003a); Godwin, et al.
Reporting reporting, such as website, internal (2011); Hardy and Ballis (2013);
printed media, mass media, social Unerman and Bennett (2004)
media, and oral reporting.
Formal reporting to discharge accountability

Large organisations are more likely to use formal reporting to discharge
accountability than small organisations. In large organisations, the stakeholders
are diverse and there is a distance between individuals involved in an
accountability relationship (Avina, 1993). This means that stakeholders cannot
directly observe the activities of an organisation. This distance also hampers direct
communication and inhibits the development of mutual knowledge (Roberts &
Scapens, 1985). In this situation, formal reporting, such as annual reports and
financial statements, is important because it is the main bearer of information
(Dhanani & Connolly, 2012; Gray, et al., 1996; Laughlin, 1990; Patton, 1992;
Roberts, 1991; Tower, 1993).
A body of literature recognises the importance of annual reports as a formal

means to discharge accountability (Broadbent, et al., 1996; Connolly & Hyndman,
2004; Connolly, et al., 2012; Ebrahim, 2003a; Goddard & Assad, 2006; Hines &
Jones, 1992; Palmer, 2013; Torres & Pina, 2003). Annual reports have a
functional role to communicate the performance and activities of not-for-profit
organisations and a symbolic role to signal that the administrators of not-for-profit

organisations are accountable and comply with the prevailing norms (Flack,
2007).
In addition to annual reports, mail reporting and customised reporting can

also be used to discharge accountability. Steccolini (2004) has documented that
several organisations in Italy use a mail report to disseminate accountability
information to their stakeholders. Several organisations prepare customised formal
reports requested by powerfull stakeholders (Connolly & Hyndman, 2013a;
Cordery, Baskerville, & Porter, 2010; Hyndman & McMahon, 2010). .
Informal reporting to discharge accountability

Accountability can also be discharged through several types of informal
media, such as the internet (Dumont, 2013; Saxton & Guo, 2011), internal printed
media (Hardy & Ballis, 2013), mass media (Mack & Ryan, 2007; Sinclair, 1995;
Steccolini, 2004), dialogue, oral reporting, and/or social interactions (Avina,
1993; Cordery, et al., 2010; Dixon, et al., 2006; Godwin, et al., 2011; Gray, et al.,
2006; Hardy & Ballis, 2013; Jayasinghe & Soobaroyen, 2009; Mack & Ryan,
2007; Unerman & O'Dwyer, 2006b).
Many organisations use the internet (organisational website) to discharge

accountability for various reasons. The internet can be used to disseminate real-
time information because this technology is accessible anytime and anywhere
(Connolly & Dhanani, 2013). The internet can be reached by a large number of
stakeholders at a minimal marginal cost and provides an opportunity to engage in
an interactive dialogue with stakeholders (Saxton & Guo, 2011; Unerman &
Bennett, 2004; Waters, 2007). With internet, an organisation can disclose
immense quantity of information. more information than other media. For
example, a study in the US found that not-for-profit organisations used the
internet to disclose a wide variety of information, such as a description of
services, current news, the mission statement, annual reports, the listing of board
directors, IRS 990 form, message from the chief executive director, and a list of
organisational goals (Waters, 2007). Although the internet offers significant
opportunity for the dissemination of accountability information, existing studies
indicate that most not-for-profit organisations only use the internet to disclose

promotional information and not for disseminating accountability information
(Dumont, 2013; Gandía, 2009).
Mass media and internal printed media can also be used to discharge
accountability. Several stakeholders prefer mass media to annual reports because
the content of mass media is more accessible and easier to understand than annual
reports (Martin & Kloot, 2001; Patton, 1992). In addition, mass media is
published in shorter periods than annual reports, which are published annually;
therefore, the information in mass media is timely and relevant for stakeholders
(Mack & Ryan, 2007). For internal printed media, Hardy & Ballis (2013)
documented that internal printed media can also be used to discharge
accountability in not-for-profit organisations.
Social media has recently gained popularity as an organisational

communication tool. Similar to organisational websites, social media also can be
used as a method of disseminating accountability information because it is easily
accessible and can be used to do an interactive two-way dialogue between an
organisation and its stakeholders (Nah & Saxton, 2012; Scott & Orlikowski,
2012). However, it might be difficult to differentiate between the usage of social
media as a means for discharging accountability or as a means for promotional
activities. A study on the usage of social media by not-for-profit organisations in
the US found that not-for-profit organisations mostly use social media to
disseminate information about organisational activities, engagement activities
with external stakeholders, such as giving recognition for donations and responses
to stakeholder’s inquiries, and promotional activities to attract an audience to
participate in an event and funding (Lovejoy & Saxton, 2012). This indicates that
both accountability and promotional information are mixed within social media.
Dialogue, oral reporting, or social interactions can also be used to render

accountability of an organization (Cordery, et al., 2010). These informal
communication methods mostly occur in small organisations that have a high
degree of closeness between with their stakeholders (Godwin, et al., 2011;
Jayasinghe & Soobaroyen, 2009). Accounting and formal reporting technologies
are usually underdeveloped in small organisations; therefore the diffusion of

information does not depend solely on accounting (Avina, 1993). Informal
communication methods provide information about what occurs in an
organisation, offsetting the weaknesses of rudimentary accounting and reporting
technologies (Avina, 1993). While it is commonly used in small organisations,
Cordery et al. (2010) has documented the use of social interaction to discharge
accountability in a large organisation.
It is expected that zakat agencies will use various means to disseminate

accountability. Figure 4-3 depicts media that can be used by zakat agencies to
discharge accountability.
Figure 4-3 Skeletal Framework of Possible Media to Discharge

Accountability.
4.6 INTER-RELATIONSHIP AMONG THE CORE ELEMENTS OF

ACCOUNTABILITY
A number of authors have suggested that inter-relationships exist among the

core elements of accountability: (1) to whom accountability should be discharged;
(2) the scope of accountability and type of information to be disclosed; and (3) the
means of discharging accountability (Connolly & Hyndman, 2004; Connolly, et
al., 2011; Hyndman, 1990, 1991; Stewart, 1984; Waters, 2009). For example,
Stewart (1984) argued that every element of his ladders of accountability requires

different types of information. Information about a statement of goals and
objectives, inputs, output and outcome information, efficiency and effectiveness
information, budget information, and future target information are required to
evaluate performance accountability (Connolly & Hyndman, 2004).
The findings of previous empirical studies suggest that every group of

stakeholders has different information requirements and different preferences for
means to disclose accountability information (Connolly & Hyndman, 2013a;
Connolly, et al., 2012; Deegan & Rankin, 1997; Tooley, Hooks, & Basnan, 2010).
Based on a survey of stakeholders of for-profit organisations, Deegan and Rankin
(1997) found that bankers, academics, and shareholders are more likely to seek
environmental information than stockbrokers and financial analysists. A study of
the public sector context conducted by Tooley, Hooks, and Basnan (2010) found
that internal stakeholders (management, councillors, and employees) and external
stakeholders (the public, creditors, and state government) have similar views
regarding the importance of non-financial performance information, statements of
revenue and expenditure, and future plans. However, internal stakeholders and
external stakeholders have different perceptions about the importance of overview
and operational information, balance sheets, cash flow statements, and financial
information outside of financial statements (Tooley, et al., 2010).
In the context of not-for-profit organisations, Connolly et al. (2012) found

that academics, auditors, funders, and management have different views regarding
the importance of information about the usage of financial resources and
information about organisational activities. O’Dwyer and Boomsma (2015)
documented that the government, as a resource provider of not-for-profit
organisations, demands formal reporting. Based on a case study of 15 not-for-
profit organisations in India, Kilby (2006) found that downward accountability to
beneficiaries could be achieved by employing both formal accountability
mechanisms, such as by organising formal and regular meetings with
beneficiaries, and informal accountability mechanisms, such as conducting
irregular and informal meetings. Kilby (2006) also found that donors were more
interested in financial accountability than other areas of accountability.

Although several authors have suggested that the core elements of
accountability are inter-related, previous studies have only partially explored this
connection amongst the core elements of accountability, such as the relationship
between formal or informal accountability mechanisms and beneficiaries (Kilby,
2006) and the type of information considered important by administrators and
donors of not-for-profit organisations (Hyndman, 1990, 1991). Therefore, this
study explores the inter-relationship amongst all core elements of accountability.
Figure 4-4 describes the framework of possible inter-relationship among the core
elements of accountability.
Figure 4-4 Skeletal Framework of Possible Inter-relationship among the Core

Elements of Accoountability
4.7 THEORETICAL UNDERSTANDING AND RESEARCH

QUESTIONS
The accountability literature that informs this study suggests that the notion
of accountability is related to whom an organisation should be accountable, for
what an organisation should be accountable, what types of information an
organisation should disclose to satisfy every area of the scope of accountability,
and by what means an organisation should discharge its accountability (Murtaza,
2012; Najam, 1996; Ospina, et al., 2002; Ryan & Irvine, 2012a; Tower, 1993). As
stated in Chapter 1, the aim of this study is to investigate the understanding of
accountability in the context of zakat agencies. An empirical investigation was
required to flesh out the skeletal framework regarding accountability in the
context of zakat agencies. To achieve the aim of this study, this study asks the
following research questions:


d) According to the donors of zakat agencies, by what means should
The first research question was proposed to achieve the objective of this study
regarding the understanding of accountability from the perspective of internal
stakeholders, that is, administrators; while the second research question was
proposed to address the second objective of this study in relation to understanding
the views and perceptions of external stakeholders of zakat agencies, that is,
donors, on the notion of accountability.
As discussed in Section 4.6, a number of authors have suggested that an

inter-relationship exists amongst the core elements of accountability: (1) to whom
accountability should be discharged; (2) the scope of accountability and type of
information to disseminate accountability; and (3) means to discharge

accountability. Therefore, this study aims to operationalise the qualitative
understanding of accountability in a quantitative inquiry by answering the
following research question:

As the nature of this study is exploratory, this study does not predict the direction
of inter-relationship between these core elements of accountability.
An accountability gap can exist if inconsistencies occur between the

perceptions of donors, the perceptions of administrators, and the disclosure
practised by an organisation (Connolly & Hyndman, 2013b; Hyndman, 1990,
1991). Therefore, the third research objective was to identify the possibility of an
accountability gap and to identify additional disclosure that could improve the
accountability of zakat agencies, if an accountability gap exists. This research
objective was addressed through the following research question.
4.8 SUMMARY
This chapter highlighted the accountability literature that informed this

study. Discussion about the meaning of accountability indicates that
accountability is a socially constructed concept and different individuals have
different perceptions regarding accountability. Although the exact definition of
accountability is elusive, this study adopts the definition of accountability as an
obligation of an individual or organisation to provide an explanation and
justification for their actions and the results (Roberts & Scapens, 1985). The
exploration of accountability in the literature led the discussion of accountability
around these core concepts: (1) to whom should an organisation be accountable;

(2) for what should an organisation be accountable for and what types of
information should be disclosed by an organisation; and (3) by what means should
an organisation discharge its accountability.
Regarding to whom zakat agencies should be accountable, the

accountability literature outlines that zakat agencies should be accountable to a
wide range of stakeholders, including resource providers, regulators, beneficiaries,
and others. In terms of ‘for what’, Stewart’s (1984) ladder of accountability
provides a basic framework to evaluate the scope of accountability of zakat
agencies. However, because a zakat agency is an Islamic faith-based organisation,
and to promote greater accountability, the scope of accountability of zakat
agencies is expected to include other areas of accountability. The scope of
accountability of zakat agencies should consist of financial accountability, legal
accountability, governance accountability, programme accountability,
performance accountability, mission accountability, Syari’ah accountability, amil
fund accountability, and ethical accountability. Consequently, information
disclosed by zakat agencies should satisfy all areas of these aspects of the scope of
accountability. Regarding the means to discharge accountability, it is expected
that zakat agencies will use various media to disseminate accountability
information, such as annual reports, financial reports, the internet, mass media,
and others. Finally, as previous studies have suggested that the core elements of
accountability are inter-related, this study also investigates the existence of an
inter-relationship among the core elements of accountability. The next chapter
discusses the research methods adopted in this study.

Chapter 5: Research Methods
5.1 INTRODUCTION
This chapter discusses the methods employed in this study. The selection of
research methods in this study was guided by the MRT research perspective and
based on the ability of selected methods to address every research question. This
chapter is structured as follows. Section 5.2 highlights the mixed methods adopted
in this study. Sections 5.3 to 5.6 describe research methods used to answer every
research question that includes sample selection methods, data collection, and
analysis methods. Section 5.7 highlights the approach used to discuss the research
findings. Finally, this chapter concludes with a summary in Section 5.8.
5.2 MIXED METHODS RESEARCH
As discussed in Chapter 3, this study follows the MRT paradigm proposed

by Laughlin (1995, 2004, 2007). From a research paradigm perspective, MRT
allows the adoption of mixed methods because MRT posits that “subjectivity and
structured formality” can be combined to produce a better understanding of the
empirical phenomenon being investigated (Laughlin, 2007, p. 275). MRT prefers
qualitative methodology but also permits the use of quantitative methodology,
such as surveys (Broadbent & Laughlin, 2013). Guided by the research paradigm
that underpins this study, it was important to employ research methods that are
appropriate to the research aims and research questions being investigated
(Creswell & PlanoClark, 2007).
Several previous studies have adopted the MRT perspective and used a
mixed methods approach, for example, Basnan (2010) used MRT and mixed
methods to investigate the accountability of Malaysian local authorities, while
Sardesai (2014) used MRT and mixed methods to investigate the impact of a new
public policy on management accounting technologies and the working life of
academics. The mixed methods approach has also been used in previous
accountability studies (e.g. Connolly, et al., 2012; Kreander, et al., 2009; Yasmin,
Chapter 5: Research Methods 83

et al., 2013). These authors stated that mixed methods can provide a robust
approach and are appropriate for use in accountability research.
Mixed methods research employs both quantitative and qualitative methods

to collect and analyse data in one or more stages of study (Creswell & PlanoClark,
2007; Johnson, Onwuegbuzie, & Turner, 2007). It is argued that mixed methods
can produce a more robust conclusion than a single method because the
weaknesses of a particular method can be compensated by the strengths of other
methods (Jick, 1979; Tashakkori & Teddlie, 2010). Furthermore, the combination
of qualitative and quantitative methods can produce a better understanding of a
research phenomenon being investigated than only using a quantitative or
qualitative method (Bryman, 2006). While the motivation to adopt mixed methods
is varied, the main reason to adopt mixed methods is because different research
questions need to be addressed through both quantitative and qualitative methods
(Johnson & Onwuegbuzie, 2004). This study adopted mixed methods research
because different research questions in this study needed to be addressed by
qualitative and quantitative methods. The methods of data collection consisted of
a survey, interviews, and a content analysis of documents and websites. Table 5-1
summarises the research methods and data collection methods used in this study
and research questions addressed.
84 Chapter 5: Research Methods

Table 5-1 Research Methods Used to Answer Research Questions
Data Collection
No Research Questions Participants
Methods
RQ.1 How is accountability understood by Qualitative method - The
the administrators of Indonesian zakat Interviews administrators
agencies? of zakat
a) To whom do the administrators of agencies
zakat agencies believe zakat
b) What is the scope of
accountability of zakat agencies
according to the administrators of
zakat agencies?
c) What information (financial and
non-financial) do the
administrators of zakat agencies
consider necessary to be
disclosed by zakat agencies to
discharge their accountability?
d) According to the administrators
of zakat agencies, by what means
should zakat agencies discharge
their accountability?
RQ.2 How is accountability understood by Quantitative method The donors of

the donors of zakat agencies? – Survey zakat agencies
a) To whom do the donors of zakat
agencies believe zakat agencies
b) What is the scope of
according to the donors of zakat
agencies?
c) What information (financial and
non-financial) do the donors of
zakat agencies expect and
consider necessary to be disclosed
by zakat agencies to discharge
their accountability?
d) According to the donors of zakat
agencies, by what means should
zakat agencies discharge their
accountability?
RQ.3 What inter-relationships exist Data to answer RQ.3 The donors of
amongst the core elements of was derived from zakat agencies
accountability in the context of zakat RQ.2.
agencies?

Data Collection
No Research Questions Participants
Methods
RQ.4 Is there an expectations gap in the Content analysis of Not applicable
scope and disclosure of zakat agency annual reports,
accountability between administrators internal magazines,
and donors? website, social media
a) What media and type of (Facebook).
information is currently used and
disclosed?
b) Do administrators and donors
have different views on to whom,
for what and how to discharge
accountability?
5.3 RESEARCH METHODS USED FOR RESEARCH QUESTION 1
Semi-structured interviews with the administrators of zakat agencies were

employed as a method to collect data to answer research question 1. Although
other data collection methods (i.e questionnaire) can also be used to collect
information about the understanding of accountability from the perspective of
administrators, the decision to conduct semi-structured interviews was taken on
the basis that the nature of this study is ‘exploratory’. While accountability is
broadly discussed in the literature, the meaning of accountability remains elusive
and the understanding of accountability in the context of Islamic organisations is
limited. Richards and Morse (2007) argue that the semi-stuctured interview is
appropriate for a study where the existing literature can provide a general
understanding about new phenomena but the detail of this new phenomena may
differ from that discussed in the existing literature. Accountability literature
guides this study, especially in developing interview protocol and interpreting
data, but the understanding of accountability in the Islamic organisational context
may be different from that in the existing literature. Therefore, semi-stuctured
interviews were employed because they provide an opportunity to explore
perceptions, understandings, thoughts, experiences, and unique information held
by individuals interviewed (Stake, 2006; Richards & Morse, 2007). Further, by

employing semi-structured interviews, it is possible to probe, clarify, and refine
information proposed by participants. Several authors have used semi-structured
interviews in previous accountability studies, for example, to investigate the
understanding of accountability in charitable organisation in the UK from the
perspective of donors (Connolly & Hyndman, 2013a) and the perceptions of
accountability in Australian faith-based not-for-profit organisation contexts
(Crofts, 2009).
5.3.1 Sample Selection Method

As discussed in Chapter 2, Indonesian zakat agencies differ in size (large
and small) and type of organisation (local Imam, government-sponsored zakat
agency, and private zakat agency). Based on the accountability literature, there is
a high degree of closeness and transparency in a small community organization
(Avina, 1993; Goodwin, et. al., 2001; Jayasinghe & Soobaroyen, 2009) such as
zakat collection by local Imams. Thus, it can be argued that the collection and
distribution of zakat by local Imams is relatively similar to that of the work of a
small community organisation because all donors and beneficiaries are members
of the local community or congregation. Donors are more readily able to see what
happens to their zakat and this narrows the gap of accountability. In contrast, this
natural transparency does not exist in zakat distribution by formal organisations,
and formal accountability mechanisms, such as reporting and disclosure of
information, are needed. Therefore, local Imams are excluded from the sample for
this study and the focus is only on formal zakat agencies (i.e. government-
sponsored zakat agencies and private zakat agencies).
Because formal zakat agencies vary in terms of size and type of

organisation, it was necessary to select a sample that represented different types
and sizes of organisations to capture variations and improve representativeness
(Eisenhardt, 1989; Stake, 2006). In addition, previous empirical research has
indicated that accountability practised by organisations is influenced by the size of
an organisation (Avina, 1993; Christensen & Mohr, 2003; Connolly & Hyndman,
2004). The variability of the sample also provided an opportunity to contrast
between small and large zakat agencies and between government-sponsored zakat

agencies and private zakat agencies. Thus, the sample was selected from small
and large government-sponsored zakat agencies, and small and large private zakat
agencies.
This study used income as the proxy of size as this has been adopted in a
number of previous studies (Connolly & Hyndman, 2001, 2004; Schmitz, et al.,
2012; Yasmin, et al., 2013). Connolly and Hyndman (2001, 2004) classified
charitable organisations with annual income the same or less than £650,000 (AUD
1,100,000 ≈ Rp11,000,000,000) as a small charitable organisation, while
charitable organisations with an annual income of more than £650,000 were large
charitable organisations. Following Connolly and Hyndman (2001, 2004), this
study classified zakat agencies with an annual income the same or less than
Rp11,000,000,000 (AUD 1,100,000) as a small zakat agency, while zakat
agencies with an annual income of more than Rp11,000,000,000 (AUD
1,100,000) were considered large zakat agencies.
The initial list of zakat agencies was obtained from the list of registered
zakat agencies issued by the Indonesian Taxation Office. This list only covers the
Central BAZNAS and 19 private zakat agencies. Eleven registered zakat agencies
had revenue of less than Rp11,000,000,000 (AUD 1,100,000), while eight zakat
agencies had revenue of more than Rp11,000,000,000 (AUD 1,100,000) in 2010
(Meutia, 2012). Because some zakat agencies are unregistered, this study also
tried to find participants from unregistered zakat agencies. The internet was used
to identify unregistered zakat agencies by using key words ‘lembaga amil zakat’.
The number of unregistered zakat agencies was unknown and the process of
finding unregistered zakat agencies was halted after 15 private unregistered zakat
agencies were identified. The contact details of registered and unregistered private
zakat agencies were obtained from the internet using the ‘Google’ search engine
and key words the name of private zakat agency.
The contact details of government-sponsored zakat agencies were collected

from the internet using the ‘Google’ search engine and key words ‘badan amil
zakat nasional’ and the name of local or provincial governments. This process
was also halted after the contact details of 15 government-sponsored zakat

agencies were identified. Therefore, the list of zakat agencies used in this study
consisted of 49 zakat agencies (19 registered zakat agencies, 15 unregistered zakat
agencies, and 15 government-sponsored zakat agencies).
The use of the internet to obtain the contact details of zakat agencies
excluded zakat agencies that did not have a website. However, this method was
considered appropriate as this study also investigated the usage of the internet to
discharge accountability. Therefore, zakat agencies that did not have a website
were excluded from this study.
Table 5-2 summarises the sample selection process and the final number of
zakat agencies. The fieldwork undertaken to collect data was conducted twice.
The first fieldwork was from December 2014 to March 2015. A letter requesting
participation in this study was sent to 14 (out of 49) selected zakat agencies.
Approximately two weeks after the initial letter request had been sent, the
researcher phoned zakat agencies that did not reply to ask about their response to
this study. Three local government-sponsored zakat agencies, two provincial
government-sponsored zakat agencies, one small private zakat agency, and two
large private zakat agencies agreed to participate in this study.
Table 5-2 Sample Selection Process

1st Fieldwork 2nd Fieldwork Total
No Description Agree to Agree to Agree to
Invited Invited Invited
Participate Participate Participate
1 Small-local government-
3 3 1 1 4 4
sponsored zakat agencies
2 Small-provincial
government-sponsored 2 1 0 0 2 1
zakat agencies
3 Large-provincial
government-sponsored 1 1 0 0 1 1
zakat agencies
4 Small private zakat
3 1 2 1 5 2
agencies
5 Large private zakat
5 2 6 1 11 3
agencies
Total 14 8 7 3 23 11
The second fieldwork was shorter than the first fieldwork and was
conducted for two weeks at the end of October 2015. Emails requesting
participation in this study were sent to seven zakat agencies. Approximately two

weeks after the initial email request had been sent, a second email request was
sent to the zakat agencies that did not reply to the first email. One local
government zakat agency and two large private zakat agencies agreed to
participate in this study. In total, eleven zakat agencies participated in this study.
The number of organisations involved in this study was considered sufficient
because four or more cases in a study are considered appropriate to gain an
understanding of a research phenomenon (Eisenhardt, 1989; Stake, 2006).
There is an inherent limitation in the sample section processes adopted in

this study. Self-selection bias may exist in this study. Zakat agencies that gave
positive responses to the interview request may have good accountability
practices, while those that did not have good accountability systems may have
refused to participate. This means that the sample may not necessarily represent
the population. In addition, due to time and resource constraints, this study only
investigated a few zakat agencies and interviewed a relatively small number of
participants in each stakeholder group. This small sample might limit the
generalisability of the findings from this study to other zakat agencies.
5.3.2 Characteristics of Respondents

The participatants of this study consist of 17 respondents from 11 zakat
agencies. Table 5-3 provides information about the profile of respondents. All
interviewees could be considered as senior staff, with positions ranging from
Manager to Chief Executive. They all had more than five years of experience in
administrating zakat agencies. While most interviewees were willing to be
intervieweed individually and, as such become an organisational participant, other
contacted potential interviewees insisted on additional organisational members
also being in attendance – either due to perceived lack of confindence or in
consideration that ‘accountability’ is a concept equally applicable to areas of the
organisation beyond the realm of one person or departement. Ten (out of 11) zakat
agencies that participated in this study are from large cities. Therefore, the views
of participants reflect the understanding of accountability from zakat agencies in
large cities.

Table 5-3 Distribution of Interviewees
No Code Position Size Organisation Location Remarks
1 P1 General Manager Small Local BAZNAS A Large City

P2 Executive Secretary Small Local BAZNAS A Large City
P3 Executive Secretary Small Local BAZNAS B Large City Interview was
2
conducted in a
P4 Treasurer Small Local BAZNAS B group
3 P5 Chief Executive Small Local BAZNAS C Small City Interview was
P6 Executive Secretary Small Local BAZNAS C (Regency) conducted in a
group
P7 Treasurer Small Local BAZNAS C
4 P8 Chief Executive Small Local BAZNAS D Large City
Provincial BAZNAS Large City Interview was
P9 Chief Executive Small
E conducted in a
5
Accounting Advisor Provincial BAZNAS Large City group
P10 Small
(Volunteer) E
Communication Provincial BAZNAS Large City
P11 Small
Advisor (Volunteer) E
Provincial BAZNAS Large City
6 P12 Finance Manager Large
F
7 P13 Chief Executive Small LAZ G Large City
8 P14 General Manager Small LAZ H Large City
9 P15 Chief Accounting Large LAZ I Large City
Vice President Large City
10 P16 Large LAZ J
Director
11 P17 Operating Director Large LAZ K Large City
5.3.3 Interviews Protocols

There was no difference in the interview protocol between the first and
second fieldwork. This study employed semi-structured interviews to gain an
understanding of the notion of accountability from the perspective of internal and
external stakeholders of zakat agencies. The semi-structured interviews used
interview guides that consisted of open-ended questions to be explored during
interviews. The interview guides were used to provoke responses from the
respondents, so that they could express their knowledge and opinion regarding the
themes investigated in this study. The interview guides helped the researcher to
ask every research question but still allowed the participants to express their
understanding according to their preference (Patton, 2002). Thus, semi-structured
interviews were more systematic than unstructured interviews, but still enabled

the researcher to probe and further explore specific information that emerged
during the interviews (Patton, 2002).
The content of the interview guide was informed by the theoretical

framework and previous empirical findings (see Appendix B). In addition, the
content of the interview guide was also informed by a preliminary understanding
about the business process of zakat agencies and their current accountability
practices gained from websites and public document analysis. The drafts of the
interview guide were revised several times based on feedback from the research
supervisors. The drafts of the interview guides were also revised based on advice
from two Indonesian research students who reviewed the interview guide. The
interview guide covered the main research themes, such as ‘the meanings of
accountability’, ‘to whom’. ‘stakeholders’, ‘dissemination of information’ and
‘financial reporting.
This study employed both face to face and telephone interviews. The
protocol for direct face to face interviews and telephone interviews, as well as the
protocol for an individual and a group interview was similar. All interviews began
with a brief introduction about this study, then the researcher explained the nature
of participation, which was voluntary, anonymous, and could be withdraw until
three months after the interview was conducted. The researcher explained that
neither interviewees nor their organisations would be identified in the interview
transcripts, this thesis, or other publications based on the data collected in this
study.
Participants were asked to read a participation information sheet and to sign

a consent form if they decided to participate (see Appendix B). The participants
also had the opportunity to read the list of questions (the semi-structured interview
guide) before the interview was conducted. After obtaining consent from the
participants, the researcher asked ice breaker questions about recent developments
in zakat administration and the growth of zakat agencies in Indonesia. This was
followed by asking questions that focused on the themes of this study, such as the
meanings of accountability, to whom zakat agencies should be accountable, and
how zakat agencies should discharge their accountability.

The interviews were held at the participants’ offices. No participants
received a reward or incentive for their time and participation. The interviews
lasted between 30 minutes to 2 hours and the average duration was 51 minutes.
Three interviews were conducted in a group that consisted of two or three
respondents. In a group interview, every participant could confirm, reject, or add
more information; therefore, a group interview could produce more robust results
than a single interview. In addition, two interviews were conducted by phone
because a direct face to face interview could not be arranged during the fieldwork.
All interviews were in Indonesian and audio-recorded for transcription. The

recordings were immediately transcribed and translated into English by the
researcher to ensure accuracy. The transcripts were carefully re-read several times
while listening to the recordings to gain some insight into participants’
understanding of the concept of accountability. These processes also offered an
opportunity to become immersed in the data, which is important in qualitative
analysis. These processes enabled the researcher to identify a saturation point or
provide early warnings on additional information that was required (Patton, 2002).
To achieve reliability, validity, objectivity, and data interpretation accuracy, the
transcriptions were emailed to respondents and proposed results were discussed
with supervisors (peer debriefing) (Creswell & Miller in Marshall & Rossman,
2011)
5.3.4 Analysis of Interview Data

The interview transcriptions were long, unstructured, and messy. Therefore,
the interview transcriptions need to be classified into pre-determined topics to
assist with interpretation. Assisted by NVivo software, content analysis was
employed to classify words or sentences that had a similar conceptual meaning
into pre-defined topics (Grbich, 2007). Content analysis has been used in a
number of studies that employed interviews to explore the understanding of
accountability (Campbell & Lambright, 2016; Schmitz, et al., 2012).
An important stage of content analysis is the development topic lists (code

book) into which words or sentences from the interview transcriptions are
classified (Dhanani & Connolly, 2012). In this study, both a theory-driven

(deductive) approach (Crabtree & Miller, 1999) and data-driven (inductive)
approach were employed (Boyatzis, 1998) to develop pre-defined topic lists. The
pre-defined topic lists were drawn from the existing literature and prepared in
advance. This pre-defined topic list consisted of variables that were related to all
core elements of accountability, such as God and donors (to whom), financial
accountability and legal accountability (for what), and annual reports and
magazines (how). However, it was possible that the pre-defined topic lists may
not capture all topics that emerged from the interviews. Therefore, the pre-defined
topic lists were modified or extended during data analysis (Campbell &
Lambright, 2016).
Before the interview transcriptions were coded based on the content, it was
important to assign descriptive information, such as the date of interview, types,
and size of zakat agency into the interview transcripts. This descriptive coding
was useful for later retrieval when the researcher looked for patterns related to a
particular characteristic of data (Richards, 2009; Richards & Morse, 2007). For
example, by using codes based on the type of zakat agency (government-
sponsored versus private zakat agencies), the researcher could easily locate and
retrieve information about to whom zakat agencies should be accountable based
on interviewees that represented government-sponsored or private zakat agencies.
After the data was labelled according to the descriptive characteristics of the
interviewees, every word or sentence from the interview transcripts was coded
and classified into pre-defined topic lists. After every interview transcript was
coded, interpretation was undertaken in light of existing theories. This approach
fits with MRT philosophy, which considers prior theories as guidance for current
research.
There is an inherent weakness in content analysis. Content analysis uses a

given set of pre-designed code (theory driven code) to categorise and analyse the
data, therefore reducing large data into smaller organised data. However, the pre-
designed code can also deflect the attention of the researcher from emerging
themes (data-driven code) that are not found in the code book (Silverman, 2013).

Although this study employed both theory-driven code and data-driven code, there
was the possibility that several emerging themes may be overlooked.
A survey was used to collect data to address the second research question
about the perceptions of donors regarding the notion of zakat agencies’
accountability. A survey was selected because it could be used to collect
quantitative and qualitative information from a large number of individuals in a
relatively short period of time at a minimum cost (Kayrooz & Trevitt, 2005).
5.4.1 Sample Selection Method

Surveys are generally used: (1) to provide description about a population;
(2) to provide an explanation about a particular phenomenon; and (3) to explore or
identify certain concepts or attributes from a population (Babbie, 1990). Surveys
have been used in previous accounting research seeking to identify users of
accounting information and their information needs (e.g. Mack & Ryan, 2006;
Tooley, et al., 2010).
The survey instrument combined both open-ended and closed questions (see
Appendix C). The contents of the survey were developed based on a review of
the previous literature. Based on feedback from supervisors, the content, layout,
and wording of the questionnaire draft went through several minor and major
revisions and refinements. After the final draft was approved by the supervisors,
the questionnaire draft was translated into Indonesian. Two research students from
Queensland University of Technology (QUT) were asked to review the
translation, content, and wording of the final questionnaire draft.
A pilot study is necessary to ensure that every question in the questionnaire

draft captures all information needed in a study and the questionnaire can be
understood by participants (Oppenheim, 1992). Thus, the questionnaire in
Indonesian was pilot tested with five Indonesian research students, one manager
of a local government-sponsored zakat agency, and one government employee.
The content and translation of the questionnaire were revised again according to
feedback from the translation reviewers, pilot test participants, and supervisors.

The survey package consisted of a participant information sheet, an
invitation to participate in the survey, the questionnaire, and a return envelope.
The participant information sheet explained about the researcher and his
institution, providing brief information about this study, ethical clearance, and
confidentiality. Convenience sampling was used to select participants. This study
used two methods to distribute the questionnaire to Muslims who gave zakat to
government-sponsored zakat agencies and private zakat agencies. First, the
researcher distributed 500 questionnaires in sealed envelopes directly to
participants at their offices. The researcher selected offices that were near the
office of the zakat agencies for convenience and to achieve a high response rate
because the researcher could directly distribute and collect the surveys.
Participants were given seven days to complete the questionnaires. After one
week, the researcher collected the questionnaires in a sealed envelope to secure
confidentiality from participants in their office.
Secondly, the researcher asked the administrators of zakat agencies to

distribute postal survey packages to their donors. The content of postal survey
packages is similar to the non-postal survey packages, except that the postal
survey packages also contain a pre-paid stamped return envelope. Previous studies
have also used the postal survey method to maintain confidentiality (Hyndman,
1990). Three zakat agencies agreed to distribute postal questionnaires to their
donors. A total of 100 postal questionnaires were given to zakat agencies for
distribution to their donors. The postal questionnaires were directed towards
participants who lived far from the office of the zakat agency.
Similar to the interview participants, the survey participants did not receive
a reward or incentive for their time and participation. In order to increase the
response rate, the researcher stated that a donation of Rp10, 000.00 (AUD 1) 15
would be given on behalf of the participant to a zakat agency selected by the
participant for every survey completed and returned. The survey participant could
15 The funding for this donation was provided by the Research Project Support Scheme from the QUT
Business School and paid on 15-17 June 2015.

select their preferred zakat agency from a list of zakat agencies provided in the
survey package.
Like all data collection methods, the survey has disadvantages, such as: (1)
the respondent may misinterpret questions; (2) the ordering of questions
sometimes has an impact on the respondent’s answers; (3) the cultural and
personal background of respondents can influence their answer; and (4) the
respondents do not try hard to answer survey questions (Foddy, 1993). The
method of selecting respondents also created limitations in this study. Given that
an organisation has various groups of stakeholders, this study only focused on one
type of external stakeholder, that is, donors. The other groups of stakeholders
were not represented in the surveys and may have different perceptions regarding
accountability.
5.4.2 Analysis of Survey Data

For data analysis purposes, returned questionnaires with many unanswered
questions were not included in analysis. From 500 surveys returned, 239
responses were usable, with a response rate at 47.80%. This sample size was
considered sufficient to ensure the robustness of statistical data analysis
(Oppenheim, 1992). Data collected from the surveys were analysed using SPSS
version 23 statistical software. Descriptive analysis was used on every survey
question to identify the distribution of data and to gain an understanding of the
data collected (Onwuegbuzie & Combs, 2010). Various statistical tests were used
to examine the difference in perceptions regarding several accountability elements
by the groups of donors (who gave to local Imam, government-sponsored zakat
agencies, and private zakat agencies) and different demographic attributes of
donors: (1) the level of education; (2) sector of employment; and (3) age groups.
Chi-square tests and Kruskal-Wallis tests were used for nominal data, while the
multivariate analysis of variance (MANOVA) test was used for scale data. In
addition, factor analysis was used to create smaller groups of variables that shared
similar attributes (Pett, Lackey, & Sullivan, 2003).

Factor Analysis
Factor analysis was employed in this study to condense a large number of
variables into a smaller set of variables to understand the underlying construct and
inter-relationship among variables. Factor analysis is a data reduction method
used to identify patterns of data without losing much information by consolidating
several highly correlated variables into a few set of factors that share variance
(Hair, Black, Babin, Anderson, & Tatham, 2006). Factor analysis assumes that
highly correlated variables share similar underlying evaluative dimensions (Hair
et al., 2006). It also assumes that there is a linear relationship between variables
and factors (Gorsuch, 1983). The grouping of variables into a factor is based on
the value of the loading score. The loading score indicates the magnitude of the
correlation between a variable and a factor.
The responses of participants to survey questions 7 (to whom zakat agencies

should be accountable), 8 (for what aspects zakat agencies should be accountable),
12 (how zakat agencies should discharge their accountability), and 13 (type of
information that should be disclosed by zakat agencies) (see Appendix C)
consisted of more than five variables. Therefore, factor analysis was used to group
and simplify the responses of participants to understand the inter-relationships
among variables and to identify the underling constructs of every factor. In
addition, the simpler classification of participants’ responses produced by factor
analysis facilitated correlation analysis to answer research question 3.
Factor analysis can be performed using several different techniques,

however, this study used principal component analysis (PCA) to develop factors.
PCA is usually used in exploratory studies where the inter-relationship among
variables is not widely understood (Pett, et al., 2003; Tabachnick & Fidell, 2007).
A few previous accounting studies have used factor analysis to reduce the number
of variables in exploratory studies (Fullerton, Kennedy, & Widener, 2013; Ritchie
& Kolodinsky, 2003; Scandura & Viator, 1994). Dumont (2013) also used factor
analysis to investigate the virtual accountability of non-for-profit organisations.
This study can be classified as an exploratory study because the meaning of

accountability in the context of zakat agencies has not been clearly theorised. In

addition, the constructs in this study were developed based on prior literature in
Western and Christian contexts. Thus, an exploratory factor analysis was
considered appropriate to simplify the constructs identified in this study.
Before proceeding to factor analysis, it was important to evaluate the

suitability of the data. Factor analysis also necessitates the presence of inter
correlations between variables where some correlation coefficients of variables
must be greater than 0.3 (Tabachnick & Fidell, 2007). The identification of inter
correlations was undertaken by visually inspecting the correlation matrix, in
addition to Bartlett’s test of sphericity to determine the existence of sizable
correlation among variables. Factor analysis requires at least five variables and 50
observations (10 observations per variable) (Hair, et al., 2006). To measure the
adequacy of the sample and to assess the appropriateness of factor analysis
application, a Kaiser-Meyer-Olkin (KMO) test was performed (Pallant, 2016).
After preliminary statistical tests confirm that the data collected is suitable
for factor analysis, it is important to determine the number of factors. The number
of factors can be determined by retaining factors that have eigenvalues greater
than 1 (Kaiser’s criterion), examining the scree plot, and parallel analysis (Pallant,
2016). As suggested by a number of authors, this study primarily employed
parallel analysis to determine the number of factors (Hayton, Allen, & Scarpello,
2004; O’Connor, 2000; Pallant, 2016). However, this study also considered
existing theories and factor interpretability to determine the number of factors
(Pett, et al., 2003). If the number of factors retained based on parallel analysis did
not fit with the existing theories, the number of factors was determined based on
the other two methods.
Parallel analysis was conducted using MonteCarloPA software developed

by Watkins (2000). The magnitude of eigenvalues and scree plots was also
evaluated to determine the appropriateness of the number of factors. The grouping
of variables was based on the score of a factor loading greater than 0.4 (Nunnally
& Bernstein, 1994; Ritchie & Kolodinsky, 2003). Factor analysis may produce
variables that load into more than one factor (cross-loading), making
interpretation difficult. In this case, the factors were rotated to ease the

interpretation of data (Tabachnick & Fidell, 2007). In this study, both oblique
(Oblimin) and orthogonal (Varimax) rotations were used, allowing the results of
rotation methods to be compared.
Factor analysis has limitations. First, it is sometimes difficult to give a name

to a factor because variables that load into a particular factor may not theoretically
correlate or make logical sense. Second, several variables may load equally into
more than one factor (cross-loading), even after rotation. Therefore, cross-loading
variables and variables that load onto a factor that does not theoretically correlate
or make logical sense are usually deleted (Fullerton, et al., 2013).
5.4.3 Characteristics of Respondents

The demographic characteristics of survey respondents have implications
for the interpretation of findings. Therefore, it is important to gain insight on the
demographic characteristics of survey respondents. Table 5-4 presents the cross-
tabulation of respondents by the groups of respondents who gave most of their
zakat to local Imams, government-sponsored zakat agencies, and private zakat
agencies, and the demographic profile of the respondents (sector of employment,
age category, and the level of education). 16
Table 5-4 Cross-tabulation of the Groups of Respondents Who Gave to Local

Imams, Government-sponsored Zakat Agencies, and Private Zakat Agencies by
Demographic Profiles
Government-
Private All
sponsored
Local Imam Zakat Respondents
Demographic Profile Zakat
Agencies n=239
Agencies
Freq. % Freq. % Freq. % Freq. %
Sector of Employment 17
Government employee 138 58.97 37 15.81 27 11.54 202 86.32
Non-government
13 5.56 6 2.56 13 5.56 32 13.68
employee 18
Total Responses 151 64.53 43 18.38 40 17.09 234 100
Did Not Respond to This Question 5
16 This survey did not ask for information about the geographical location of where the respondents resided.
17 Data was initially collected based on six areas of employment (see Appendix Q); however, it was
collapsed into two categories due to a low frequency in several categories.
18 Non-government employees consist of state-owned company employees, private company employees, or
self-employed and others.

Age Category19
≤ 30 37 15.74 5 2.13 9 3.83 51 21.70
31 – 40 46 19.57 18 7.66 15 6.38 79 33.62
41 – 50 40 17.02 13 5.53 9 3.83 62 26.38
≥ 51 29 12.34 7 2.98 7 2.98 43 18.30
Total Responses 152 64.68 43 18.30 40 17.02 235 100.00
Education 20
Below Bachelor degree 36 15.32 7 2.98 9 3.83 52 22.13
Bachelor degree or higher 116 49.36 36 15.32 31 13.19 183 77.87
Total Responses 152 64.68 43 18.30 40 17.02 235 100
The majority of respondents (155 respondents or 64.85%) indicated that
they gave most of their zakat to local Imams. There were 44 (18.41%) respondents
who stated that they gave most of their zakat to government-sponsored zakat
agencies, and 40 (16.74%) respondents stated that they gave most of their zakat to
private zakat agencies. Based on the sector of employment, the majority of
respondents (86.32%) were government employees. According to their age
groups, the majority of respondents were below 40. Based on the level of
education, the majority of respondents were well educated, as 77.87% of them had
completed university. Based on 2014 population data issued by Statistics
Indonesia, 21 government employees only represent 3.8% of the labour force and
the percentage of the labour force who hold a bachelor degree qualification is
7.5%.
The demographic profile indicates that the sample is not representative

because the majority of respondents were government employees or well-educated
individuals, while the majority of the Indonesian population are not government
employees and have education levels below a bachelor degree. Therefore, the
19 Age data was initially collected based on six categories (see Appendix Q). However, there were only
three respondents below 21 years (1.3%) and one respondent above 60 years (0.4%). Therefore, the ‘≤ 20’
and ‘21-30’ categories and ‘51-60’ and ‘≥ 61’ categories were merged.
20 Education data was initially collected into five categories in this survey (see Appendix Q). However, the
levels of education were reduced into only two categories (below bachelor degree and bachelor degree or
higher) because several variables had a zero or low frequency.
21 According to 2014 data provided by Badan Pusat Statistik (Statistics Indonesia), the number of
government employees was 4,455,303 (https://www.bps.go.id/linkTabelStatis/view/id/1174), the
workforce population was 118,169,922 and the number of those in the work force with a bachelor degree
or higher was 8,846,837 (https://www.bps.go.id/linkTabelStatis/view/id/1936)

results of this survey may not reflect the perception of the general population who
give zakat. The results of this study are more likely to reflect the understanding of
accountability in the zakat agency context from the perspective of well-educated
government employees. Although the sample is not representative, based on the
MRT research perspective adopted in this study, the findings of this study still
provide a valuable theoretical insight that can enrich the skeletal understanding of
the notion of accountability.
The data to answer the third research question were generated using factor
analysis. Factor analysis was used to produce a new set of values or scores for
every respondent on every variable of the core element of accountability (Pett, et
al., 2003). These new values or scores were labelled as factor scores and replaced
the original score collected in the survey. In this study, factor scores were
produced using the regression method (Tabachnick & Fidell, 2007). The factor
scores were then used in non-parametric correlation tests to determine whether
there was a significant correlation among to whom, for what, type of information,
and how. A MANOVA test was also performed to establish whether there was a
significant difference in the views of donors about the concept of accountability
among the groups of donors and donors who had different demographic attributes
(the primary beneficiaries of zakat, the age of donors, the level of education, and
occupation).
The aim of research question 4 was to investigate the existence of an

accountability gap in the accountability of Indonesian zakat agencies. In order to
identify an accountability gap, it is necessary to identify media used by zakat
agencies to discharge their accountability and the presence or absence of
accountability information in these media. Content analysis was used to identify
the presence or absence of accountability information in annual reports, internal
printed media, the internet (website), social media, and mass media of Local
BAZNAS A, B, C, and D, Provincial BAZNAS E and F, small LAZ G and H, and
large LAZ I, J, and K. The results of the content analysis were compared with the

views of administrators and donors as to whom, for what, the types of information
and the media that should be used by zakat agencies to answer research question
4. Content analysis was selected because this method has been used in previous
studies investigating the use of various media to discharge accountability, such as
annual reports (Dhanani & Connolly, 2012; Flack, 2007; Hyndman, 1990, 1991;
Yasmin, et al., 2013), the internet (Connolly & Dhanani, 2013; Dumont, 2013;
Saxton & Guo, 2011; Waters, 2007), and internal printed media (Hardy & Ballis,
2013).
Several authors have used the presence or absence of various types of

accountability information in previous accountability studies, for example, to
investigate the content of annual reports published by Australian not-for-profit
organisations (Flack, 2007) and the content of annual reports and annual reviews
of the top 100 British charitable organisations (Connolly & Hyndman, 2013b).
Because the objective of content analysis in this study was only to identify the
presence or absence of a specific accountability information, the quantity, quality,
and completeness of the information were not examined.
For the purpose of coding the textual data, a list of various types of
accountability information was created. Similar to the content analysis of the
interview data, the list of accountability information was based on the existing
accountability literature or theory-driven (inductive approach) (Boyatzis, 1998).
The list of accountability information developed by Hyndman (1990, 1991) was
used as a basic framework to develop the coding instrument. The Hyndman list
(1990, 1991) was selected as a basic framework because this list is simple but able
to capture the main information usually disclosed by charitable organisations. The
Hyndman list has been used in previous content analysis studies that investigate
the accountability of charitable organisations (Connolly & Hyndman, 2013b;
Flack, 2007).
The original list developed by Hyndman (1990, 1991) only consists of 14

types of information. In this study, this list of information was modified and
expanded into 24 types of information (see Appendix D) based on the existing
accountability literature (Flack, 2007; Tooley, et al., 2010; Yasmin, et al., 2013).

It is possible that this list of information did not capture all information found in
annual reports, websites, the internet, or Facebook. Therefore, a data-driven
(inductive) approach was also employed for data analysis to code the information
that did not match the list (Crabtree & Miller, 1999).
Because only three zakat agencies produced annual reports, the content
analysis of annual reports was only conducted for these three annual reports. The
annual reports selected were the latest annual reports. Six zakat agencies
published magazines and only one magazine was selected as a sample from each
zakat agency. The administrators of zakat agencies explained that the content of
the magazines was relatively similar in each edition, therefore selecting only one
edition of magazine was considered appropriate. For Facebook, the content
analysis was only conducted on the 50 latest posts. During the coding processes,
every page of the annual reports, every article in a magazine, every page on the
website of zakat agencies, and every posting on Facebook were analysed for their
themes.
As part of data analysis and to address RQ 4, a comparison was made

between information demanded by external stakeholders, information considered
important by the administrators of zakat agencies, and information supplied by
zakat agencies. The information demanded by external stakeholders but not
supplied by zakat agencies indicated an accountability gap. Based on the possible
identified accountability gap, recommendations for future improvement have been
proposed.
5.7 DISCUSSION OF RESEARCH FINDINGS
The final stage of this study was to analyse and discuss the findings on the
understanding of accountability in the context of zakat agencies as identified from
the interviews, surveys, and document and website analysis. The discussion
involved an integrative analysis of qualitative and quantitative data. Every piece
of data was considered to be a piece of the jigsaw, which when combined and
appropriately analysed created a complete image (Bazeley, 2012; Bazeley &
Kemp, 2012).

Finally, rigour and reliability are always the main issues in qualitative
studies (Marshall & Rossman, 2011). Concerns about reliability were dealt with
by using triangulation and member checking. Triangulation was performed by
combining multiple research methods to investigate the same empirical
phenomenon to improve the validity of findings. Triangulation was conducted by
comparing the findings from the interviews, surveys, and document analysis. The
interview data and interpretation were also shared with related respondents
(member checks) to improve validity (Marshall & Rossman, 2011).
5.8 SUMMARY
This study adopted a mixed methods research design because different

research questions in this study required different information and data analysis.
Semi-structured interviews were used to collect data on the understanding of
accountability in the context of zakat agencies from the perspective of the
administrators of zakat agencies. A survey was used to collect data regarding the
understanding of accountability in the context of zakat agencies as perceived by
donors. A non-parametric correlation test was performed to identify the inter-
relationship amongst the core elements of accountability. In addition, document,
website, and social media analysis was conducted to identify the media used to
disseminate accountability information by zakat agencies and type of information
disclosed by zakat agencies. The next three chapters present the findings of this
study.

Agencies: Administrators’
Perceptions
6.1 INTRODUCTION
This chapter presents the findings that address the first research question
about the perceptions of administrators of zakat agencies on the concept of zakat
agencies’ accountability. The insights are based on interviews with the
administrators of zakat agencies. This chapter is structured as follows. Section 6.2
reports the understanding of accountability from the perspective of administrators.
Section 6.3 presents the views of the administrators regarding whether zakat
agencies should be accountable. Sections 6.4 to 6.7 focus on the core elements of
accountability, namely: ‘to whom’, ‘for what’, and ‘how’. Section 6.8 discusses
the findings of this study. Finally, Section 6.9 summarises the findings presented
and discussed in this chapter.
6.2 ADMINISTRATORS’ PERCEPTIONS ON THE MEANING OF

ACCOUNTABILITY
In order to gain insight into the administrators’ understanding of

accountability in the context of zakat agency, interviewees were asked open-ended
questions about what they understood by the term accountability. Table 6-1
summarises the responses of interviewees on the meaning of accountability. The
majority of respondents did not link accountability with justification or
answerability, instead associating accountability with an expected quality of zakat
agency administrators, such as transparency, compliance with Syari’ah
requirements, and trustworthiness.
Chapter 6: The Accountability of Zakat Agencies: Administrators’ Perceptions 107

Table 6-1 Perceptions of Administrators on the Meaning(s) of Accountability
BAZNAS LAZ
Meaning(s) of Total
No Small Large ∑ Small Large ∑
Accountability n=11
n=5 n=1 n=6 n=2 n=3 n=5
1 Transparency 5 1 6 2 3 5 11
2 Actions that comply with
5 0 5 2 3 5 10
Syari’ah requirements
3 Trustworthy 5 0 5 0 3 3 8
4 Financial reporting 1 1 2 2 2 4 6
5 Good administration 2 0 2 1 2 3 5
6 Justification 0 0 0 1 2 3 3
7 Responsiveness 1 0 1 0 1 1 2
8 Compliance with 1 0 1 0 0 0 1
government regulations
All interviewees associated accountability with transparency, making

transparency the most frequently stated by interviewees. Interviewees recognised
that most external stakeholders, such as donors and government, are not involved
in the daily administration of zakat agencies. These external stakeholders do not
know about the use of resources entrusted to zakat agencies. Therefore,
administrators believed that zakat agencies should proactively disseminate
information to external stakeholders:
If they [external stakeholders] do not receive our reports, they do not

have information. (P16 – Vice President Director of a large LAZ J)
An interviewee indicated that transparency is linked with the disclosure of

financial information.
So, we do not want to restrict the access of information. We want to

provide everything. The proof is our financial reports. Our report is
accessible anytime and we do not cover up any information. We always
welcome anyone who wants to access any information. (P14 – General
Manager of a small LAZ H)
Furthermore, interviewees also stated that transparency of actions or activities is

also important for zakat agencies.
Yes, even though it is a big organisation, but this organisation cannot

provide reports or data, this organisation is not accountable. But, as long
108 Chapter 6: The Accountability of Zakat Agencies: Administrators’ Perceptions

as this organisation can provide data or [information about] their
activities, this organisation is accountable. At least, a zakat agency should
provide data about its activities in a financial year. (P15 – Chief
Accountant of a large LAZ I)
The second most prevalent term associated with accountability was actions
that complied with Syari’ah requirements. The reference to accountability through
Syari’ah compliance is not surprising because zakat is not only a charitable
activity, but also a religious duty. Therefore, there are religious requirements that
must be satisfied by zakat agencies. This understanding also indicated that the
concept of accountability in zakat agencies is linked with sacred constructs.
Accountability is compliance with government regulation and Syari’ah

requirements determined by God. (P5 – Chief Executive of a small local
BAZNAS C)
Accountability means an organisation that can carry out its tasks, both
from Syari’ah and professional perspectives. (P13 – Chief Executive of a
small LAZ G)
The third most prevalent understanding mentioned by interviewees was

‘amanah’ or trustworthiness. The concept of amanah is related to the concept of
stewardship and transfer of resources. Interviewees considered themselves as a
trustee or steward of the funds donated by Muslim communities. This transfer of
resources is considered a ‘mandate’ given by donors to zakat agencies. Zakat
agencies receive a mandate from donors to distribute zakat funds to eligible
beneficiaries. As a recipient of this mandate or trusteeship or stewardship, the
administrators of zakat agencies have an obligation to perform the mandate and
report to individuals or organisations that give the mandate.
Trustworthy, can be trusted to perform mandate. (P5 – Chief Executive of

a small local BAZNAS C)
Six participants linked accountability with financial reporting. The majority

of participants that linked accountability with financial reporting were
interviewees from private zakat agencies.

That our [financial] recording and reporting are orderly. (P13 – Chief
Executive of a small LAZ G)
Public, especially our donors – can access financial data and this financial
data can convince them; [the financial data] do not create questions or
doubt or even distrust. If public get [our financial] data and they are
convinced; it means that our accountability is good. (P15 – Chief
Accounting of a large LAZ I)
Five interviewees linked accountability with good administration or

professionalism. As an organisation that collects donation from Muslims,
interviewees believed that the accountability of zakat agencies is related to the
administration of the zakat fund.
Accountability is an organisation that acts professionally. (P13 – Chief

Executive of a small LAZ G)
Although accountability is usually interpreted as providing reasons for

actions, only a few interviewees linked accountability with justification or
providing reasons for conduct. The majority of interviewees that mentioned this
justification were from private zakat agencies. Interviewees stated that they
needed to provide information to explain and justify their achievements or
failures, as stated in the following comments:
We tell about preconditions, preconditions that influence our

achievement. I report about that. I report about favourable condition and
unfavourable condition. I also report about our internal condition, then
the condition of donors, then the condition of beneficiaries, all related
parties, then the solutions. Therefore, our performance is based on these
conditions. (P13 – Chief Executive of a small LAZ G)
It means that I have to tell everything to the donors. The donors must
know everything. If my program fails, why does my program fail? If I
have to discontinue a program, why do I have to discontinue this
program? If I succeed, [I have to explain] why my program succeeds.
(P16 – Vice-President Director of a large LAZ J)

A small minority of interviewees linked accountability with responsiveness.
Interviewees perceived responsiveness as an ability to provide assistance that
meets the demand of stakeholders and this assistance should be given promptly, as
described in the following comments.
And whenever a disaster occurs, [we act promptly]; for example, we

heard the news that the house of Mr A was burned. We will survey the
location and give financial assistance. (P5 – Chief Executive of a small
local BAZNAS C)
Finally, one interviewee linked accountability with compliance with government

regulations, as mentioned in the following comment:
It complies with government regulation. (P5 – Chief Executive of a small

local BAZNAS C)
6.3 SHOULD ZAKAT AGENCIES BE ACCOUNTABLE?
When asked about “should zakat agencies be accountable?” all interviewees

unanimously agreed that zakat agencies should be accountable. A number of
reasons were proposed to support their views about the importance of
demonstrating accountability. The three most popular reasons proposed by
interviewees were: (1) accountability is important because it is required to gain
public trust and external support; (2) stewardship of resources; and (3) demanded
by regulations. Their responses are presented in Table 6-2.
Table 6-2 Perceptions of Administrators on “Why Should Zakat Agencies Be

Accountable?”
BAZNAS LAZ
Total
No Reasons Small Large Small Large
∑ ∑ N=11
n=5 n=1 n=2 n=3
1 Gain public trust 3 1 4 2 3 5 9
2 Religious reasons 4 0 4 1 1 2 6
3 Required by regulation 5 0 5 0 2 2 7
4 Zakat agency is a ‘steward’ 3 0 3 1 1 2 7
that receives a mandate to
administer zakat.
5 Zakat agency is a financial 3 0 3 1 1 2 5
institution that administers
funds donated by public.

The majority of interviewees (9 out of 11) stated that trust must be earned
and disclosure of information can be used to earn trust. The disclosure of
information can be used to convince donors that the zakat fund has been
distributed to eligible beneficiaries, as reflected in the following comments:
One method that we used to improve public trust to us is reporting. Every

month we produce this report. (P1 – General Manager of a small local
BAZNAS A)
Yes, it is a necessity. Therefore, donors will not doubt that the zakat fund
is distributed to eligible beneficiaries. (P15 – Chief of Accounting of a
large LAZ I)
Further, interviewees believed that trust would encourage Muslims to give

zakat to zakat agencies, as stated in the following comments:
Accountability is needed to build and to increase public trust; therefore,

our revenues will increase. (P12 – Finance Manager of a large provincial
BAZNAS F)
This will encourage Muslims who do not give zakat to give zakat or those
who give zakat but not to [formal] zakat agencies – for example those
who give zakat to Imams or directly to beneficiaries – will give zakat to
[formal] zakat agencies. (P15 – Chief Accounting of a large LAZ I)
Six interviewees stated that religious reasons also motivate zakat agencies to
be accountable. For example, they believe that zakat funds belong to God and
God will ask for accountability from all human beings in the afterlife. In addition,
one interviewee mentioned that Islam teaches Muslims to provide a written
account, as per the following comment:
I always put emphasis to our staff that this fund belongs to Allah, belongs
to the poor people, and you must not misuse it. (P3 – Executive Secretary
of a small local BAZNAS B)
Islam teaches us to record all our works and transactions. Recorded! We

are taught if we received zakat, for example, Rp 2 million, this

transaction must be recorded. (P9 – Chief Executive of a small provincial
BAZNAS E)
Five interviewees indicated that zakat agencies should be accountable

because existing regulations require zakat agencies to give an account. This
comment is reflected in the following quote:
Accountability is required by regulation. The law states that zakat

agencies must be able to present their data. There is public representative
that audit zakat agencies, in this case public accountant. It means that we
must be accountable and responsible for the accuracy of information
provided. (P15 – Chief of Accounting of a large LAZ I).
An interviewee stated that satisfying legal requirements is important because there

is a legal sanction for zakat agencies and their administrators who do not comply
with regulations.
Why? If I do not provide it [a financial report], I can be jailed even

though I am correct [do not misappropriate zakat fund]. (P8 – Chief
Executive of a small local BAZNAS D)
Five interviewees highlighted that zakat agencies only receive a mandate

from the donors to distribute zakat funds to eligible beneficiaries. They consider
zakat agencies to be a steward of zakat funds entrusted by donors for poor people.
As a trustee of zakat fund, there is an obligation to give account. Interviewees
stated that donors have a right to obtain information about the usage of zakat
funds because donors have already given a donation to zakat agencies, as stated in
the following comments:
Amil is only entrusted zakat fund from Muslims who perform their
religious duty. On the other hand, there are [poor] persons who have a
right to this money (P16 – Vice President Director of a large LAZ J)
Individuals who give zakat should have a right to access information

about the usage of zakat funds. (P14 – General Manager of small LAZ H)
Five interviewees compared zakat agencies with financial institutions, such

as a bank that must be able to safeguard the money deposited by their customers.

This reason is related to the administrator’s understanding of accountability as a
responsibility. Interviewees stated that a zakat agency has a responsibility to
safeguard zakat funds donated by the public.
A zakat agency is a public financial institution. It is a public financial

institution that administers money from public. (P3 – Executive Secretary
of a small local BAZNAS B)
6.4 TO WHOM SHOULD ZAKAT AGENCIES BE ACCOUNTABLE?
This section presents the findings addressing the following research

question:
RQ.1.a. To whom do the administrators of zakat agencies believe zakat

Table 6-3 reports the responses of interviewees to the questions about to

whom zakat agencies should be accountable. The findings indicate that
administrators and donors share a similar perception on to whom zakat agencies
should be accountable. The majority of interviewees were in agreement that zakat
agencies should be accountable to a wide range of stakeholders that include God,
resource providers, regulators, beneficiaries, and others.
Table 6-3 Perceptions of Administrators on “To Whom Should Zakat Agencies be

Accountable?”
BAZNAS LAZ
To Whom Small Large Small Large Total
∑ ∑
n=5 n=1 n=2 n=3
God 5 1 6 2 3 5 11
Government 5 1 6 2 3 5 11
Central BAZNAS 5 1 6 1 3 4 10
Boards 3 2 5 2 3 5 10
Donors 5 1 6 2 3 5 10
Parent organisation 0 0 0 2 3 5 5
Indonesian Ulema Council 0 0 0 0 0 0 0
(MUI)
Beneficiaries 2 0 2 1 3 4 6
Academics and education 0 1 1 0 1 1 2
institutions
Media 0 0 0 0 1 1 1
Other zakat agencies 0 0 0 0 0 0 0
Informal leaders 0 0 0 0 0 0 0

All interviewees echoed that zakat agencies should be accountable to God
and they consider that the ultimate accountability of zakat agencies is to Allah, as
stated in the following quote:
Firstly, to God, the Qur’an states it … We cannot see God, but you must
believe that God sees your work. It makes us to work (well) and – we will
never misappropriate zakat funds or do other misconducts’ (P16 – Vice
President Director of a large LAZ J)
Interviewees explained that accountability to God is closely related to the

concept of dualism in life. Muslims believe that their life in this world is
temporary. In the afterlife, Muslims must account for their actions (inactions)
during their life in this world, as illustrated in the following quote:
We have to give account in this world and in the hereafter … Even

though we did everything properly and everybody believed that, but if
our actions did not comply with Syari’ah requirements, we still receive
punishment in the hereafter. (P5 – Chief Executive of a small local
BAZNAS C)
While interviewees stated that the primary accountability of zakat agencies

is to God, this does not negate the importance of accountability to human beings.
This is shown in their comments where all interviewees stated that zakat agencies
should be accountable to the government, and the majority of interviewees (10 out
of 11) stated that zakat agencies should be accountable to donors, the Central
BAZNAS, and the board. Furthermore, interviewees comments indicated that
accountability to the government and donors is more important than
accountability to other secular stakeholders, as shown in the following comments:
BAZNAS City B is accountable to the local government and local

Parliament, but mainly to the local government. (P5 – Executive
Secretary of a small local BAZNAS C)
In my opinion, our primary stakeholder is our donors, because we are a

charitable organisation. (P14 – General Manager of a small LAZ H)

Interviewees stated that accountability to the government is important
because the government has the authority to give licence to zakat agencies to
operate.
Structurally, we are accountable to the government that gives zakat

agencies formal legality. (P13 – Chief Executive of a small LAZ G)
Specifically, for government-sponsored zakat agencies, interviewees also

stated that the main reason to be accountable to the government is because a
government-sponsored zakat agency is created by government.
This zakat agency is created by the government of this city, so, firstly, we
have to account to the (local) government. (P3 – Executive Secretary of a
small local BAZNAS B)
With regards to accountability to donors, interviewees stated that

accountability to donors is important because zakat agencies depend on a
continuous flow of donations from donors. Therefore, donors have the power to
request information from zakat agencies. This indicated that resource dependency
motivated zakat agencies to give account.
The most important accountability is to donors; donors who give zakat to

us, donors who entrust their zakat to us. (P15 – Chief of Accounting of a
large LAZ I).
Several donors are smart. They ask for [information]. Donors who give
zakat more than one hundred million rupiah [AUD 10,000] are smart
donors. Our donors vary from those who give two hundred thousand
rupiah [AUD 20] to two hundred million rupiah [AUD 20,000]. But they
do not ask for detailed information like corporate donors. They usually
ask about the usage of zakat fund. (P16 – Vice President Director of a
large LAZ J)
Interviewees mentioned the importance of being accountable to the Central

BAZNAS because Zakat Management Law states that all zakat agencies must
report to the Central BAZNAS. The Central BAZNAS has an authority to issue a
recommendation letter for an organisation to obtain a licence as a zakat agency

from the Ministry of Religious Affairs. In addition, the Central BAZNAS also has
an authority to monitor the activities of zakat agencies.
So, according to regulation, we have to account to the Mayor and the

Central BAZNAS. (P1 – General Manager of a small local BAZNAS A)
[In addition to] accountability to donors who entrust their zakat to us, it is
important to report to the Ministry of Religious Affairs and the other
institutions, such as the Central BAZNAS. (P15 – Chief of Accounting of
a large LAZ I).
Zakat agencies usually have several boards and committees, such as the
board of Trustees, Syari’ah Advisory Board, Supervisory Board, 22 and Advisory
Board. In this context, these boards and committees are the representative of an
organisation that creates a zakat agency. Therefore, their role is to oversee the
executive. The executives of zakat agencies usually hold a regular meeting with
all board members and committees. In this meeting, the executive gives an
account of the administration of zakat funds to the board:
Secondly, [I am accountable] to the board. I am part of the management.

If this zakat agency is a corporation, the founders [of this zakat agency]
are the board and I am only an executive. So, my accountability is to
donors, board, and beneficiaries. (P13 – Chief Executive of a small LAZ
G)
Several interviewees did not state clearly that they had to account to the
boards, but from their explanation it could be concluded that this was the case:
We conducted meetings several times to evaluate our performance in

2014 and preparing the program for 2015. We will bring the programme
prepared in this meeting to plenary meetings with oversight committee
and the boards. We will present our program to them. They may give
suggestions, revision, or add new programmes. (P12 – Finance Manager
of a small provincial BAZNAS F)
22 In several zakat agencies, the Syari’ah Advisory Board and Supervisory Board are called the Sya’riah
Advisory Committee and Supervisory Committee.

We will bring this report to the annual meeting. The meeting agendas are
to report and account for financial management of previous financial year
and to prepare programmes for the next year. Boards, Oversight
Committee, and the management attended this annual meeting. (P8 –
Chief Executive of a small local BAZNAS D)
Although the board has a strategic role in the administration of an

organisation and most interviewees stated that zakat agencies should be
accountable to the board, several interviewees expressed that the board might not
have an active role in zakat administration, as per the following comments:
We have an oversight committee [as a sub-committee of the board]. If

this oversight committee is active and working, it would be very great.
(P1 – General Manager of a small local BAZNAS A)
The members of the board are not active in most of zakat agencies … I
mean the board of trustee and advisory board. These boards do not
perform their duty. (P16 – Vice President Director of a large LAZ J)
Interviewees from private zakat agencies unanimously agreed that the

administrators of zakat agencies should be accountable to their parent
organisation. By chance, all private zakat agencies that participated in this study
were created by an Islamic religious organisation or a for-profit (private)
institution. Therefore, the interviewees from private zakat agencies considered
that zakat agencies had to give an account to their parent organisation or
institution. One Vice Director of a large LAZ explained:
I am supervised by many parties. Our parent organisation has a Board of

Trustees and Supervisory Board. This zakat agency also has a Board of
Trustees and Supervisory Board. I report regularly to them. Our parent
organisation has an internal audit division that does performance audit,
Syari’ah audit and financial audit. If I make a mistake, I will ask guidance
from them. (P16 – Vice President Director of a large LAZ J)
Furthermore, the parent organisation has an interest in the activities of the

zakat agencies because the parent organisation also has to account to their
stakeholders. One Chief Executive of LAZ commented:

We report every six months. The parent organisation needs our report for
their report as a foundation. So, we are asked to submit a report [every
semester]. (P13 – Chief Executive of a small LAZ G)
Despite zakat agencies being created as a faith-based charitable organisation

to help poor individuals, only six (out of eleven) interviewees stated that zakat
agencies should be accountable to beneficiaries and four (out of five) interviewees
from private zakat agencies stated that zakat agencies should be accountable to
beneficiaries; however, only two (out of six) interviewees from government-
sponsored zakat agencies mentioned accountability to beneficiaries. Interviewees
interpreted accountability to beneficiaries differently from accountability to
donors and government. While the focus of accountability to donors and
government is to provide information, interviewees linked accountability to
beneficiaries with providing good quality assistance. This finding suggests that
the meaning of accountability is not only limited to providing reasons for
conducts but also to the extent of the agencies’ responsiveness and responsibility.
[Zakat agency should be accountable] to their beneficiaries or individuals

who have right to zakat fund (P16 –Vice President Director of a large
LAZ J)
Yes, we must be accountable to them [beneficiaries]. But our

accountability to the children [orphans] and their guardians is by giving
good programmes and not giving low quality programmes. We want to
give the best place, the best programmes, and the best teachers for them.
(P13 – Chief Executive of s small LAZ G)
One interviewee stated that zakat agencies also have an accountability

relationship with academics and the media. Academics and the media were
identified as stakeholders because they can help zakat agencies to disseminate
information about the activities of zakat agencies to the public.
We call [our partners] ABCG, which stands for Academics, Business,

Civil Society, and Government. We invite them to focus group
discussions and we present our programmes to them. (P16 – Vice

6.5 WHAT SHOULD ZAKAT AGENCIES BE ACCOUNTABLE FOR?
This section presents the findings to answer the following research question:
RQ.1.b. What is the scope of accountability of zakat agencies according to the

Table 6-4 summarises the responses of interviewees to the question about

the scope of accountability of zakat agencies. The comments indicate that
interviewees had a similar understanding regarding the scope of zakat agencies’
accountability. Most interviewees suggested that the accountability of zakat
agencies must consist of all elements of Stewart’s (1984) ladder of accountability
and Syari’ah accountability (sacred accountability).
Table 6-4 Perceptions of Administrators on the Scope of Zakat Agencies’

Accountability
BAZNAS LAZ
Accountable for: Small Large Small Large Total
∑ ∑
n=5 n=1 n=2 n=3
Syari’ah accountability 5 1 6 2 2 4 10
Amil fund accountability 0 0 0 0 0 0 0
Ethics accountability 0 0 0 0 0 0 0
Finance 5 1 6 2 3 5 11
Legal 5 0 5 1 3 4 9
Process 5 1 6 2 3 5 11
Programme 2 1 3 1 3 4 7
Performance 1 0 1 1 3 4 5
Mission 4 0 4 2 3 5 9
The majority of interviewees (10 out of 11) stated that zakat agencies should
be accountable from a Syari’ah perspective. Interviewees believed that zakat
agencies must comply with Syari’ah requirements in distributing zakat, as
described in the following quotes:
There is religious arrangement on zakat. It must comply with Syari’ah

requirements. Zakat must be divided into eight categories of
beneficiaries. The portion [of zakat] for amil must not be higher than the
portion [of zakat] for the other categories of beneficiaries. (P2 –
Executive Secretary of a small local BAZNAS A)

The funds must be used in accordance with the sources of fund. For
example, [Syari’ah stated that] zakat fund can only be distributed to 8
beneficiaries and non-zakat fund can be distributed to anyone. There are
requirements on the usage of amil fund. And [there is Syar’iah
requirements] for the usage of non-halal fund such as interest. (P17 –
Operating Director of a Large LAZ K)
Although Indonesia is a secular country and the government does not

enforce Syari’ah requirements, the comments of the interviewees indicate that
compliance with Syari’ah requirements is as important as compliance with the law
and regulations. The administrators of zakat agencies may need to consult with a
Syari’ah expert to ensure that their actions comply with Syari’ah requirements.
We must comply with government regulation and Syari’ah requirements

determined by God. (P5 – Chief Executive of a small local BAZNAS C)
There is a question about a sick person. This person is not a poor person
who is eligible for zakat but he does not have sufficient money to pay an
expensive medical treatment. This person needs money urgently to pay
for expensive medical [treatment]. Can this person borrow money from
us? Can zakat money be used to help this person? This person is not
considered to be an eligible zakat beneficiary. We ask this question to our
Syari’ah Advisor. (P13 – Chief Accounting of a large LAZ G)
References to financial accountability and process accountability were the

most frequent in the responses of interviewees. Eleven administrators of zakat
agencies stated that zakat agencies should be accountable for the proper
administration and control of financial resources. Financial accountability is also
related to the stewardship of resources provided by donors. Interviewees
explained that zakat agencies should record the collection and distribution of
zakat funds appropriately.
It means we should be professional in safeguarding the fund. It is not

only about saving the money, but also about the ability to give a written
description about the funds in our account, supported by records and

physical evidence. Everything can be traced. (P13 – Chief Executive of a
small LAZ G)
Furthermore, one interviewee stated that the recording of every transaction

must comply with the existing accounting standards.
Then, we have accounting standard – PSAK [Accounting Standard] No

109. We have implemented it since 2009, so our balance sheet follows
this standard. We train all local BAZNASs in this province to apply this
standard. (P9 – Chief Executive of a small provincial BAZNAS E)
Nine interviewees stated that zakat agencies should satisfy legal

accountability. They stressed that the government has authority to enforce
regulations on reporting the collection and distribution of zakat funds, as per the
following comment:
Because if I did not provide it [customised reports requested by the

government], I can be jailed even though I am correct. (P9 – Chief
Executive of a small provincial BAZNAS E)
Eleven interviewees noted that the process of zakat collection and

distribution should comply with internal standard operating procedures (SOPs).
SOPs are required to ensure that assistance is given to legitimate beneficiaries
who require the most help because their funds are limited. This indicates that
process accountability is important for zakat agencies.
We review their application and do a survey. If the result indicates that

this person is eligible for help, we will help. We may not give all
requested funding, because we have standard operating procedure. (P2 –
General Manager of a local BAZNAS A)
There are standard operating procedures for zakat distribution and zakat
collection, for the usage of ambulance and others. (P6 – Executive
Secretary of local BAZNAS C)
Seven (out of 11) interviewees stated that zakat agencies should be

accountable for their programmes, while five (out of 11) interviewees said that

zakat agencies should be accountable for their performance. The comments of the
interviewees indicate that programme accountability was linked to performance
accountability. Their understanding regarding programme accountability focused
on the effectiveness of a programme, while performance accountability was
related to efficiency. Interviewees also believed that evaluation of the execution of
programmes or activities was important for programme and performance
accountability.
We conduct meetings with all branch offices. In these meetings, we

evaluate our performances and which programmes are achieved and not
achieved. The programmes that are not achieved will be continued in the
next year. We do an evaluation from collection and usage perspectives.
(P12 – Finance Manager of a large provincial BAZNAS F).
Interviewees recognised that they should account for financial performance

and non-financial performance.
We should account for our performance. We have [three] performance

indicators: [1] organisational performance or the performance of
organisation itself; [2] financial performance – how stable is our financial
condition – from collection and distribution perspective; and [3]
programme performance. (P 16 – Vice President Director of a large LAZ
J).
Although interviewees talked about financial performance, they did not

explain the financial ratios used to measure financial performance. Instead of
using financial ratios, the administrators of zakat agencies use the percentage of
amil fund from total donation collected as an indicator of financial performance.
Interviewees agreed that a zakat agency is not allowed to retain more than 12.5%
of zakat collected for administrative purposes. Therefore, an efficient zakat
agency is a zakat agency that uses an amil fund of less than 12.5% of the total
donations collected.
We determine that the amil fund is maximum 10% of the amount of zakat
collected. Why do we set 10% of fund collected as a limit? This is our
argument. The Holy Qur’an states that the beneficiaries of zakat can be

classified into eight categories. If zakat is divided evenly, every category
will receive 12.5% of the amount of zakat collected. It is the maximum
amount but we try to use less than 10%. (P12 – Chief of Accounting of a
large LAZ I)
Furthermore, interviewees stated that performance was a relative concept.

They argued that the performance of an organisation should be compared with
other organisations.
Accountability is not only about our performance but also comparing our
performance with the performance of other organisations. If the report of
zakat agencies is comparable, then we can measure accountability. When
we compare the reports of an organisation with other similar
organisations, then we can measure accountability. (P8 – Chief Executive
of a small local BAZNAS D)
Nine interviewees alluded that zakat agencies should be accountable for the
achievement of the mission of the organisation. The main mission of most zakat
agencies is to provide humanitarian assistance. Several zakat agencies are also
active in Islamic proselytisation; however, their main mission is usually to provide
humanitarian assistance. Interviewees stated that they were concerned about the
impacts of their activities on the welfare of beneficiaries and highlighted the
importance of providing assistance that enable beneficiaries to generate income.
This indicates that the achievement of the organisational mission is important for
zakat agencies.
On the impacts, ... we cannot measure but we observe the changes [in the
welfare of beneficiaries]. The transformation that occurs, from a
community who does not want to attend school, from a community who
does not want to conduct an activity to be a learner and active
community. They help themselves and have extraordinary activities. (P13
– Chief Executive of a small LAZ G)
In fact, the most important thing from a program is its impacts, isn’t it?
We report about the impacts of our programmes. We not only report
about money but also the impacts of an activity. (P7 – Chief Executive of
a small local BAZNAS C)

Furthermore, one interviewee stated that accountability for the mission is
more important that financial accountability.
Accountability is not only about finance. Finance is only one of several

indicators. How much funds are collected and how much funds are
disbursed? How much is the amil fund? These are [financial] indicators.
But it is not the end. If the fund is distributed to beneficiaries but the
beneficiaries cannot generate enough income for themselves, it means
that our performance is not good. (P16 –Vice President Director of a
large LAZ J)
6.6 TYPE OF INFORMATION CONSIDERED IMPORTANT BY

ADMINISTRATORS
This section addresses the following research question:
RQ.1.c What information (financial and non-financial) do the administrators of

zakat agencies consider necessary to be disclosed by zakat agencies to
demonstrate their accountability?
To answer this research question, interviewees were asked to identify any

information that should be disclosed by zakat agencies to demonstrate
accountability. The results are presented in Table 6-5. This information is
classified into nine themes; therefore, it can be compared with the findings from
the surveys and document analysis.

Table 6-5 Perceptions of Administrators on Types of Information that Should be
Disclosed by Zakat Agencies
BAZNAS LAZ
No Type of Information Small Large Small Large Total
∑ ∑
n=5 n=1 n=2 n=3
I Overview – Organisation
1 Statement of mission and objectives 1 0 1 0 0 0 1
2 History of the organisation 0 0 0 0 1 1 1
II Governance
3 Boards and committee activities 0 0 0 0 0 0 0
4 Profile of Boards, CEO and senior staff 0 0 0 0 0 0 0
5 Information about the organisation’s
0 0 0 0 0 0 0
structure
6 Remuneration of boards, CEO and senior
0 0 0 0 0 0 0
staff
III Future Plans
7 Future plans 1 0 1 0 2 2 3
IV Organisation Policy and Program
8 Organisation policy (criteria) in selecting
2 0 2 1 2 3 5
beneficiaries
9 Overview of programmes and activities 5 1 6 2 3 5 11
10 Organisation policy related to the
0 0 0 0 0 0 0
allocation of resources
11 Information about how to access zakat
0 0 0 0 0 0 0
agency services
V Beneficiaries
12 Overview of beneficiaries 2 0 2 1 2 3 5
13 Human interest stories (information about
0 0 0 0 0 0 0
how zakat fund helps beneficiaries)
VI Other Non-financial Information
14 Information about related parties’ 0 0 0 0 0 0 0
transactions
15 Acknowledgement of donors and 0 0 0 0 0 0 0
volunteer’s contributions
VII Financial Information
16 Audited financial reports 0 0 0 0 0 0 0
17 Total revenue and its sources 5 1 6 2 3 5 11
Usage of the zakat fund for beneficiaries
18 5 1 6 2 3 5 11
(except amil fund)
Usage of other donated funds (except zakat
19 0 0 0 0 0 0 0
fund)
20 Usage of amil fund 0 0 0 0 0 0 0
Auditor's report or other types of assurance 1 1 2 0 3 3 5
21
reports
22 Fundraising costs 0 0 0 0 0 0 0
VIII Performance Information
23 Financial performance information 0 0 0 0 1 1 1
24 Non-financial performance information 1 0 1 2 3 5 6

Only one interviewee from a small government-sponsored zakat agency that
stated zakat agencies should disclose information about their mission and
objectives. Likewise, only one interviewee from a large government-sponsored
zakat agency that stated zakat agencies should disclose information about the
history of the organisation. With regard to governance information, none of the
interviewees mentioned governance information.
Three interviewees stated that zakat agencies need to disclose information

about their future plans. The disclosure of future plans is linked with
organisational credibility and public trust. Information about future plans is used
to signal that a zakat agency is managed professionally.
For example, our Chairman makes a projection about an ideal zakat agency
in 2030. Everything is planned, including the best methods to achieve the
programmes. We need to convince the public that we are professional and
trustworthy in administering zakat. (P 10 – Communications Advisor of a small
provincial BAZNAS E)The disclosure of future plans is also linked with the need
for resources. By disclosing their future plans, it is expected that the public has
information about the future activities of zakat agencies that require public
support. Therefore, the disclosure of future plans can be used to attract donors to
give donations, as presented in the following quote:
We present our last year’s work, our achievements, and our plans for next
year [to our stakeholders]. We present our progress, our performance and
the amount of funds needed. [Therefore], the level of trust increases and
the amount of zakat collected also increases. (P16 – Vice President
Director of a large LAZ J).
With respect to information about organisational policies and programs, five

interviewees mentioned that zakat agencies should disclose information about
their policies and criteria to select beneficiaries. In contrast, all interviewees
mentioned that zakat agencies should disclose information about their
programmes and activities. Interviewees stated that disclosing information about
programmes can attract donors to give a donation, as explained in the following
quote:

We also explain about our programs, program A, B, C and others.
Initially, they may not believe in us and it is natural. But several of them
will give zakat to us. (P1 – General Manager of small local BAZNAS A)
Five (out of 11) interviewees stated that zakat agencies should disclose
information about their beneficiaries. Information about beneficiaries can be used
to create a positive image and convince donors that the zakat fund has been
distributed to eligible recipients:
Zakat agencies should be able to explain the effectiveness and the benefit
of their assistance. Therefore, the donors are convinced that their zakat is
beneficial for the eligible recipients. (P15 – Chief of Accounting of a
large LAZ I)
Financial information was the most cited by interviewees. All interviewees

stated that zakat agencies should disclose information about their revenue and the
usage of zakat funds. Further, five interviewees indicated that zakat agencies
should disclose their auditor’s report to certify that their financial report complies
with accounting standards. Most interviewees stated that financial information is
considered important to convince donors that the zakat fund is being used
appropriately.
We publish financial reports since 2010. There is information about the

amount of zakat collected and distributed in this report. We publish audit
report. So, donors have convincing information on zakat distribution.
(P15 – Chief Accounting of a large LAZ I).
One method that we used to improve public trust to us is reporting. Every

month we produce this report. It consists of information about the amount
of funds collected and the amount of funds distributed. (P1 – General
Manager of a small BAZNAS A)
The responses of the interviewees indicated that the disclosure of

performance information was limited. Only one interviewee mentioned narrative
analysis of financial performance. Six interviewees – the majority of them from
private zakat agencies – only mentioned information about narrative analysis of

non-financial performance when re asked about non-financial information that
should be disclosed by zakat agencies. Other types of performance information,
such as information about efficiency, effectiveness, and outcomes and narrative
analysis of factors influencing financial and non-financial performance were not
mentioned by interviewees.
In addition to information related to the administration of zakat agencies,

most interviewees (7 out of 11) stated that zakat agencies should also publish
religious information in their internal publications. The disclosure of religious
information is used to remind Muslims that giving zakat is a compulsory religious
duty for Muslims.
Our duty is to remind the public that zakat is compulsory according to

our religion. The duty of the government is to provide regulation. The
duty of amil is to remind people to pay zakat. (P2 – Executive Secretary
of a BAZNAS A)
The administrators of zakat agencies also used religious information to

reinforce the image of the zakat agency as a faith-based organisation. This
information can induce public trust in a zakat agency.
The content of our magazine consists of 80% religious information and

20% [the activities of] this organisation. The reason is to avoid the image
of our magazine as a marketing tool. It makes our magazine more
elegant. We share knowledge about Islam and if they feel this knowledge
is beneficial, then they will give a donation. (P14 – General Manager of a
small LAZ H)
6.7 BY WHAT MEANS SHOULD ZAKAT AGENCIES DISCHARGE

THEIR ACCOUNTABILITY?
This section presents findings to answer the following research question:
RQ.1.d. According to the administrators of zakat agencies, by what means

Table 6-6 summarises the perceptions of administrators on media that
should be used by zakat agencies to discharge their accountability. The findings

indicate that zakat agencies should use various forms of media to disseminate
accountability information.
Table 6-6 Perceptions of Administrators on Media that Should be Used by Zakat

Agencies to Discharge Accountability
BAZNAS LAZ
No Media Small Large Small Large Total
∑ ∑
n=5 n=1 n=2 n=3
1 Customised reports 5 1 6 2 3 5 11
2 Website 5 1 6 2 3 4 10
3 Annual reports 4 2 6 1 3 4 10
Internal media
4 (magazines/bulletins/pamphlets 2 1 3 2 2 4 7
published by zakat agencies)
5 Mass media 4 1 5 0 2 2 7
6 Public announcement in mosque 3 0 3 0 2 2 5
7 Social media (Facebook) 2 0 2 1 2 3 5
Letter (sent by zakat agencies to
8 1 0 1 1 2 3 4
their donors)
9 Staff of zakat agencies 1 0 1 1 0 1 2
All interviewees stated that zakat agencies used customised reporting to

discharge accountability. Customised reporting is used to discharge accountability
to regulators (the government and the Central BAZNAS). The regulators usually
determine the format and content of reports.
The report required [by regulators] is only a piece of paper. Our treasurer
submits this report [to regulators]. (P8 – Chief Executive of a small
BAZNAS D)
We used to report [to government and the Central BAZNAS] once a year,
but currently, we are asked to report [to the government and the Central
BAZNAS] every six months. (P13 – Chief Executive of a small LAZ G).
Intervieewees also stated that zakat agencies use customised reports to

discharge accountability to their board and their parent organisation. However, the
customised report submitted to the board and the parent organisation is different
from the customised report submitted to regulators. The customised report for the
Board and the parent organisation is usually submitted at an annual general

meeting. Because this report is specifically prepared for the board or the parent
organisation, this report is not distributed to external stakeholders.
We report [to the parent organisation] every six months, because our
parent organisation needs our report for their report as a foundation. (P13
– Chief Executive of a small LAZ G)
An annual report is widely known as the media to disseminate

accountability to external stakeholders. However, there only three interviewees
mentioned an annual report as a tool to discharge accountability.
This [annual] report was sent to the Governor, Vice-Governor, Mayor

and Vice-Mayor, Parliament, the Head of the Government Department,
and the Head of the Village. But no one – from the President to the Heads
of the Village – gave responses. (P8 – Chief Executive of a small local
BAZNAS D)
Ten (out of eleven) interviewees stated that zakat agencies should use their
website to disseminate accountability. Interviewees stated that a website has
advantages compared to other forms of media because a website can be accessed
by anybody from anywhere.
We cannot give a bundle of report to the public but our reports to the
public are available on our web. We have a website that can be accessed
by people around the world. (P1 – General Manager of a small local
BAZNAS A)
Internal printed media and mass media were cited by the same number
of interviewees (7 out of 11). Interviewees explained that zakat agencies
should use internal printed media and mass media to publish audited balance
sheets, audited statements of financial position, and audited statements of
cash flow, as per the following quote:
This is an internal-printed magazine for reporting to donors; therefore,

most information consists of programmes implementation, financial
reporting, religious information, and information to educate donors such

as the importance of giving zakat and other voluntary religious giving
(P17 – Operating Director of a large LAZ K).
We publish the audit report in the newspaper. I know that not every donor
knows about the usage of the zakat fund, but at least we disclose it in the
newspaper and our internal magazine. (P12 – Finance Manager of a large
provincial BAZNAS F)
Participants also discussed other media that can be used by zakat agencies to
disseminate accountability, such as a letter, religious gathering, public
announcements in mosques, social media, and verbal information.
Facebook is my favourite because it is easy. For the magazine, we have to

publish it. For Facebook, if I’ve got an idea today, I just write it on the
fan page. (P14 – General Manager of a small LAZ H).
There is a monthly religious gathering. We invite [our donors] every

month. In these religious gatherings, we report our progress. (P16 – Vice
In addition to these forms of media, nine interviewees explained that the

participation of external stakeholders – especially beneficiaries and donors –
reduces the demand for the disclosure of information. The first type of
participation is where zakat agencies give donors the opportunity to propose the
beneficiaries of zakat. This method is used to preserve the degree of closeness
between donors and beneficiaries that is usually found in the administration of
zakat by local Imams. This method avoids the information asymmetry described
by Scott (1986) as the ‘Bermuda Triangle’ because donors know the beneficiaries
of the zakat. It is also based on consideration that most Muslims want to help poor
people who live in their neighbourhood. Participation will convince donors that
the zakat fund is actually distributed to eligible beneficiaries because donors can
see that their poor neighbours receive assistance from zakat agencies.
The donor can recommend his or her neighbour to get financial assistance
by filling in the form. They can choose financial assistance to buy basic

needs or financial assistance for productive economic activities. (P9 –
Chief Executive of a small provincial BAZNAS E).
The second type of participation is public partipation in the development of

programmes. Zakat agencies seek feedback from a wide variety of stakeholders
through public hearings, public dialogue, or surveys to develop a programme that
suits the needs of beneficiaries. Donors and other stakeholders are expected to
give their thoughts or suggestions to improve the quality of proposed
programmes:
We ask our donors to participate [in developing our programmes] by

giving their ideas and thoughts. From this process, we can determine how
we should run a programme, the amount of funds needed and the sources
of the funds. It means that our donors are involved. (P16 – Vice President
Director of a large LAZ J).
6.8 DISCUSSION
Based on the research findings presented in Sections 6.2 to 6.7, this section
discusses the findings in every section, with reference to the literature and
accountability framework.
Administrators’ perceptions regarding the meaning of accountability
The findings regarding the meaning of accountability support the literature

suggesting that every individual has a different understanding of accountability
(Bovens, 2010; Mulgan, 2000; Sinclair, 1995). This finding is consistent with a
previous empirical study in the US that found the leaders of US transnational not-
for-profit organisations linked accountability with several concepts, such as
financial management and transparency (Schmitz, et al., 2012). Interviewees not
only perceived accountability as a mechanism to justify and provide reasons for
actions and results (Day & Klein, 1987; Ebrahim & Weisband, 2007; Roberts &
Scapens, 1985) such as justification and financial reporting, but also as ‘a virtue’
or ‘positive feature of organisations or officials’ (Koppell, 2005; Bovens, 2010),
such as compliance with religious requirements, trustworthiness, responsibility,
and responsiveness. This finding reinforces the notion of accountability as a

nebulous, inter-subjective, and socially constructed concept (Bovens, 2010;
Ebrahim, 2003a; Shearer, 2002).
Should zakat agencies be accountable and why?
The results highlighted in Section 6.3 revealed that interviewees

unanimously agreed that zakat agencies should be accountable. Interviewees
believed that discharging accountability was related to the transfer of resources,
stewardship, and trust. Interviewees stated that zakat agencies were ‘a steward of
public money’ or an intermediary institution that collects donations from donors
to be used for the welfare of beneficiaries. As a steward of resources, zakat
agencies have an obligation to provide information about the usage of the
resources entrusted to them. Furthermore, interviewees believed that
accountability can be used to convince donors that the zakat fund has been used
appropriately for the welfare of beneficiaries. By showing the appropriate use of
resources, interviewees stated that zakat agencies can foster public trust. This
finding is consistent with previous work showing that trust is a mediating variable
that links accountability with donations, because accountability can induce trust
and trust leads to donations (Furneaux & Wymer, 2015; Verbruggen, Christiaens,
& Milis, 2011). Thus, accountability is a tool that can be used to secure funding
from donors.
Interviewees also stated that regulations require zakat agencies to be

accountable. For example, there is a regulation that requires zakat agencies to
submit audited financial reports to the government. Reporting to the government
is mandatory because the government can give sanctions to zakat agencies that do
not comply. This finding mirrors Croft (2014), who found that government
demand was the driver for reporting in Australian faith-based organisations. This
finding is also consistent with previous literature stating that the government may
introduce regulations to increase the accountability of charitable organisations
(Chisolm, 1995; Connolly, et al., 2011; Ebrahim, 2009; Weidenbaum, 2009).
To whom should zakat agencies be accountable?

All interviewees considered that zakat agencies must be accountable to God.
This finding suggests that Islamic religious beliefs influence the perceptions of
accountability in the administration of zakat. This finding offers additional
support to previous literature that found a faith-based organisation has
accountability to God (Abdul-Rahman & Goddard, 1998; Crofts, 2009; Joannides,
2012).
In addition to accountability to God, interviewees also acknowledged that

zakat agencies should be accountable to a wide range of stakeholders. This
finding confirms the finding of Schmitz et al. (2012), which asserted that US not-
for-profit organisations are accountable to various stakeholders, such as donors,
the board, beneficiaries, the government, and others. The comments of
interviewees indicate that a contractual relationship exists between zakat agencies
and government because regulations provide authority to government and the
Central BAZNAS to monitor zakat agencies. Therefore, government and the
Central BAZNAS can be classified as the primary stakeholders (Carroll, 1989).
This contractual relationship gives regulators power to demand accountability, as
indicated in the requirement for zakat agencies to submit customised reports.
Thus, the relationship between the zakat agencies and government can be
classified as ‘a bond of accountability’ (Stewart, 1984) because government and
the Central BAZNAS have the power to ask zakat agencies to give account. This
finding supports the existing literature that identifies regulators as important
stakeholders of not-for-profit organisations (Cordery & Baskerville, 2011; Najam,
1996; Schmitz, et al., 2012).
Interviewees also recognised that zakat agencies should be accountable to

donors. An accountability relationship with donors is related to the transfer of
resources (Cordery & Baskerville, 2011). Zakat given by Muslims creates a
contractual relationship between donors and a zakat agency. Although donors
cannot withdraw their donation, they will not provide support in the future if a
zakat agency cannot demonstrate accountability in the usage of resources. As
stated in Section 6.4, interviewees stated that donors can request information from
zakat agencies; therefore, donors can be classified as powerful and primary
stakeholders (Carroll, 1989). Because donors have an ability to hold an

organisation to give account, the accountability relationship between zakat
agencies and donors can be classified as a bond of accountability (Stewart, 1984).
This finding also supports the existing literature that classifies donors as a salient
stakeholder of not-for-profit organisations because donors provide resources
(Christensen & Mohr, 2003; Connolly, et al., 2012; Ebrahim, 2003a; Hyndman &
McMahon, 2010; Schmitz, et al., 2012).
Interviewees stated that zakat agencies owed accountability to their board

and their parent organisation. A parent organisation is a powerful and salient
stakeholder for private zakat agencies because private zakat agencies are created
by the parent organisation. For government-sponsored zakat agencies,
interviewees stated that they had to account to the government because
government-sponsored zakat agencies were created by the government. Although
private zakat agencies do not depend on resources from their parent organisation,
a parent organisation has the authority to elect the board of private zakat agency.
The relationship between the parent organisation and the administrators of zakat
agencies is an explicit contractual relationship, because administrators are elected
by the parent organisation to administer a zakat agency. Likewise, the relationship
between the board and the administrators of zakat agencies is an explicit
contractual relationship because the administrators have the responsibility to
execute the budget and programmes approved by the board. Parent organisations
and the board can be classified as the primary stakeholders (Carroll, 1989) or
salient stakeholders (Cordery & Baskerville, 2011) and a bond of accountability
(Stewart, 1984) exists between zakat agencies and the board and parent
organisation. Therefore, the parent organisation and board can ask for information
about the administration of zakat agency.
This study also finds that zakat agencies should be accountable to

beneficiaries because the mission of zakat agencies is to increase the welfare of
beneficiaries. This finding corresponds with Schmitz et al. (2012), who also found
that the leaders of US not-for-profit organisations were accountable to their
beneficiaries. This finding also supports the existing literature that not-for-profit
organisations should be accountable to beneficiaries (for example Connolly, et al.,
2012; Najam, 1996).

Although most intervieewees stated that zakat agencies should be
accountable to their beneficiaries, there is an indication that accountability to
beneficiaries only reflects a recognition of responsiveness to the demand of
beneficiaries and a recognition of responsibility to the welfare of beneficiaries.
Interviewees associated accountability to beneficiaries with a responsibility to
provide good programmes and responsiveness in providing assistance. This
indicates that the accountability relationship between zakat agencies and
beneficiaries falls short of a bond of accountability and only constitutes a link of
accountability (Stewart, 1984). Although beneficiaries have a legitimate right to
demand accountability, their relationship with a charitable organisation is only
based on an implicit contractual relationship through the charitable mission and
organisational values (Cordery & Baskerville, 2011). Therefore, beneficiaries do
not have the power to hold a zakat agency accountable and can be classified as
secondary stakeholders (Carroll, 1989).
A few interviewees identified an accountability relationship with other

groups of stakeholders, such as academics, the media, and professional bodies.
Academics, media, and professional bodies can disseminate information about the
activities of zakat agencies to the public. Although zakat agencies can receive
benefits by creating a good relationship with these stakeholders, these
stakeholders do not have the power to hold zakat agencies to account. As a result,
these stakeholders are classified as secondary stakeholders (Carroll, 1989). Thus,
the accountability relationship between zakat agencies and these stakeholders is
only in the form of a link of accountability (Stewart, 1984) that reflects the
responsiveness of zakat agencies to the needs of the media, academics, and peer
organisations.
Overall, the responses of interviewees indicated that zakat agencies should

be accountable to a broad range of stakeholders. However, upward accountability
to regulators and resource providers was mentioned more frequently than
downward accountability to beneficiaries or horizontal accountability to
academics, media, and others. This finding suggests that administrators focus on
upward accountability to stakeholders that can influence their performance, such
as regulators and donors.

The scope of accountability of zakat agencies
With respect to the scope of accountability, the results indicate that the
scope of zakat agencies accountability extends beyond the scope of accountability
proposed by Stewart (1984). Administrators stated that the scope of zakat
agencies accountability includes Syari’ah accountability. Syari’ah accountability
was related to accountability to God. Although zakat agencies do not provide
religious services, as do the Church of England or the Salvation Army, it is clear
from the comments of interviewees that there is a sacred dimension in the
accountability of zakat agencies.
All interviewees stated that zakat agencies have financial accountability.

This finding is consistent with Yasmin et al., (2013), who found that charitable
organisations have financial accountability. Administrators consider that financial
accountability is important in gaining public trust and public trust is needed to
attract donations. Further, the procedures implemented by zakat agencies to
achieve their organisational objectives is also considered important by all
administrators. Several administrators also mentioned mission, performance,
programme, and legal accountability. This finding suggests that Stewart’s (1984)
ladder of accountability is applicable in the context of zakat agencies.
The findings of this study support previous literature that sacred and secular
accountability is equally important for organisations that require public support
(Bigoni, et al., 2013; Irvine, 2002). This finding also suggests that religious
beliefs influence the understanding of accountability of faith-based charitable
organisations and extends the findings of previous accounting and accountability
studies that found the existence of sacred and secular accountability in religious
organisations (Abdul-Rahman & Goddard, 1998; Bigoni, et al., 2013; Irvine,
2002; Jacobs, 2005; Jacobs & Walker, 2004; Jayasinghe & Soobaroyen, 2009;
Joannides, 2012; Laughlin, 1988, 1990; Quattrone, 2004).
With respect to type of information, most interviewees stated that zakat

agencies should disclose financial information and programme information. This
finding indicates that administrators considered financial and programme
information as equally important, which is in contrast to Connolly et al. (2012),

who found that the administrators of charitable organisations in the UK consider
performance information more important than financial information.
By what means should zakat agencies discharge their accountability?
The findings presented in Section 6.7 indicate that zakat agencies use formal
and informal means to discharge accountability. Several media that are used to
disseminate accountability information include annual reports, websites, internal
printed media, mass media, religious gatherings, social media, and public
announcements in mosques. Prior literature has also suggested that not-for-profit
organisations use formal and informal means to discharge their accountability
(Cordery, et al., 2010; Gray, et al., 2006; Unerman & O'Dwyer, 2006b).
The use of informal media, such as websites and internal printed media, to
disseminate accountability information is more common than the use of formal
media, such as annual reports. It is possible that zakat agencies give information
using the internet, internal, and printed media in preference to annual reports
because annual reports are only published once a year, while other media can be
published in a shorter period, such as daily, monthly, or quarterly. There are many
activities that need to be reported to the public promptly, such as distribution of
zakat funds and fundraising activities for disaster victims. This information will
lose its value if it is not reported to the public in a timely fashion. In addition, the
preparation of annual reports requires specific knowledge in formal reporting;
therefore, it requires more effort to prepare annual reports.
6.9 SUMMARY
This chapter presented the findings regarding the understanding of

accountability from the perceptions of zakat agencies’ administrators.
Interviewees associated accountability with several concepts, such as
transparency, amanah or trustworthiness, responsibility, responsiveness, and
justification. Interviewees’ responses indicate that the accountability of zakat
agencies covers sacred and secular dimensions. All interviewees agreed that zakat
agencies must be accountable to God and wide groups of secular stakeholders,
such as donors, the government, the Central BAZNAS, and beneficiaries. The
scope of accountability also consists of sacred (Syari’ah accountability) and

secular accountability. For secular accountability, consistent with Stewart’s
(1984) ladder of accountability, interviewees indicated that the accountability of
zakat agencies consists of financial accountability, process accountability,
programme accountability, performance accountability, and policy (mission)
accountability. With regards to media for disseminating accountability,
interviewees stated that zakat agencies should use formal and non-formal
mechanisms. Customised formal reports, financial reports, and annual reports
were mentioned as the formal mechanisms to disseminate accountability. For
informal mechanisms, interviewees referred to the internet, mass media, internal
printed media, and social media.

Agencies: Donors’Perceptions
7.1 INTRODUCTION
This findings chapter addresses the second research question about donors’
perceptions regarding the accountability of zakat agencies. While accountability is
typically analysed qualitatively, the insights presented in this chapter are based on
a survey of the donors of zakat agencies. This chapter is presented as follows.
Section 7.2 describes the perceptions of donors regarding the notion of
accountability while Section 7.3 presents the responses of donors with regards to
the importance of demonstrating accountability for zakat agencies. Sections 7.4 to
7.7 report donors’ perceptions regarding the key accountability issues of “to
whom”, “for what”, and “how”. In these sections, factor analysis was used to
regroup variables of “to whom”, “for what”, and “how” based on shared variance
and to produce factor scores. Section 7.8 presents the results of the non-parametric
correlation test to investigate the correlation among the elements of “to whom”,
“for what”, and “how”. Section 7.9 investigates the relationship between “the
groups of respondents based on to whom zakat is given” and “the demographic
attributes of the respondents” and their understanding of accountability. The
discussion of findings is presented in Section 7.10. The final section provides the
summary of this chapter.
7.2 DONORS’ PERCEPTIONS ON THE MEANING OF

ACCOUNTABILITY
Donors were asked to describe their understanding of the term

‘accountability’. The results are presented in Table 7-1. The majority of
respondents (51.9%) associated accountability with the ability to provide
information about the usage of the zakat fund. This was followed by transparency
(40 respondents or 17.3%) and the ability to provide reliable and accurate
financial information (21 respondents or 9.1%). Donors also linked accountability
to a normative concept about a state of being accountable. For example, donors
141
linked accountability with the ability to distribute zakat to eligible beneficiaries
(7.95%), good administration (5.02%), trustworthiness (3.35%), and compliance
with regulation (2.09). These findings show that donors had different views and
perceptions regarding the meaning of accountability.
Table 7-1 Perceptions of Donors on the Meaning(s) of Accountability

Primary Recipient of Zakat
Meaning (s) of
No Local Imam BAZNAS LAZ Total
Accountability
Demonstrating that the
1 zakat fund is used 85 54.84 17 38.64 18 45.00 120 50.21
appropriately
2 Transparency 17 10.97 10 22.73 13 32.50 40 16.74
Providing reliable and
3 accurate financial 13 8.39 4 9.09 4 10.00 21 8.79
information
Financial assistance is
4 received by eligible 14 9.03 3 6.82 2 5.00 19 7.95
beneficiaries
5 Good administration 5 3.23 6 13.64 1 2.50 12 5.02
6 Trustworthy 7 4.52 1 2.27 0 0 8 3.35
Compliance with
7 5 3.23 0 0 0 0 5 2.09
regulation
Compliance with
8 1 0.65 1 2.27 1 2.50 3 1.26
Syari’ah requirements
9 Others 2 1.29 1 2.27 0 0 3 1.26
10 Did not respond 6 3.87 1 2.27 1 2.50 8 3.35
Total 155 44 40 239 100
7.3 SHOULD ZAKAT AGENCIES BE ACCOUNTABLE?
Donors were asked whether zakat agencies should be accountable to their

stakeholders. The results are presented in Table 7-2. Of the 221 respondents who
responded to this question, most respondents (95%) believed that zakat agencies
should be accountable. This indicates that respondents consider accountability to
be very important in the administration of zakat agency. A chi-square test was
performed to determine whether there was a significant difference among the
groups of respondents and no significant differences were identified. This finding
indicates that all groups of respondents have a similar view on the importance of
demonstrating accountability.
142 Chapter 7: The Accountability of Zakat Agencies: Donors’Perceptions

Table 7-2 Cross-tabulation of the Importance of Demonstrating Accountability to
Stakeholders by the Groups of Donors
Primary Recipient of Zakat All
Respondentsa
Local Imam BAZNAS LAZ (n=221)
Yes No Yes No Yes No Yes No
Should zakat agencies 135 6 38 4 38 0 211 10
be accountable? (96%) (4%) (90%) (10%) (100%) (0) (95%) (5%)
Donors were also asked to explain why they thought that zakat agencies
should be accountable. The results are reported in Table 7-3. It is notable that
there was similarity among the donor groups on why zakat agencies should be
accountable. The most popular reasons were that: (1) giving an account about the
usage of the zakat fund is the obligation of organisations that receive zakat
(36.02%); (2) accountability will increase public trust (22.75%); and (3) to show
trustworthiness or amanah (12.32%). Respondents also stated that God would ask
for accountability from the administrators of zakat agencies (4.27%) and to
comply with Syari’ah requirements (1.90%).
Table 7-3 Reasons Why Zakat Agencies Should be Accountable

Total
No Reasons Local Imam BAZNAS LAZ
It is an obligation to give
1 52 38.52 12 31.58 12 31.58 76 36.02
account
2 To increase public trust 28 20.74 11 28.95 9 23.68 48 22.75
Amanah (trustworthiness or
3 12 8.89 7 18.42 7 18.42 26 12.32
fulfiling or upholding trust)
Zakat fund is from public
4 16 11.85 2 5.26 1 2.63 19 9.00
[Muslim] donations
5 Avoid malfeasance 10 7.41 1 2.63 4 10.53 15 7.11
6 God will ask accountability 6 4.44 2 5.26 1 2.63 9 4.27

7 To comply with regulations 5 3.70 2 5.26 2 5.26 9 4.27
8 To comply with Syari’ah 2 1.48 1 2.63 1 2.63 4 1.90
9 Did not mention their reason 4 2.96 0 0.00 1 2.63 5 2.37
Total 135 38 38 211 100
Table 7-4 summarises the reasons of respondents who stated that zakat
agencies do not need to be accountable. Five respondents stated that zakat
agencies do not need to demonstrate accountability because they give zakat ‘from
143
the heart’. Three respondents stated that God will ask for accountability from
zakat agencies while one respondent stated that there are regulations that regulate
zakat agencies.
Table 7-4 Reasons Why Zakat Agencies Should Not be Accountable

The Primary Recipient of Zakat
Total
No Reasons Local Imam BAZNAS LAZ

They give zakat ‘from the
1 2 33.33 3 75.00 0 0 5 50
heart’
A zakat agency is
2 3 50.00 0 0 0 0 3 30
accountable to God
There are regulations that
3 0 0 1 25.00 0 0 1 10
regulate zakat agencies
Did not mention their
4 1 16.67 0 0 0 0 1 10
reason
Total 6 4 0 10 100
7.4 TO WHOM SHOULD ZAKAT AGENCIES BE ACCOUNTABLE?
As discussed in Section 7.3, most respondents stated that zakat agencies

should be accountable. Therefore, this study also investigated to whom zakat
agencies should be accountable and to address the following research question:
RQ.2.a. To whom do the donors of zakat agencies believe zakat agencies

To answer this research question, respondents were asked to indicate whether a

zakat agency should be accountable to a range of possible stakeholders listed in a
questionnaire (see Appendix C No. 7).
Descriptive statisticsTable 7-5 presents the descriptive statistics of the
findings. The majority of respondents indicated that zakat agencies should be
accountable to God (95%), donors (76%), the Central BAZNAS (64%), the public
(60%), and the government (59%).

Table 7-5 Cross-tabulation between the Groups of Respondents and their
Perceptions on the Stakeholders of Zakat Agencies

All Respondents
No To Whom Local Imam BAZNAS LAZ
Yes No Yes No Yes No Yes No Total
(%) (%) (%) (%) (%) (%) (%) (%) (n)
133 6 37 0 35 4 205 10
1 God 215
96 4 100 0 90 10 95 5
108 29 26 10 26 11 160 50
2 Donors 210
76 21 72 28 70 30 76 24
90 49 26 10 20 17 136 76
3 Central BAZNAS 212
65 35 72 28 54 46 64 36
84 52 24 12 17 20 125 84
4 Public 209
62 38 67 33 35 55 60 40
76* 62* 30* 6* 19* 18* 125 86
5 Government 211
55 45 83 17 51 49 59 41
67 69 18 18 15 22 100 109
6 Beneficiaries 209
49 51 50 50 41 59 48 52
61 76 15 21 14 23 90 120
7 The board 210
44 54 42 58 38 62 43 57
55 81 19 17 17 20 55 81
8 MUI 209
40 60 53 47 46 54 26 74
47 90 11 25 14 23 72 138
9 Peak Body 210
34 66 51 69 38 62 34 66
29 107 4 32 10 27 43 166
10 Volunteers 209
21 79 11 89 27 73 21 79
25 111 9 27 10 27 44 165
11 Media 209
18 82 25 75 27 73 21 79
15 121 6 30 4 33 25 184
12 Parliament 209
11 89 17 83 11 89 12 88
Notes:
* Significant difference at 0.1 level using Pearson Chi Square Test
Although it might be expected that donors would expect zakat agencies to

be accountable to their beneficiaries, the finding indicates different perceptions
among participants. There were 109 (52%) respondents who stated that zakat
agencies should not be accountable to their beneficiaries while 100 (48%)
respondents agreed that zakat agencies should be accountable to their
beneficiaries. A similar pattern was observed for accountability to the board,
MUI, peer organisations, volunteers, the media, and Parliament. The percentage
of participants who stated that zakat agencies should not demonstrate
accountability to these stakeholders was higher than the percentage of participants
who stated that zakat agencies should demonstrate accountability to them.
Chi-square tests were performed to identify whether the responses among

the groups of donors were significantly different. The result indicated that there
145
was no significant difference among the three groups of donors surveyed, except
for their perception on accountability to the government.23 A post-hoc test was
conducted to determine which groups of donors were statistically different from
one another. The results indicated differences on the views of accountability to the
government between the group of donors who give zakat to government-
sponsored zakat agencies and the other groups of donors. Participants who gave
zakat to government-sponsored zakat agencies might expect government-
sponsored zakat agencies to be accountable to government because: (1)
government-sponsored zakat agencies are created by government; (2)
government-sponsored zakat agencies receive funding from government; and (3)
zakat might be directly deducted from salary government employees and given to
the government-sponsored zakat agencies.
Grouping of Stakeholders
The results of the survey indicated that zakat agencies should be
accountable to a wide range of stakeholders. The theoretical framework discussed
in Section 4.3 shows that stakeholders of an organisation can be classified into
several categories based on several stakeholders’ attributes. Factor analysis was
applied to classify the stakeholders of zakat agencies and to facilitate the
identification of their underlying dimension.
Factor analysis requires sizeable correlations among variables; therefore, a

Spearman correlation test was performed. The results of the Spearman correlation
test are presented in Table 7-6. Visual inspection of the results of the correlation
test indicate that many variables had correlation coefficients of 0.3 or above.
Bartlett’s test of sphericity was also performed to determine the presence of
correlation among variables. The result of Bartlett’s test of sphericity was
significant (χ2=917.550, p<0.000), indicating that a sufficient correlation among
variables existed. The Kaiser-Meyer-Olkin (KMO) test was used to measure
sample adequacy and the results exceeded the recommended value of 0.6 (KMO =
0.826), indicating that the size of the sample was sufficient. Therefore the
application of factor analysis was suitable (Tabachnick & Fidell, 2007).
23 χ2 (2, n=211) = 10.601, p: 0.005, phi=0.224.

Table 7-6 Spearman’s rho Correlation Matrix for to Whom Zakat Agencies
Should be Accountable
Variable (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
(1) God 1.000
(2) Government 0.355** 1.000
(3) Parliament 0.100 0.299** 1.000
(4) MUI 0.245** 0.421** 0.408** 1.000
(5) Central BAZNAS 0.226** 0.556** 0.242** 0.421** 1.000
(6) Zakat Forum 0.137* 0.225** 0.312** 0.424** 0.424** 1.000
**
(7) Boards 0.267 0.310** 0.270** 0.369** 0.467** 0.638** 1.000
(8) Donors 0.452** 0.362** 0.211** 0.313** 0.340** 0.364** 0.363** 1.000
(9) Beneficiaries 0.273** 0.182** 0.292** 0.296** 0.207** 0.349** 0.251** 0.488** 1.000
(10) Volunteers 0.160* 0.142* 0.338** 0.216** 0.188** 0.476** 0.423** 0.260** 0.287** 1.000
(11) Media 0.193** 0.237** 0.296** 0.317** 0.283** 0.465** 0.322** 0.265** 0.100 0.480** 1.000
(12) Public 0.402** 0.363** 0.244** 0.300** 0.252** 0.353** 0.310** 0.362** 0.284** 0.273** 0.324**
Notes:
n=239
** Correlation is significant at the 0.01 level (2-tailed)
* Correlation is significant at the 0.05 level (2-tailed)
Based on Kaiser’s criterion, the number of components that should be

retained was three because three components had initial eigenvalues of 1 or above
(see Appendix D). Based on Monte Carlo PCA for parallel analysis, the number
of components that should be retained was two becausee two components had
eigenvalues above the criterion value created by the Monte Carlo PCA for parallel
analysis. Visual inspection of the scree plot presented in Appendix E was
inconclusive because there were three elbows, each at components 2, 4, and 6. As
parallel analysis is considered more accurate than other methods (Pallant, 2016),
two components or factors were retained.
The results of the factor analysis are presented in Table 7-7. Two factors
produced by principal component analysis accounted for 48.59% of the total
variation in the data.
Table 7-7 Rotated Component Matrix of “To Whom Should Zakat Agencies be
Accountable"
Pattern Matrix Structure Matrix
To Whom Communalities
Factor 1 Factor 2 Factor 1 Factor 2
147
Primary Secondary Primary Secondary
Stakeholders Stakeholders Stakeholders Stakeholders
God 0.814 0.235 0.709 –0.130 0.546
Government 0.752 0.046 0.731 –0.291 0.537
Donor 0.706 –0.054 0.731 –0.371 0.537
Public 0.549 –0.158 0.620 –0.404 0.404
Central BAZNAS 0.522 –0.230 0.625 –0.463 0.432
Beneficiaries 0.467 –0.158 0.538 –0.367 0.309
MUI 0.435 –0.331 0.583 –0.525 0.427
Volunteer -0.138 –0.821 0.230 –0.759 0.591
The Zakat Forum 0.064 –0.795 0.421 –0.824 0.683
Media –0.022 –0.714 0.298 –0.704 0.496
Board 0.223 –0.604 0.493 –0.704 0.535
Parliament 0.119 –0.514 0.349 –0.567 0.332
% of variance explained 37.541 11.045
Extraction method: principal component analysis.
Rotation method: oblimin with Kaiser normalisation.
Rotation converged in 9 iterations.
The first factor accounted for a total of 37.54% of the variance being
explained. The groups of stakeholders that loaded into this factor are considered
the ‘primary stakeholders’ of zakat agencies because they consist of resource
providers (donors), regulators (the government, the Central BAZNAS, and MUI),
the public and beneficiaries. Three stakeholders loaded strongly into factor 1,
namely God (0.814), the government (0.752), and donors (0.706), while the
public, the Central BAZNAS, beneficiaries, and MUI had moderate factor
loadings from 0.435 to 0.549. Although MUI does not have legal authority to
produce regulations, their ‘fatwa’ 24 is followed by most Muslims in Indonesia,
including zakat agencies. Therefore, MUI can be considered a regulator,
particularly for matters that relate to Syari’ah.
The second factor accounted for 11.05% of the total variance being
explained. The second factor consisted of the board, peer organisations, media,
volunteers, and parliaments 25 and was labelled ‘secondary stakeholders’. It is
24 An Islamic legal pronouncement on a specific issue handed down by Muslim cleric(s).

25 Indonesia follows a presidential system where Parliament (legislative) is separate from the Executive. The
head of the government is the President and the head of the ministry and department is not a member of
Parliament. The main task of Parliament is to produce regulations and to monitor the government;
therefore, they do not monitor zakat agencies.

surprising that the board loaded into the same factor as peer organisations, media,
and volunteers, as the board is an internal stakeholder; while peer organisations,
the media, and volunteers are external stakeholders. Volunteers, the zakat forum,
the media, and the board loaded strongly to factor 2 (factor loading from 0.604 to
0.821), while Parliament only moderately loaded to factor 2 (0.514).
Principal component analysis with oblique Oblimin rotation also produced a

correlation matrix between Factor 1 and Factor 2. The results indicate a medium
negative correlation (r = –0.448) between Factors 1 and 2. Because both
components were correlated, oblique rotation was more appropriate than
orthogonal rotation (Pett, Lackey & Sullivan, 2003). The negative correlation
indicates that the primary stakeholders and the secondary stakeholders are distinct
groups of stakeholders. In addition, as shown in Figure 7-1, the plot of each
stakeholder in rotated space clearly indicates that the primary stakeholders and the
secondary stakeholders are separate groups of stakeholders.
Figure 7-1 Factor Plot in Rotated Space for "To Whom Should Zakat Agencies be
Accountable"
Factor scores were produced for every factor using the multiple regression
approach. Multivariate analysis of variance (MANOVA) tests were carried out
with factor scores for Factors 1 and 2 as dependent variables and (i) the groups of
respondents, (ii) employment sectors, (iii) age categories, and (iv) level of
149
education as independent variables. The results of the MANOVA tests did not
find statistically significant results based on the groups of donors (Appendix G)
and demographic attributes of the donors (Appendix H). Thus, there was no
difference in the perception of stakeholders regarding zakat agencies based on the
groups of donors and demographic attributes of donors.
7.5 WHAT SHOULD ZAKAT AGENCIES BE ACCOUNTABLE FOR?
The findings in this section address the following research question:
RQ. 2(b). What is the scope of accountability of zakat agencies according to the
Participants were asked to indicate the level of importance of ten statements

about the scope of accountability (see Appendix C, Question No. 8).
Descriptive StatisticsTable 7-8 presents the responses of respondents
regarding the scope of accountability of zakat agencies as reported by the mean
score of the variables. The higher the mean score, the higher the importance that
respondents assigned to the variables presented. The survey revealed that the
majority of respondents had similar views about the relative importance of each
variable that represented the scope of accountability, as indicated by the minimal
differences in the mean score of each variable.

Table 7-8 Perceptions of Donors on the Scope of Zakat Agencies Accountability
Primary Receipient of All Respondents
Zakat n=239
Scope
No of Local BAZ
LAZ Frequency*
Accountability Imam NAS Mean
Mean Mean Mean 0 1 2 3 4 5
1 Finances 4.80 4.77 4.81 4.80 20 0 1 0 40 178
2 Syari’ah 4.72 4.77 4.58 4.72 23 1 3 1 45 166
3 Ethics 4.53 4.57 4.56 4.55 23 1 1 8 74 132
4 Outcome 4.32 4.43 4.22 4.33 23 1 2 20 94 99
5 Legal 4.35 4.37 4.19 4.33 22 6 2 16 84 109
6 Efficiency 4.30 4.31 4.14 4.28 26 0 1 27 96 89
7 Effectiveness 4.29 4.37 4.14 4.27 24 1 0 21 110 83
8 Governance 4.30 4.29 4.22 4.26 23 1 4 23 98 90
9 Mission 4.29 4.23 4.00 4.23 25 4 3 24 91 92
10 Amil Fund 3.91 3.83 4.17 3.93 32 15 10 31 70 81
Notes:
*: 0 = Did not respond to this question; 1 = Not Important; 2 = Less Important; 3= Medium; 4 =
Important; 5: Very Important
Accountability for finances had the highest mean score (4.80) with 178 (out
of 239) respondents stating that accountability for finances was very important.
This was followed by compliance with Syari’ah requirements (mean score: 4.72)
and accountability for ethics (mean score: 4.55). The three categories that received
the lowest mean score were governance (mean score: 4.25), mission (mean score:
4.23), and amil fund (mean score: 3.93). Only 81 (out of 239) respondents stated
that accountability for the amil fund was very important. The results of the
Kruskal-Wallis test showed no significant difference between the perceptions of
donors who gave to local Imams, government-sponsored zakat agencies, and
private zakat agencies regarding the scope of accountability. This indicates that
there was no difference in the perceived scope of accountability of zakat agencies
based on the groups of donors.
Grouping the Scope of Accountability

Several authors have proposed that the scope of accountability consists of
several areas (Dhanani & Connolly, 2012; Ebrahim, 2010; Goodin, 2003; Kearns,
151
1996; Stewart, 1984). The survey identified ten elements in which zakat agencies
should be accountable. Factor analysis was used to produce factor scores for
further analysis and to condense these areas of accountability by grouping
correlated areas of accountability so that they can be compared with the existing
literature.
Because factor analysis requires highly correlated variables, Spearman rho

correlation was used to test the correlation among variables. The results are
presented in Table 7-9 and indicate that most variables had a correlation of 0.3 or
above. The result of Bartlett’s test of sphericity was significant (χ2=714.843,
p<0.000); indicating a sufficient correlation among the variables. The KMO value
was 0.86 and above the recommended value of 0.6, indicating that the size of the
sample was sufficient. Therefore the application of factor analysis for the scope of
accountability was suitable (Tabachnick & Fidell, 2007).
Table 7-9 Spearman’s rho Correlation Matrix for the Scope of Accountability
Scope of Accountability 1 2 3 4 5 6 7 8 9
1. Finances 1.000
2. Amil Fund 0.183** 1.000
3. Ethics 0.473** 0.243** 1.000
4. Syari’ah 0.595** 0.213** 0.563** 1.000
5. Law and regulation 0.339** 0.050 0.412** 0.455** 1.000
6. Governance 0.395** 0.171* 0.431** 0.413** 0.590** 1.000
7. Effectiveness 0.327** 0.134 0.423** 0.392** 0.514** 0.584** 1.000
8. Efficiency 0.382** 0.197** 0.525** 0.406** 0.470** 0.569** 0.610** 1.000
9. Outcome 0.315** 0.229** 0.498** 0.379** 0.415** 0.469** 0.519** 0.488** 1.000
10. Mission 0.380** 0.114 0.385** 0.301** 0.462** 0.503** 0.524** 0.563** 0.508**
After the suitability of the data for factor analysis was confirmed, the next
step was to determine the number of factors that should be retained. Based on
Kaiser’s criterion, two components should be retained because two components
had eigenvalues above one (Appendix D). Visual inspection of the scree plot
(Appendix E) indicates that the sharp elbow is located in the second component;
therefore, there only one factor should be retained. The result of Monte Carlo
PCA for parallel analysis indicates that only one factor should be retained because

only component 1 had an eigenvalue above the criterion valued from the Monte
Carlo PCA for parallel analysis. However, retaining only one factor is not
appropriate from a theoretical perspective because the previous literature has
indicated that the scope of accountability consists of several elements (Ebrahim,
2010; Goodin, 2003; Kearns, 1996; Stewart, 1984). Moreover, Nunally and
Bernstein (1994) suggested that the number of factors retained should make
theoretical sense. Therefore, two factors were retained because this was more
theoretically justifiable than one factor.
The results of the factor extraction on the scope of accountability based on a

two factors solution are presented in Table 7-10. The two factors solution
produced a simple structure of factors that accounted for 55.57% of the total
variation in the data. The result suggests that there were two distinct scopes of
accountability as perceived by donors. The plot of every item of the scope of
accountability presented in Figure 7-2 also indicates that Factors 1 and 2 were
distinct.
Table 7-10 Results of Factor Extraction on the Scope of Accountability
Pattern Matrixa Structure Matrix

Scope of Factor 1 Factor 2 Factor 1 Factor 2 Communalitie
Accountability Performance Financial and Performance Financial and
s
and Governance Sacred and Governance Sacred
Accountability Accountability Accountability Accountability
Legal 0.818 –0.192 0.760 0.054 0.611

Mission 0.801 –0.143 0.759 0.099 0.594
Governance 0.798 –0.019 0.792 0.221 0.627
Efficiency 0.699 0.144 0.742 0.354 0.569
Effectiveness 0.693 0.170 0.744 0.378 0.580
Outcomes 0.540 0.222 0.607 0.385 0.413
Amil Fund –0.225 0.706 –0.013 0.638 0.453
Syari’ah Accountability 0.406 0.570 0.577 0.692 0.629
Ethics 0.386 0.552 0.552 0.668 0.582
Finances 0.307 0.551 0.473 0.643 0.499
Eigenvalues 4.41 1.15
a. Rotation converged in 10 iterations.
153
Figure 7-2 Factor Plot in Rotated Space for the Scope of Accountability
The first factor explains 44.10% of total variance. The variables with
significant loading in this factor were compliance with regulations, governance,
mission, and performance; thus, this factor was labelled “Governance and
Performance Accountability”. All items that compose this factor had high factor
loadings exceeding 0.690, with the exception of accountability for outcome that
only moderately loaded into this factor (0.540).
The second factor was associated with 11.47% of total variance and
consisted of accountability for finances, amil fund, ethics, and Syari’ah
compliance; thus, the second factor was labelled “Sacred and Financial
Accountability”. Accountability for the amil fund had the highest loading score
(0.706), while Syari’ah accountability (0.570), ethics accountability (0.552), and
finance accountability (0.551) loaded moderately to the second factor.
As discussed in Chapter 2, a zakat fund consists of: (1) zakat funds to be

distributed to beneficiaries, and (2) the amil fund (to finance the administration of
zakat agencies). Therefore, it is reasonable that accountability for finances and
accountability for amil fund loaded into the same factor because both areas of

accountability are directly related to the usage of financial resources. The usage of
the zakat fund for beneficiaries must comply with Syari’ah requirements. Thus,
financial accountability was also related to Syari’ah accountability. According to
Syari’ah, one eighth of the zakat fund belongs to the administrators of zakat
agencies. Syari’ah and government regulations do not regulate the usage of the
amil fund. However, it is also expected that the administrators of zakat agencies
will consider this ethical dimension in the usage of the amil fund.
Principal component analysis with oblique oblimin rotation 26 also produced

a correlation matrix between two factors. The component correlation matrix
indicated a medium correlation between two factors (r = 0.301). Therefore, the
application of oblique oblimin rotation was considered appropriate.
Factor scores for Factors 1 and 2 were produced using a multiple regression
approach. MANOVA tests on factor scores on Factors 1 and 2 were performed
with four different independent variables: (1) the groups of respondents; (2) age
group; (3) employment sector; and (4) education. The results indicated no
significant difference among the different independent variables, except for
employment sector, [(F (2,179) = 3.514, p=0.032; Wilks’ Lambda=0.962]
(Appendixes J and I). Test of between subject effects only indicated a marginally
significant difference on the importance of performance and governance
accountability [(F (1, 3.973) =3.699, p=0.096]. An inspection of the mean scores
indicated that respondents who were not government employees perceived
performance and governance accountability to be more important than
respondents who were government employees.
7.6 TYPES OF INFORMATION REQUIRED BY DONORS
This study also sought to identify the types of information considered

important by donors. This section addresses the following research question:
RQ 2 (c): What information (financial and non-financial) do the donors of

zakat agencies expect and consider necessary to be disclosed by zakat agencies?
26 Orthogonal varimax rotation was also performed and produces identical results.
155
To answer this research question, respondents were asked to indicate the
level of importance of various types of information on a five-point Likert-type
scale (see Appendix X No.13).
Descriptive Statistics
The summary of responses from participants is presented in Table 7-11. All
information types listed in the questionnaire were identified by the majority of
donors as being of “medium importance” to “very important”, indicating that all
variables listed in the questionnaire were considered necessary to be disclosed by
zakat agencies to render accountability. Notably, participants perceived
beneficiary-related information and financial information to be the most important
information compared to other types of information.

Table 7-11 Perceptions of Donors on Types of Information that should be
disclosed by Zakat Agencies

Zakat (n = 239)
No Type of Information Local BAZ
NAS
LAZ Frequency*
Imam Mean
Overview – Organisation
Statement of mission
1 4.32 4.13 4.08 4.25 1 2 3 28 106 99
and objectives
History of the
2 3.45 3.50 3.51 3.50 4 8 16 82 108 21
organisation
Governance Information
Boards and committee
3 3.86 3.71 3.82 3.83 4 1 13 58 115 47
activities
Profile of boards,
4 CEO and other senior 3.88 3.63 3.78 3.82 10 3 14 56 104 52
staff
Information about
5 3.86 3.75 3.81 3.82 6 3 13 54 116 47
organisation structure
Remuneration of
6 boards, CEO and other 3.64 3.55 3.54 3.61 6 6 20 74 92 41
senior staff
Future Plans
7 Future plans 4.38 4.35 4.22 4.35 5 1 0 16 117 100
Organisation Policy and Program
Organisation’s policy
for selecting
8 beneficiaries including 4.39 4.33 4.08 4.26 6 2 3 23 110 95
the criteria to select
beneficiaries
Overview of
9 programmes and 4.25 4.30 4.22 4.22 6 2 2 28 111 90
activities
Organisation’s policy
10 related to the 4.26 4.28 4.00 4.19 7 2 5 27 112 86
allocation of resources
Information about
11 how to access zakat 4.17 4.23 4.19 4.14 6 4 5 27 116 81
agency services
Beneficiaries
Overview of
12 4.53 4.53 4.46 4.48 3 1 1 13 90 131
beneficiaries
Human interest stories
(information about
13 4.35 4.33 4.32 4.32 5 2 1 19 111 101
how zakat funds help
beneficiaries)
157
Zakat (n = 239)
No Type of Information Local BAZ
NAS
LAZ Frequency*
Imam Mean
Other Non-financial Information
Information about
14 related parties’ 4.12 4.03 4.03 4.07 5 3 5 42 106 78
transactions
Acknowledgement of
15 donors and volunteer’s 3.54 3.63 3.43 3.55 6 7 13 84 102 27
contributions
Financial Information
Audited financial
16 4.38 4.48 4.24 4.35 5 1 1 32 80 120
statements
Total revenues and
17 4.40 4.55 4.22 4.35 3 1 4 22 93 116
sources of revenues
Usage of zakat fund
18 for beneficiaries other 4.42 4.20 4.16 4.31 4 1 3 18 113 100
than amil
Usage of other
19 donated funds (except 4.42 4.20 4.16 4.30 3 1 4 24 102 105
zakat fund)
20 Usage of the amil fund 4.30 4.30 4.22 4.26 6 1 4 31 94 103
Auditor's report or
21 other type of 4.30 4.43 4.11 4.25 4 1 3 37 89 105
assurance report
22 Fundraising cost 3.96 3.88 3.62 3.88 6 3 13 48 114 55
Performance Information
Financial performance
23 4.17 4.13 3.95 4.11 4 0 1 41 124 69
information
Non-financial
24 performance 4.03 4.18 3.84 4.02 8 2 7 40 118 64
information
Notes *: 0: Did not responses; 1 = Not Important; 2 = Less Important; 3= Medium; 4 = Important;
5: Very Important
Information about zakat agencies’ beneficiaries had the highest mean score
(4.48), which reflects the importance of information about beneficiaries. In
relation to information about zakat agencies beneficiaries, 221 (out 239)
respondents agreed that they were important or very important. The other type of
information about beneficiaries – information about human interest stories
(information about how zakat funds help beneficiaries) – was also considered very
important by the majority of respondents (mean score: 4.32), while 212 (out of
239) respondents stated that information about human interest stories was
important or very important.

The relative importance of financial information was reflected by the mean
score of the “independent auditor report” (4.35) and “audited financial statements”
(mean score: 4.35). The number of respondents who stated that information about
“independent auditor report and other assurance reports” (105 out of 239) and
“audited financial statements” (120 out of 239) was important or very important
was also quite high. The other financially-related information (information about
how the zakat fund was spent, information about the proportion of zakat for
beneficiaries, and information about total revenues and its sources) was also
considered very important by the majority of donors and had an average mean
rating above 4. These findings indicate that donors had a strong interest in
financial accountability. However, information regarding the proportion of zakat
fund for amil and information relating to fundraising were not regarded as being
as important as other financial information. These findings are consistent with the
findings from Section 7.5 about the scope of accountability that indicated
participants had a lower interest in the usage of amil fund than other scopes of
accountability.
This study found that respondents had mixed perceptions regarding the
importance of organisational information. While information about the
organisation’s vision, mission, and objectives was considered important (mean
score: 4.25), information about the history of the organisation was only
considered moderately important (mean score: 3.50). It is possible that donors
believe that information about the history of an organisation does not influence
the ability to distribute a zakat fund, therefore, they do not consider this
information important. In contrast, the organisation’s vision, mission, and
objectives are considered important because they provide a general description
about how an organisation will use the money donated to them.
In order to measure the differences in the ratings regarding information

given by the three groups of donors, a Kruskal-Wallis Test was performed. There
were no significant differences in the responses between the groups of donors,
except for information about the statement of zakat agency’s vision, mission, and
objectives. Post-hoc tests were conducted to identify which specific groups of
donors differed. The result indicated that the group of respondents who gave to
159
local Imams and the group of respondents who gave to government-sponsored
zakat agencies differed significantly in regard to their perceptions on the
importance of information about the vision, mission, and objectives (Chi-square:
4.423; p value: 0.035). An inspection of the mean ranks for every group of donors
suggests that respondents who gave zakat to local Imams had the highest
perception regarding the importance of information about the zakat agency’s
vision, mission, and objectives; while the respondents who gave to private zakat
agencies reported the lowest. No significant difference was observed between the
group of respondents who gave to government-sponsored zakat agencies and
private zakat agencies.
Grouping of Information Types

This study identified 24 types of information considered important by
donors. Factor analysis was used to simplify these types of information. A
Spearman non-parametric correlation test was used to test the presence of
correlation among the variables. The results are presented in Table 7-12 and
indicate that most variables had correlation coefficients of 0.3 or above. The result
of Bartlett’s test of sphericity was significant (χ2=3551.585, p<0.000), indicating a
sufficient correlation among variables. The value of KMO was 0.90 and above the
recommended value of 0.6, indicating that the size of the sample was sufficient.
Therefore, the application of factor analysis was appropriate (Tabachnick &
Fidell, 2007).
After the applicability of the factor analysis was confirmed, it was

important to determine the number of factors. Based on eigenvalues above 1, there
were five components that should be retained (Appendix D). However, there were
only four components that satisfied the criterion value from Monte Carlo PCA for
Parallel Analysis. Visual inspection of the scree plot (Appendix E) was
inconclusive because sharp elbows were present at components 2, 4, and 7.
Therefore, based on the Monte Carlo PCA for parallel analysis, the number of
components that should be retained was four.

Table 7-12 Spearman's rho Correlation on Types of Information that Should be Disclosed by Zakat Agencies
Types of Information 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
1. Statement of mission
1.000
and objectives
2. History of the
0.406** 1.000
organisation
3. Boards and committee

0.497** 0.327** 1.000
activities
4. Profile of boards, CEO,

0.451** 0.542** 0.481** 1.000
and senior staff
5. Information about
0.456** 0.595** 0.379** 0.741** 1.000
organisation structure
6. Remuneration of boards,
0.240** 0.451** 0.366** 0.441** 0.604** 1.000
CEO and senior staff
7. Future plans 0.066 0.242** 0.182** 0.316** 0.413** 0.493** 1.000
8. Organisation policy in
selecting beneficiaries,
0.525** 0.358** 0.531** 0.488** 0.475** 0.453** 0.393** 1.000
including the criteria to
select beneficiaries
9. Overview of
programmes and 0.305** 0.146* 0.431** 0.307** 0.290** 0.338** 0.335** 0.569** 1.000
activities
10. Organisation’s policy
related to the allocation 0.220** 0.177** 0.343** 0.297** 0.268** 0.365** 0.299** 0.415** 0.694** 1.000
of resources
11. Information about how
to access the zakat 0.190** 0.268** 0.325** 0.277** 0.318** 0.382** 0.389** 0.392** 0.507** 0.610** 1.000
agency’s services
12. Overview of
0.279** 0.197** 0.370** 0.355** 0.319** 0.396** 0.286** 0.485** 0.596** 0.650** 0.563** 1.000
beneficiaries
161
Types of
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Information
13. Human interest
stories
(information about
0.263** 0.187** 0.428** 0.254** 0.242** 0.375** 0.290** 0.508** 0.509** 0.547** 0.484** 0.661** 1.000
how the zakat fund
helps
beneficiaries)
14. Information about
related parties’ 0.266** 0.303** 0.192** 0.248** 0.369** 0.435** 0.373** 0.316** 0.272** 0.287** 0.361** 0.400** 0.378** 1.000
transactions
15. Acknowledgement
of donors and
0.388** 0.367** 0.353** 0.407** 0.442** 0.399** 0.396** 0.546** 0.433** 0.335** 0.418** 0.370** 0.449** 0.469** 1.000
volunteer’s
contributions
16. Audited financial
0.481** 0.274** 0.353** 0.373** 0.395** 0.353** 0.279** 0.589** 0.491** 0.385** 0.387** 0.429** 0.449** 0.354** 0.818** 1.000
statements
17. Total revenue and
0.305** 0.179** 0.398** 0.280** 0.264** 0.383** 0.309** 0.489** 0.508** 0.454** 0.421** 0.488** 0.529** 0.273** 0.644** 0.708** 1.000
sources of revenue
18. Usage of the zakat
fund for
0.173** 0.116 0.352** 0.210** 0.249** 0.422** 0.370** 0.439** 0.477** 0.436** 0.390** 0.436** 0.485** 0.414** 0.574** 0.622** 0.725** 1.000
beneficiaries other
than amil
19. Usage of other
donated funds
0.196** 0.077 0.339** 0.284** 0.201** 0.330** 0.266** 0.412** 0.527** 0.422** 0.362** 0.509** 0.470** 0.319** 0.543** 0.579** 0.655** 0.739** 1.000
(except the zakat
fund)
20. The zakat fund for
amil and how the 0.201** 0.243** 0.284** 0.277** 0.380** 0.445** 0.449** 0.394** 0.423** 0.423** 0.428** 0.415** 0.388** 0.440** 0.434** 0.448** 0.484** 0.586** 0.497** 1.000
amil fund is spent
21. Auditor's report or
other type of 0.275** 0.224** 0.460** 0.302** 0.325** 0.465** 0.376** 0.501** 0.531** 0.474** 0.427** 0.503** 0.537** 0.356** 0.537** 0.556** 0.616** 0.669** 0.570** 0.598** 1.000
assurance reports
22. Fundraising costs 0.276** 0.150* 0.231** 0.223** 0.351** 0.291** 0.279** 0.294** 0.331** 0.338** 0.347** 0.352** 0.272** 0.295** 0.377** 0.437** 0.283** 0.347** 0.363** 0.365** 0.342** 1.000

Types of
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Information
23. Financial
performance
information,
0.363** 0.195** 0.338** 0.371** 0.346** 0.255** 0.174** 0.340** 0.302** 0.317** 0.318** 0.290** 0.267** 0.260** 0.369** 0.492** 0.425** 0.417** 0.447** 0.351** 0.387** 0.667** 1.000
such as
efficiency
ratio
24. Non-financial
performance
information,
0.312** 0.160* 0.406** 0.246** 0.334** 0.319** .0309** 0.368** 0.350** 0.277** 0.279** 0.340** 0.285** 0.321** 0.389** 0.425** 0.352** 0.360** 0.412** 0.395** 0.390** 0.571** 0.636**
such as the
number of
beneficiaries
163
The results of the factor analysis are presented in Table 7-13. Factor
analysis produced four components or factors that explained 64.32% of the total
variation 27. The value of communalities was above 0.3 in all variables, indicating
that every variable fit well with other variables in every component (Pallant,
2016). Most theoretically related variables inclined to load on the same factor.
There were four types of information that loaded into more than one factor: (1)
information about future plans; (2) the overview of zakat agency programmes and
activities; (3) information about how to access zakat agency services; and (4)
board and committee activities. Overall, the results of the factor analysis indicate
that donors had a strong interest, not only in financial information about the usage
of zakat funds but also in non-financial information, such as information about
governance, the programme, and performance.
The first factor was classified as “financial and beneficiary

information”. Eleven variables that loaded into this factor accounted for 42.61%
of the total variance and had an eigenvalue of 10.23. Financial information items,
such as information about total revenue and sources of revenue and information
about the usage of the zakat fund for beneficiaries loaded highly to this factor,
ranging from 0.671 to 0.832. Beneficiary-related information such as “the
overview of beneficiaries” (0.766) and “organisation policy in selecting
beneficiaries” (0.766) also loaded into the first factor. These findings reflect that
donors who were interested in financial information were also interested in
information about the beneficiaries of zakat.
27 The component plot in rotated space for every type of information was not produced because a component
plot rotated with four factors is difficult to interpret.

Table 7-13 Results of Factor Analysis on the Perception of Donors on the Types of Information
Pattern Matrix Structure Matrix
Type of Information Factor Factor Factor Factor Factor Factor Factor Factor Communalities
1 2 3 4 1 2 3 4
1. Total revenue and sources of revenue 0.832 –0.072 0.127 –0.094 0.823 0.289 0.402 0.139 0.702
2. Usage of the zakat fund for beneficiaries other than amil 0.814 –0.124 0.167 –0.052 0.811 0.247 0.426 0.174 0.729
3. Zakat fund for amil and how the amil fund is spent 0.771 –0.185 0.174 0.179 0.809 0.206 0.431 0.384 0.691
4. Overview of beneficiaries 0.766 0.102 –0.104 0.052 0.784 0.395 0.213 0.264 0.632
5. Organisation’s policy in selecting beneficiaries 0.766 0.062 –0.147 0.016 0.741 0.338 0.155 0.216 0.570
6. Usage of other donated funds (except the zakat fund) 0.739 –0.035 0.083 0.153 0.797 0.314 0.366 0.360 0.664
7. Organisation’s policy related to the allocation of resources 0.709 0.083 –0.071 0.121 0.750 0.372 0.229 0.318 0.585
8. Human interest stories 0.674 0.052 –0.150 0.238 0.705 0.323 0.144 0.411 0.568
9. Audited financial statements 0.671 0.101 0.305 –0.207 0.768 0.428 0.554 0.032 0.721
10. Future plans 0.569 0.428 –0.017 –0.107 0.710 0.641 0.297 0.113 0.662
11. Auditor's report or other type of assurance report 0.550 0.200 0.221 –0.049 0.701 0.479 0.473 0.161 0.578
12. Profile of boards, committee members, and senior staff –0.096 0.839 0.137 0.185 0.349 0.866 0.355 0.305 0.798
13. Information about organisation structure 0.068 0.825 0.001 –0.036 0.396 0.847 0.246 0.110 0.721
14. History of the organisation –0.118 0.752 –0.016 0.255 0.254 0.738 0.179 0.336 0.608
15. Statement about the zakat agency's vision, mission, and objectives 0.151 0.632 0.176 –0.364 0.375 0.686 0.357 –0.203 0.626
16. Overview of zakat agency programmes and activities 0.410 0.472 0.035 –0.173 0.569 0.623 0.293 0.016 0.535
17. Financial performance information, such as efficiency ratio 0.049 0.082 0.825 –0.118 0.355 0.310 0.851 0.015 0.683
18. Information about related parties’ transactions –0.081 –0.015 0.771 0.298 0.278 0.208 0.775 0.373 0.743
19. Non–financial performance information, such as the number of 0.029 0.047 0.760 –0.010 0.326 0.265 0.782 0.104
0.615
beneficiaries
20. Remuneration of boards, CEO, and other senior staff 0.139 0.184 0.097 0.626 0.421 0.363 0.280 0.705 0.594
21. Acknowledgement of donors and volunteer’s contribution 0.164 0.158 0.190 0.539 0.447 0.360 0.364 0.633 0.541
22. Information about how to access zakat agency services 0.441 0.061 –0.011 0.509 0.601 0.316 0.234 0.637 0.606
23. Fundraising costs 0.390 –0.046 0.236 0.488 0.592 0.254 0.431 0.619 0.623
24. Boards and committee activities 0.181 0.448 0.039 0.461 0.505 0.603 0.288 0.585 0.642
Notes:
Factor 1 Financial and beneficiary information
Factor 2 Governance and programme information
Factor 3 Performance information
Factor 4 Other information
a Rotation converged in 10 iterations.
165
The second factor explained 8.63% of the total variance and had an
eigenvalue of 2.07. There were five variables with a high loading on the second
factor, which included information about the profile of boards, committee
members, and senior staff (0.839), information about the organisation’s structure
(0.825), information about the history of organisation (0.752), and information
about the zakat agency's vision, mission, and objectives (0.632). The overview of
the zakat agency programmes and activities also loaded moderately (0.472) to the
second factor. Thus, this factor was named “governance and programmes
information”.
The third factor had an eigenvalue 1.60 and accounted for 6.66% of the
total variance. This factor includes financial performance and non-financial
performance information and information about related party transactions. This
factor was labelled “performance information” because two out of the three
variables that loaded into this factor were related to performance. Both financial
and non-financial performance information had high loadings of 0.825 and 0.760,
respectively, in this factor. The last factor being extracted had an eigenvalue of
1.54 and accounted for 6.43% of the total variance. Variables that loaded into this
factor included remuneration information, acknowledgment of donors and
volunteer contribution, information about zakat agencies services, fundraising
costs, and board and committee activities. Thus, performance information
required was not limited to the usage of the zakat fund to deliver programmes and
activities but also covered fundraising costs. Several cross-loading variables were
observed in this factor. For example, information about board and committee
activities also loaded into factor 4 (governance and programme information) and
the fundraising cost variable also loaded into factor 1 (financial and beneficiary
information). Every variable in factor 4 was theoretically different. Thus, this
factor was labelled as “other information”.
Principal component analysis with oblique oblimin rotation also produced
the correlation of every factor. Two factors had a correlation of above 0.3;
therefore, the application of oblique rotation was more appropriate than
orthogonal rotation.

Factors scores for Factors 1, 2, 3, and 4 were produced using a multiple
regression approach. MANOVA tests were carried out with an independent
variable, that is the factor scores for Factors 1, 2, 3 and 4 against several different
dependent variables based on: (1) the primary recipient of zakat; (2) occupation;
(3) the level of education; and (4) the age group. The results did not show a
statistically significant difference for all variables (see Appendix M and N). Thus,
there were no different perceptions regarding the importance of the four clusters
of information types to discharge accountability among the groups of donors who
gave to local Imams, government-sponsored zakat agencies, and private zakat
agencies and among donors with different demographic attributes.
7.7 BY WHAT MEANS SHOULD ZAKAT AGENCIES DISCHARGE

THEIR ACCOUNTABILITY?
This section presents information about the mechanisms used to disseminate

accountability to answer the following research question:
RQ2.d. According to the donors of zakat agencies, by what means should zakat
agencies discharge their accountability?
Descriptive Statistics
Table 7-14 presents the perception of donors regarding the importance of
several sources of information on the accountability of zakat agencies. The
majority of respondents (118 out of 224) stated that the annual report was a very
important source of information (mean score 4.42). Other sources of written
information, such as internal printed media, organisation website, and letters were
also rated as important to very important by the majority of respondents, with
mean responses varying from 3.80 to 4.13. Verbal sources of information, such as
verbal information from staff and verbal information from a friend, relative, and
family members had lower scores than written sources of information, with mean
values of 3.36 and 3.12 respectively.
A Kruskal-Wallis test was conducted to identify whether there were
significant differences among the perceptions of the three groups of donors on the
importance of several sources of information on the accountability of zakat
agencies. The results indicate that there were no significant differences across the
167
three groups of donors on their views on the importance of several sources of
information on the accountability of zakat agencies.
Table 7-14 Perceptions of Donors on the Sources of Information
Primary Reciepient of
Zakat All Respondents
Source of Information Local BAZ
LAZ
Imam NAS Frequency*
Mean
Annual reports 4.39 4.54 4.36 4.42 15 2 3 13 88 118
Internal printed media 4.04 4.14 4.12 4.13 18 0 7 26 119 69
Internet 4.02 4.19 4.27 4.11 16 5 7 23 111 77

Letter (sent by zakat
3.77 3.89 3.82 3.80 22 7 11 49 102 48
agencies to their donors)
Mass media 3.80 3.92 3.91 3.89 17 5 13 41 106 57
Public announcement in
3.64 3.59 3.42 3.64 18 9 23 53 89 47
mosques
Social media 3.03 3.46 3.70 3.24 29 19 30 67 69 25
Staff of zakat agencies 3.37 3.46 3.37 3.36 21 14 36 60 73 35

Friend, relative, or
3.12 3.16 3.12 3.12 26 20 39 62 80 12
family members
Notes *: 1 = Not Important; 2 = Less Important; 3= Medium; 4 = Important; 5: Very Important
Accountability can only be achieved if the disclosure of information can

reach stakeholders. Therefore, respondents were also asked whether they had
access to several types of media that are usually used by zakat agencies to disclose
accountability information. The results are presented in Table 7-15. In general, the
majority of respondents had access to informal sources of information, such as
public announcements in mosques (64%), the internet (63%), mass media (57%),
and internal printed media (53%). The proportion of donors who accessed
information from the internet and mass media was consistently higher than those
who did not have access to the internet and mass media among the three groups of
donors. Although donors indicated that the annual report was a very important
source of information, this survey found that the majority of respondents (65%)

did not have access to annual reports, even for the donors of government-
sponsored zakat agencies and private zakat agencies that publish annual reports.
Table 7-15 Proportion of Donors with Access to Sources of Information about

Zakat Agencies
Source of
N Local Imam BAZNAS LAZ TOTAL
Information
Yes No Yes No Yes No Yes No
Public
88 34 13 14 10 14 111 62
announcement in 173
(72%) (28%) 48%) (52%) (42%) (58%) (64%) (36%)
mosques
73 50 16 10 21 4 110 64
Internet 174
(59%) (41%) (59%) (41%) (84%) (16%) (63%) (37%)
68 54 17 11 16 9 101 74
Mass media 175
(56%) (44%) (61%) (39%) (64%) (36%) (58%) (42%)
Internal printed 60 60 15 12 17 8 92 80
172
media (50%) (50%) (56%) (44%) (68%) (32%) (53%) (47%)
60 60 10 17 14 11 84 88
Social media 172
(50%) (50%) (37%) (63%) (56%) (44%) (49%) (51%)
Friend, relative, or 60 61 12 15 8 16 80 92
172
family members (49%) (51%) (44%) (56%) (33%) (67%) (47%) (53%)
Letter (sent by zakat
44 77 10 17 15 10 69 104
agencies to their 173
(36%) (64%) (37%) (63%) (60%) (40%) (40%) (60%)
donors)
40 85 15 18 14 15 69 118
Annual reports 187
(32%)_ (68%) (45%) (55%) (48%) (51%) (37%) (63%)
Staff of zakat 42 76 8 19 10 15 60 110
170
agencies (36%) (64%) (30%) (70%) (40%) (60%) (35%) (65%)
A Kruskal-Wallis test was conducted to identify whether there were

significant differences among the three groups of donors regarding their ability to
gain access to several sources of information. The results indicate that there were
no significant differences across the three groups of donors, except for public
announcements in mosques (p = 0.003). Respondents who gave zakat to local
Imams were more likely to depend on information from public announcements in
mosques than respondents who gave zakat to government-sponsored zakat
agencies or private zakat agencies. This is predictable because the activities of
local Imams are based on mosques, therefore, their donors depend on information
about the usage of zakat funds from public announcement in mosques. For access
to annual reports, the proportion of respondents who did not have access to annual
169
reports was higher for the group of donors who gave to local Imams than the
groups of donors who gave to government-sponsored zakat agencies or private
zakat agencies. However, the difference is not statistically significant.
Do donors read annual reports?

In order to gauge donors’ interest in annual reports and financial statements,
respondents were asked whether they read annual reports or financial statements
published by zakat agencies (see Appendix C 9). The results are presented in
Table 7-16. The majority of respondents (76.9%) did not read annual reports or
financial statements published by zakat agencies. The proportion of donors who
read annual reports between the groups of donors who gave most of their zakat to
government-sponsored zakat agencies (32.6%) and private zakat agencies (32.4%)
was relatively equal, but higher than the group of donors who gave most of their
zakat to local mosques (17.7%). Chi-square tests were carried out to explore
whether the difference was significant. The results indicate that the difference was
significant, (χ2 (2, n=221) = 6.272, p: 0.043, phi=0.168).
Table 7-16 Cross-tabulation of the Interest of Respondents in Relation to Reading

Annual Reports by the Groups of Donors
Do you read the Annual
Primary Recipient of Zakat Report? Total 28
No Yes
Local Imam Frequency 116 25 141
Percentage 82.3% 17.7% 100.0%
Adjusted Residual 2.5 -2.5
BAZNAS Frequency 29 14 43
Percentage 67.4% 32.6% 100.0%
Adjusted Residual -1.6 1.6
LAZ Frequency 25 12 37
Percentage 67.6% 32.4% 100.0%
Adjusted Residual -1.5 1.5
Total Frequency 170 51 221
Percentage 76.9% 23.1% 100.0%
Post-hoc testing was performed by calculating adjusted residuals. The

results of the post hoc test confirmed that the proportion of respondents who gave
to local Imams and read annual reports was significantly lower than those who
28 From the 221 respondents that answered this question, only 187 respondents answered the question about
access to annual reports.

gave to government-sponsored zakat agencies and private zakat agencies and read
annual reports. However, the difference between the proportion of respondents
who read annual reports those who gave to government-sponsored zakat agencies
and private zakat agencies was not significantly different. It is possible that donors
who gave to local Imams have a lower interest in reading the annual reports of
zakat agencies than those who give to government-sponsored zakat agencies or
private zakat agencies because local Imams do not produce annual reports and
therefore they depend on other types of information sources.
Further Chi-square tests for independence were conducted with different
explanatory variables, that is, sector of employment, level of education, and age
groups. The results indicated no significant association between these explanatory
variables regarding reading annual reports.
Why do donors read annual reports?

Respondents were also asked to answer an open-ended question about why
they read zakat agencies’ reports (see Appendix C No. 10). The results are
presented in Table 7-17.
Table 7-17 Reasons for Reading Annual Reports or Financial Statements

Reasons for reading
No annual reports or Local Imam BAZNAS LAZ Total
financial statements
To obtain financial
1 information about the 20 80 8 57 8 67 36 70
usage of the zakat fund.
To obtain information
2 1 4 2 14 1 8 4 8
about programmes
To access Syari’ah
3 1 4 1 7 0 0 2 4
accountability
4 Others 1 4 3 21 1 8 5 10
5 Did not provide a reason 2 8 0 0 2 17 4 8
Total 25 14 12 51 100
The majority of respondents (76.60%) read annual reports to obtain

information about the usage of the zakat fund. Other responses were relatively less
common and included getting information about programmes (8.51%) and to
access Syari’ah accountability (4.26%), and other reasons (10.64%). These
171
findings lead to the conclusion that respondents were more interested in financial
accountability regarding the usage of zakat funds than other scopes of
accountability. These responses were consistent with the answers of respondents
from the previous section about the scope of accountability that indicated financial
accountability was the most important factor in evaluating the accountability of
zakat agencies.
Why do donors not read annual reports?

The responses of respondents to the question regarding why they do not
read annual reports or financial statements were grouped into seven key themes
(see Appendix C 11) and are presented in Table 7-18. In general, there were no
significant differences in the opinions of donors, except for the role of government
in monitoring zakat agencies. The majority of respondents stated that they trusted
individuals who administered zakat agencies. This finding is consistent with the
answer from the previous question in this survey about selecting a particular
method of giving zakat that found that trust was an important factor in selecting
zakat agencies. Participants also expressed that they did not read annual reports
because they believed that the government monitored zakat agencies.
Table 7-18 Reasons for Not Reading Annual Reports or Financial Statements
Reasons for not reading Primary Recipient of Zakat Total

No annual reports or financial
statements Local BAZ
% % LAZ % Freq %
Imam NAS
Trust individuals who
1 48 38 10 33 9 47 67 39
administer zakat agencies
Government monitors zakat
2 34 27 15 50 6 32 55 32
agencies
Do not give zakat to
government-sponsored zakat
3 28 22 0 0 0 0 28 16
agencies or private zakat
agencies
Do not understand financial
information presented in
4 7 6 4 13 3 16 14 8
annual reports or financial
statements
Not interested in the affairs
5 4 3 1 3 0 0 5 3
of zakat agencies
Rely on the other sources of
6 2 2 0 0 1 5 3 2
information
Content of annual reports
7 does not satisfy my 2 2 0 0 0 0 2 1
information needs.

Total 125 30 19 174
The previous sections discussed the views of donors regarding the

accountability of zakat agencies. The next sections present the results of the
statistical analysis of the inter-relationship among the core elements of
accountability.
Grouping of Media Used to Disseminate Accountability

Factor analysis was used to simplify the media used by zakat agencies to
disseminate accountability, therefore, the underlying dimensions of these media
could be identified. Spearman non-parametric correlation tests were performed to
determine the presence of correlation among variables. The results are presented
in Table 7-19 and confirm the presence of many correlation coefficients of 0.3 or
above. The result of Bartlett’s test of sphericity was significant (χ2=565.443,
p<0.000), indicating a sufficient correlation among variables. The KMO value
was 0.796 and exceeded the recommended value of 0.6, indicating that the size of
the sample was sufficient for factor analysis.
Table 7-19 Spearman's rho Correlations for the Sources of Information
Sources of Information 1 2 3 4 5 6 7 8
(1) Annual reports 1.000

(2) Mass media 0.320** 1.000
(3) Internal Printed Media 0.476** 0.447** 1.000
(4) Internet 0.416** 0.454** 0.428** 1.000
(5) Information from staff 0.172* 0.362** 0.309** 0.140* 1.000
(6) Information from a
0.065 0.281** 0.231** 0.039 0.742** 1.000
member of family
(7) Public announcement in
0.255** 0.276** 0.307** 0.201** 0.418** 0.437** 1.000
mosques
(8) Social media 0.164* 0.394** 0.231** 0.333** 0.398** 0.369** 0.381** 1.000
(9) Letter 0.345** 0.319** 0.390** 0.314** 0.321** 0.208** 0.345** 0.313**
With regard to the number of factors, both eigenvalues and Monte Carlo
parallel analysis confirmed that two factors could be extracted (see Appendix D).
The elbow of the scree plot was at component 3 (see Appendix E), indicating two
173
factors should be extracted. Therefore, factor analysis with two fixed number of
factors was performed using oblique oblimin rotation.
The results of the principal component analysis with oblique oblimin

rotation are presented in Table 7-20, while the results of the orthogonal varimax
rotation are reported in Table 7–21. The results of the rotation support orthogonal
rotation as more appropriate than oblique rotation because the results of oblique
oblimin rotation are more difficult to interpret than the results of orthogonal
varimax rotation. For example, Table 7-20 shows that the oblimin rotation
produced three variables (information from family members, annual report, and
the internet) that loaded strongly to both factors.
Oblique oblimin rotation produced a component correlation matrix between

Factors 1 and 2. The component correlation matrix indicated that Factors 1 and 2
were not correlated (r = 0.03). In this case, the application of orthogonal rotation
assumes that each component was not correlated, which was more appropriate
than oblique rotation that assumed the presence of correlation among components.
Table 7-20 Pattern and Structure Matrix with Oblique Oblimin Rotation of the
Source of Information Variables
Pattern Matrixa Structure Matrix
Medium Factor Factor Factor Communalities
Factor 2
1 1 2
Information from staff 0.711 –0.524 0.695 –0.502 0.757
Internal printed media 0.670 0.321 0.680 0.341 0.565
Mass media 0.664 0.131 0.668 0.152 0.464
Social media 0.663 –0.145 0.659 –0.124 0.455
Letter 0.610 0.202 0.617 0.221 0.421
Announcement in mosques 0.606 –0.334 0.595 –0.315 0.466
Information from family
0.642 –0.648 0.622 –0.628 0.807
members
Annual Reports 0.500 0.548 0.517 0.563 0.567
Internet 0.519 0.540 0.536 0.556 0.578

Table 7–21 Rotated Component Matrixa with Orthogonal Varimax Rotation of the
Source of Information Variables
Factor 1 Factor 2
Medium Informal Sources of Formal Sources of
Information Information
Information from member of the family 0.898 –0.020
Information from staff 0.862 0.119
Announcement in mosques 0.657 0.184
Social media 0.569 0.362
Internet –0.001 0.761
Annual report –0.020 0.753
Internal-printed media (internal publication) 0.256 0.707
Letter 0.294 0.578
Mass media 0.381 0.564
Eigenvalues 2.602 2.478
The first factor had an eigenvalue of 2.602 and accounted for 28.91% of
the total variance. This factor was classified as “informal sources of
information” because variables with a high loading on this factor were informal
and verbal sources of information, such as information from family members
(0.898), information from staff (0.862), and public announcements in mosques
(0.657), except for social media. Although zakat agencies officially administer a
social media account, it might be considered as an informal source of information
by donors.
The second factor extracted consisted of formal and written information,
such as the internet, annual report, internal-printed media, letters, and mass media.
Zakat agencies use these media to formally publish their financial and non-
financial information. Therefore, this factor was named “formal sources of
information”. This factor had an eigenvalue of 2.48 and explained 27.53% of the
total variance.
Figure 7-3 displays the position of every variable in rotated space. It is clear
that orthogonal rotation produced two distinct factors. Therefore, the results of
175
orthogonal rotation were used, because two factors were not correlated and the
result of orthogonal rotation did not indicate cross loadings.
Figure 7-3 Factor Plot in Rotated Space for Medium used to Discharge
Accountability
Factor scores for Factors 1 and 2 were produced using a multiple regression
approach. MANOVA tests were carried out with an independent variable as the
factor scores for Factors 1 and 2 against several different dependent variables
based on (i) the methods of giving zakat, (ii) occupation, (iii) the level of
education, and (iv) the age group. The results did not show a statistically
significant difference for all variables (see Appendix O and P). Thus, there were
no different perceptions regarding the importance of formal and informal
mediums to disseminate accountability among the groups of donors and donors
with different demographic attributes.

7.8 INTER-RELATIONSHIP AMONG THE CORE ELEMENTS OF
ACCOUNTABILITY
The findings presented in this section answer the following research

question:
RQ. 3. What inter-relationships exist amongst the core elements of

accountability in the context of zakat agencies?
Because every core element of accountability investigated in this study

consisted of many variables (to whom: 12 variables; for what: 10 variables; types
of information: 24 variables; how: 9 variables); it was not practical to run a
correlation test among these variables. As discussed in the research methods
chapter, factor analysis was employed to condense these variables into smaller
groups of variables and factor scores were produced on every factor to replace the
original set of variables on “to whom”, “for what”, and “how”. Thus, a
Spearman’s rho non-parametric correlation test was performed on factor scores of
every factor for to whom, for what, and how. Non-parametric correlation analysis
was selected because several variables were not normally distributed. 29
Table 7-22 presents the results of the Spearman’s rho non-parametric

correlation. Financial accountability was significantly related to accountability to
primary stakeholders (r=0.246). 30 This indicates that donors who considered
financial accountability to be important also considered accountability to main
stakeholders important. The correlation coefficient between financial
accountability and accountability to secondary stakeholders was small and not
significant, indicating the absence of correlation between both factors. In addition,
performance accountability was not significantly correlated with to whom zakat
agencies should be accountable.
29 Parametric correlation analysis (Pearson Correlation) was also conducted and the results are presented in
Appendix F
30 Cohen (1988) suggested that the strength of a correlation between two variables is: (1) small if the value
of r is 0.10 to 0.29; (2) medium if the value of r is 0.30 to 0.49; and large if the value of r is 0.50 to 1.00).
177
Table 7-22 Results of Spearman’s rho CorrelationTest on Factor Scores of “To
Whom”, “For What”, and “How”
Grouping of
Variables
Elements of
No based on 1 2 3 4 5 6 7 8
Accountability
Factor
Analysis
Primary
1 1.000
Stakeholders
To Whom
Secondary
2 NA 1.000
Stakeholders
Financial and
3 Sacred 0.246** –0.014 1.000
For What – Accountability
The Scope of Performance
Accountability and
4 0.074 –0.046 NA 1.000
Governance
Accountability
Financial
5 0.186** –0.048 0.508** 0.379** 1.000
Information
Governance
For What - 6 0.105 0.048 0.378** 0.098 NA 1.000
Information
Types of
Performance
Information 7 0.069 –0.053 0.357** 0.169* NA NA 1.000
Information
Other
8 0.119 –0.118 –0.002 0.186* NA NA NA 1.000
Information
Informal
9 0.077 0.040 0.221** 0.027 0.186* 0.235** 0.104 0.173*
Sources
How
Formal
10 0.206** –0.003 0.424** 0.309** 0.516** 0.263** 0.277** 0.089
Sources
NA Not-applicable because the scores in these cells indicate correlations among factors in the
same elements of accountability, for example, correlation between the main stakeholders
and secondary stakeholders (between the factors of to whom) or correlation between
performance accountability and financial accountability (between the factors of for what).
Thus, the results in these cells were deleted because they were not relevant and to avoid
confusion.
For types of information considered important to be disclosed by zakat

agencies to disseminate accountability, financial information was significantly and
positively correlated with accountability to primary stakeholders (r = 186) but not
with secondary stakeholders. Financial information had a large and significant

association with financial accountability (r = 0.508) and medium correlation with
performance accountability (r = 0.379). Governance and programme information
had a significant medium correlation with financial accountability (r = 0.378).
Performance information was significantly associated with performance
accountability (r = 0.169) and financial accountability (r = 0.357). Although
weak, other information had a significant correlation with performance
accountability.
With regards to the sources of information, informal sources of information

had a weak positive but significant correlation with financial accountability (r =
0.221), financial information (r = 0.186), governance information (r = 0.235), and
other information (r = 0.173). Formal sources of information had a positive
significant correlation with accountability to main stakeholders (r = 0.206),
financial accountability (r = 0.424), and performance accountability (r = 0.309).
Formal sources of information were also significantly related to almost all types
of information (financial, governance, and performance information). The fact
that formal sources of information were significantly correlated with most of the
other factors indicates that donors consider formal sources of information to be an
important method for disseminating accountability.
Overall, the findings indicate a correlation between formal sources of

information and financial information for discharging financial accountability to
primary stakeholders. Formal sources of information are also required to disclose
performance and governance information to discharge performance
accountability. However, this study did not find correlations between performance
accountability and accountability to primary stakeholders or accountability to
secondary stakeholders.
7.9 DO THE PERCEPTIONS OF DONORS ON THE CORE ELEMENTS

OF ACCOUNTABILITY DIFFER AMONG THE THREE GROUPS
OF DONORS AND AMONG DONORS WHO HAVE DIFFERENT
DEMOGRAPHIC ATTRIBUTES?
Multivariate analysis of variance (MANOVA) was conducted to test

whether the views and perceptions of donors on “to whom”, “for what’, and
“how” were distinct between: (1) the three group of donors; and (2) donors with
179
different demographic attributes (level of education, employment sectors, and age
group). As indicated in Section 8.2, the distribution of data was skewed; therefore,
it was necessary to select criteria for statistical inference that was not affected by
this problem. This study adopted Pillai’s Trace criterion because it was considered
reasonably robust even when the assumptions of MANOVA were moderately
violated 31 (Tabachnick & Fidell, 2007).
The results of MANOVA are presented in Table 7-23. There was no

significant difference regarding (i) the perception about to whom zakat agencies
should be accountable, (ii) the perception about the scope of accountability, (iii)
the perception about the types of information that should be disclosed by zakat
agencies, and (iv) the medium used to disseminate information between the
groups of donors and the demographic characteristic of respondents. The only
significant variable was the interaction variable between the occupation and age
categories, indicating that the combination of the level of education and
occupation of donors influenced their perception regarding understanding of
accountability.
31 Wilks’ Lamda criterion is usually more powerful than Pillai’s Trace criterion; therefore, most research
adopts Wilks’ Lamda criterion (Tabachnick & Fidell, 2007). In this study, both Wilks’ Lamda and Pillai’s
Trace criterion produced relatively similar results.

Table 7-23 Results of MANOVA on “To Whom”, “For What”, and “How” by the
Groups of Donors and Demographic Attributes of Donors
Pillai’s Trace
Hypothesis Partial Eta
Value F Error df Sig.
df Squared
Intercept 0.171 2.169 10.000 105.000 0.025 0.171
Recipient of zakat 0.149 0.853 20.000 212.000 0.647 0.074
Age Category 0.264 1.032 30.000 321.000 0.423 0.088
Education 0.072 0.811 10.000 105.000 0.618 0.072
Sectors of Employment 0.082 0.935 10.000 105.000 0.505 0.082

Recipient of zakat * Age
0.494 0.987 60.000 660.000 0.507 0.082
Category
Recipient of zakat * Education 0.211 1.248 20.000 212.000 0.218 0.105
Recipient of zakat * Sectors of
0.145 0.830 20.000 212.000 0.675 0.073
Employment
Age Category * Education 0.250 0.973 30.000 321.000 0.510 0.083
Age Category * Sectors of
0.164 0.618 30.000 321.000 0.944 0.055
Employment
Education * Sectors of
0.162 2.034 10.000 105.000 0.037 0.162
Employment
0.299 1.186 30.000 321.000 0.235 0.100
Category * Education
Category * Sectors of 0.040 0.440 10.000 105.000 0.923 0.040
Employment
Recipient of zakat * Education *
0.000 . 0.000 0.000 . .
Sectors of Employment
Age Category * Education *
0.000 . 0.000 0.000 . .
Sectors of Employment
Category * Education * Sectors 0.000 . 0.000 0.000 . .
of Employment
Table 7-24 presents the results of tests of the between-subjects effect on

education x occupation. The results indicate that the understanding regarding
accountability to primary stakeholders, accountability to secondary stakeholders,
and the importance of formal sources of information was significantly different
based on the interaction variables of education and occupation.
181
Table 7-24 Tests of Between-subjects Effects on Interaction Variables Education
x Sectors of Employment
Type III Partial
Mean
Source Dependent Variable Sum of df F Sig. Eta
Square
Squares Squared
Education * Primary stakeholders 3.117 1 3.117 4.403 0.038 0.037
Sectors of Secondary stakeholders 4.945 1 4.945 5.577 0.020 0.047
Employment Financial accountability 1.734 1 1.734 2.034 0.157 0.018
Performance accountability 0.856 1 0.856 0.706 0.403 0.006
Financial information 1.460 1 1.460 1.494 0.224 0.013
Governance information 0.285 1 0.285 0.259 0.612 0.002
Performance information 0.028 1 0.028 0.028 0.866 0.000
Other information 0.257 1 0.257 0.342 0.560 0.003
Informal sources of
information 1.362 1 1.362 1.237 0.268 0.011
Formal sources of
information 6.309 1 6.309 6.266 0.014 0.052
Visual inspection of the line graphs presented in Figure 7-4 indicates that
both government employees and non-government employees with high education
levels (bachelor degree or higher) tended to consider accountability to primary
stakeholders to be important. Individuals with education levels lower than a
bachelor degree and who were government employees had the lowest perception
regarding the importance of demonstrating accountability to primary stakeholders.
Visual inspection of the line graph presented in Figure 7-5 indicates the
presence of the interaction effect between the level of education and the sectors of
employment of respondents and the importance of accountability to secondary
stakeholders. The perception regarding the importance of accountability to
secondary stakeholders was higher for individuals who were government
employees than individuals who were not government employees and had a low
level of education.

Figure 7-4 Estimated Marginal Means of Accountability to Primary Stakeholders
Figure 7-5 Estimated Marginal Means of Accountability to Secondary

Stakeholders
183
Figure 7-6 indicates that the perception of government employees and non-
government employees who had education levels of a bachelor degree or higher in
regard to the importance of formal sources of information was higher than
government employees and non-government employees who had education levels
below a bachelor degree. This finding that highly educated people are more
interested in written and formal information than individuals with a low level of
education is understandable.
Figure 7-6 Estimated Marginal Means of Formal Sources of Information
7.10 DISCUSSION
It is clear from the results presented in Section 7.2 that donors had various
understandings of accountability. Their perceptions about accountability were
related to a mechanism to provide information (Bovens, 2010), such as
demonstrating the usage of the zakat fund, transparency, and providing financial
information and accountability as a normative construct; or the positive attributes
of organisations (Bovens, 2010), such as good administration and trustworthiness.
As detailed in Sections 7.3 and 7.4, the results of the survey revealed that
the majority of donors stated that zakat agencies should be accountable to a wide

range of stakeholders that cover both sacred and secular dimensions. The majority
of respondents stated that zakat agencies should be accountable to God. This
indicates that the understanding of accountability in zakat agencies covers a
sacred dimension. This view stems from the Islamic belief that the ultimate
accountability of human beings is to God (Nahar & Yaacob, 2011).
In addition to the sacred stakeholder, secular stakeholders were also

evidenced in the context of zakat agencies. The finding indicates that donors
expect zakat agencies to be accountable to individuals or organisations that can
influence the sustainability of zakat agencies, such as donors, regulators, and
media and to individuals or organisations whose welfare is affected by the
activities of zakat agencies such as beneficiaries. This finding also confirmed the
presence of upward (to donors and regulators), downward (to beneficiaries), and
horizontal (media and peer organisations) accountability relationships identified in
literature (Candler & Dumont, 2010; Ebrahim, 2003b; Godwin, et al., 2011;
Hyndman & McDonnell, 2009; Najam, 1996).
Based on the results of factor analysis, there are two groups of stakeholders
of zakat agencies: primary stakeholders and secondary stakeholders. Primary
stakeholders consist of God, donors, the Central BAZNAS, the government, MUI,
the public, donors, and beneficiaries; whereas secondary stakeholders consist of
boards, volunteers, the media, and peer organisations. Table 7-25 compares the
results of the factor analysis with the theoretical framework discussed in Section
4.3. Primary stakeholders and secondary stakeholder had different power,
legitimacy, and urgency. Donors and the government have an explicit, contractual
relationship with zakat agencies, thus, they have power to hold zakat agencies to
be accountable. Donors have legitimacy to hold zakat agencies accountable
through donations, while the government gains legitimacy through legislation and
possibly through funding. It is expected that a bond of accountability (Stewart,
1984) exists between zakat agencies and donors and between zakat agencies and
the government. Therefore, donors and the government are primary stakeholders.
This finding is consistent with the concept of primary stakeholders (Carroll, 1989)
and salient stakeholders (Cordery & Baskerville, 2011; Mitchell, et al., 1997).
185
Table 7-25 Classification of Zakat Agencies Stakeholders Compared to Theoretical Framework
Potential Stakeholder Attributes Category of
Type of Accountability
Charity (Cordery & Baskerville, 2011; Mitchell, et al., 1997) Stakeholder Finding
(Stewart, 1984)
Stakeholders Power Legitimacy Urgency (Carroll, 1989)
Government Yes, granted by Yes, through legal means Unlikely Primary – explicit A bond of accountability Primary
statute contractual
Major donors Possibly • Yes, through donations Possibly Primary – explicit A bond of accountability Primary
• Moral dimension/shared values contractual
Public Possibly • Yes - through donations Unlikely Secondary – implicit A link of accountability Primary
• Moral dimension/shared values contractual
Beneficiaries Unlikely • Yes, through charity mission Unlikely Secondary – implicit A link of accountability Primary
contractual
MUI Unlikely • Possibly, through moral Unlikely Secondary – implicit A link of accountability Primary
dimension/shared values contractual
Volunteer Unlikely • Yes, through non-monetary Possibly Secondary – non- A link of accountability Secondary
contributions contractual
• Moral dimension/shared values
The Zakat Forum Unlikely • Possibly, through moral Unlikely Secondary – non- A link of accountability Secondary
dimension/shared values contractual
The media Unlikely • Unlikely Unlikely Secondary – non- A link of accountability Secondary
contractual
Board Yes Yes Yes Primary – explicit A bond of accountability Secondary
contractual
Parliament Yes, granted by Yes, through legal means Unlikely Primary – implicit A bond of accountability Secondary
statute contractual
186 Accounting for Zakat: the Accountability of Indonesian Zakat Agencies

Based on power, beneficiaries and MUI should be classified as non-salient
stakeholders (Cordery & Baskerville, 2011; Mitchell, et al., 1997) or secondary
stakeholders (Carroll, 1989) because beneficiaries and MUI do not have the
formal authority to hold zakat agencies accountable. The relationship between
zakat agencies and beneficiaries and between zakat agencies and MUI is only
based on an implicit contractual relationship through shared values. Because
beneficiaries and MUI do not have the legal power to hold zakat agencies
accountable, their relationship only indicates a link of accountability (Stewart,
1984). However, the result of factor analysis suggests that donors, regulators,
beneficiaries, and MUI loaded into the same factor. This indicates that
participants may not only consider legal power to classify stakeholders, but also
the moral dimension, social power, and organisation’s values. Donors might
expect zakat agencies to be accountable to MUI because zakat agencies are an
Islamic faith-based organisation. While fatwa issued by MUI is not legally
binding, there is a social expectation that every Muslim and Islamic faith-based
organisation will comply with fatwa issued by an MUI. It is unlikely that Muslims
will support an Islamic organisation that does not comply with fatwa issued by an
MUI. In relation to accountability to beneficiaries, zakat agencies are established
to help poor beneficiaries, therefore, it is morally justifiable to give account to
beneficiaries.
Volunteers, media, and the Forum Zakat would be classified as secondary

stakeholders based on the framework proposed by Carroll (1989) or non-salient
stakeholders based on the framework proposed by Cordery and Baskerville
(2011), and this correlates with the results of the factor analysis. The classification
of Parliament as a secondary stakeholder is appropriate because Indonesian zakat
agencies do not have an accountability relationship with the Parliament.
According to Zakat Management Law, institutions that have the authority to
regulate and monitor zakat agencies are the Ministry of Religious Affair and the
Central BAZNAS.
The results of the survey provide evidence of a general consensus by

respondents regarding the scope of accountability of zakat agencies. Contrary to
Chapter 7: The Accountability of Zakat Agencies: Donors’Perceptions 187

previous literature that stated the scope of accountability consisted of five areas
(Stewart, 1984), this study found that the scope of accountability of zakat agencies
also included accountability for Syari’ah, amil fund, ethics, and mission. This
indicates the presence of sacred accountability in the context of Islamic faith-
based charitable organisations. This finding also suggests that Stewart’s (1984)
ladder of accountability is insufficient, because this framework does not consider
sacred accountability.
In relation to the level of importance of every area of the scope of

accountability, respondents rated all elements as important to very important. The
high level of importance rating for accountability for finances indicates that
donors have a strong interest in financial information, suggesting that financial
accountability is important. It might be possible that donors expect zakat agencies
to demonstrate their stewardship of resources because zakat funds are collected
from Muslims’ donations.
Factor analysis was used to condense the scope of accountability of zakat

agencies and produced two distinct factors. The first factor consisted of legal
accountability, governance accountability, programme accountability
(effectiveness), performance accountability (efficiency and outcomes), and
mission (policy) accountability. This scope of accountability is related to non-
financial aspects of the scope of accountability proposed by Kearns (1996); ,
Ebrahim (2010), and Dhanani and Connolly (2012).
Financial accountability, amil fund accountability, ethics accountability, and

Syari’ah accountability loaded into the same factor. Therefore, this scope of
accountability was referred to as financial and sacred accountability. This finding
provided empirical evidence in accordance with Laughlin (2007), who argued that
sacred and secular are not absolute constructs because sacred and secular activities
are different in every organisation. In the context of zakat agencies, donors
consider financial accountability to be as important as sacred accountability. This
finding supports previous literature that stated financial accountability can be
classified as a sacred activity in faith-based organisations (Cordery, 2006; Crofts,
2009). This finding also agrees with Irvine (2002) and Bigoni et al. (2013), who

found that a faith-based organisation that needs support from external
stakeholders will use financial reports to discharge accountability. Zakat agencies
need support from donors, therefore, financial accountability is important, while
Syari’ah accountability is also important because zakat agencies are an Islamic
faith based organisation.
The results presented in Section 7.6 provide evidence that zakat agencies
should disclose a broad set of information to their stakeholders. Respondents
showed a strong interest in financial information, such as audited financial
statements, information about total revenue and sources of revenue, and
information about the usage of the zakat fund. These findings support Dixon et al.
(2006), who found that donors had a strong interest in financial and activities
information but contradicts the results of previous studies in the UK that found
donors were more interested in performance information (Connolly & Hyndman,
2103b; Hyndman, 1990, 1991).
Factor analysis confirmed the information set that should be disclosed by

zakat agencies includes financial information, programmes and beneficiary
information, mission and governance information, information about future plans,
and performance information. In addition to financial information, donors also
need a broad type of information to access the accountability of zakat agencies.
This finding suggests that financial information was important but insufficient to
capture all aspects of accountability (Lee, 2008).
With respect to the mechanisms for discharging accountability, respondents

regarded written sources of information officially issued by zakat agencies, such
as annual reports, internal printed media, and the internet (organisational website)
as of higher importance than verbal sources of information, such as information
from friends, relatives, and family members. Based on the results of factor
analysis, there are two categories of information sources. The first categorty
consists of written information, such as annual reports, internal publications,
letters, and mass media. The second category consists of informal sources of
information, such as social media, public announcement in mosques, and
information from family and staff.

It is possible that the grouping of sources of information is based on the
accessibility and reliability of the sources of information. Arguably, informal
sources of information are easier to access than formal sources of information;
however, informal sources of information are less reliable and accurate than
formal sources of information. Based on the quality of information, information
provided in annual reports, internal printed media, and via the internet might be
more accurate and reliable than information provided by public announcements in
mosques, social media, the staff of zakat agencies, and information from friends,
relatives and family members.
Specifically, with regards to annual reports, this study found that the
majority of donors stated that the annual report was an important or very
important source of information. This finding supports the existing literature that
considers annual reports an important form of media for discharge accountability
(Connolly, et al., 2012; Ebrahim, 2003a; Hines & Jones, 1992; Palmer, 2013).
Although donors considered annual reports to be an important source of
information, the majority of respondents stated that they did not have access to
annual reports and only a few donors read annual reports. This finding resonates
with Connolly and Hyndman (2013a), who found that donors rarely read annual
reports.
Correlation analysis provided evidence of correlation among variables of to

whom zakat agencies should be accountable, the scope of accountability, types of
information, and the media used to disseminate information. This finding supports
previous qualitative literature about inter-relationship among the core elements of
accountability (Connolly & Hyndman, 2004; Connolly, et al., 2011; Stewart,
1984; Waters, 2009). Primary stakeholders had significant and positive correlation
with financial and sacred accountability, financial information, and formal sources
of information; while secondary stakeholders did not have a significant correlation
with other variables. This finding indicates that donors perceived zakat agencies
should provide financial information through formal sources of information to
discharge financial accountability to their primary stakeholders.

Financial and sacred accountability had a significant strong relationship
with financial information and a significant medium relationship with governance
information and performance information. Although weak, performance and
governance accountability had a significant correlation with performance
information and other information and a significant medium correlation with
financial information. Performance accountability also had a significant medium
correlation with formal sources of information. These findings suggest that donors
perceived financial and performance information to be important to discharge
both elements of accountability (financial and sacred accountability and
performance and governance accountability).
For sources of information, formal sources of information had a significant

correlation with financial, governance, and performance information, while
informal sources of information had a significant correlation with financial,
governance, and other information. These findings suggest that donors expect
zakat agencies to provide many types of information in various forms of formal
and informal media.
Although most variables of every element of accountability loaded strongly

into a particular factor, the results of MANOVA tests showed that differences
among the groups of donors who gave their zakat to local Imams, government-
sponsored zakat agencies, and private zakat agencies appeared to be insignificant.
In addition, there were no significant differences in their understanding of
accountability among donors with different demographic attributes, except for
interaction variables between education and sectors of employment. It is possible
that the lack of demographic variation of donors who participated in this study
may have contributed to the insignificance of these results. Nevertheless, this
finding provides preliminary evidence that the understanding of accountability
might be influenced by the demographic characteristics of individuals.
7.11 SUMMARY
This chapter examined donors’ perceptions on the meaning of

accountability, to whom zakat agencies should be accountable, the scope of

accountability, types of information to disseminate accountability, and how
accountability should be discharged. In addition, this chapter also sought to
operationalise quantitative and qualitative approaches to accountability. Overall,
the findings indicate the presence of sacred and secular accountability in zakat
agencies. Respondents believed that sacred accountability should be fulfilled
because God will demand accountability from all human beings. Secular
accountability is also important because zakat funds are collected from Muslim
donations.
This study provides evidence of a consensus among respondents for

Indonesian zakat agencies to show accountability to their stakeholders. Donors
expected zakat agencies to be accountable to a wide range of stakeholders,
including God, regulators, resource providers, beneficiaries, and others. With
regards to the scope of accountability, this study also found that the scope of
accountability of zakat agencies extended beyond Stewart’s (1984) ladder of
accountability and includes accountability for Syari’ah, ethics, and mission. With
regards to the types of information, it is clear from the responses of respondents
that donors consider financial information to be very important. Although donors
have a strong interest in financial information, they also stated that zakat agencies
should disclose other types of information, such as programme and activities
information. This study also found that donors consider annual reports to be a
very important source of information. Although most respondents stated that the
annual report was very important, most of them did not have access to an annual
report and most of them also did not read the annual report. Consequently, donors
rely on other accessible information, such as public announcements in mosques,
the internet, and mass media.

Agencies: A Comparison
between Administrators’ and
Donors’ Perceptions
8.1 INTRODUCTION
Previous research has indicated that an accountability gap might exist

because information provided by an organisation does not match information
required by its external stakeholders (Hyndman, 1990, 1991). The gap might also
exist because the perceptions of administrators regarding the notion of
accountability are different from the perceptions of donors. This accountability
gap can influence the level of trust of stakeholders for an organisation. Therefore,
the aim of this chapter is to compare the perceptions of administrators (as
presented in Chapter 6) with the perceptions of donors (as presented in Chapter 7)
on the notion of accountability and how accountability is actually discharged by
zakat agencies to answer the fourth research question:
This research question is addressed through three subsidiary questions?
b) Do administrators and donors have different views on to whom, for what, and
how to discharge accountability?
This chapter is structured as follows. Section 8.2 reports the media used by zakat
agencies to discharge accountability. Section 8.3 compares the perceptions of
administrators and donors regarding the meaning of accountability and actual
practices of the core elements of accountability (to whom, for what, and how).
Section 8.4 provides discussion and is followed by a summary in Section 8.5.
Chapter 8: The Accountability of Zakat Agencies: A Comparison between Administrators’ and Donors’ Perceptions 193
8.2 MEDIA USED TO DISCHARGE ACCOUNTABILITY
The findings presented in this section identify the forms of media used by
zakat agencies to discharge accountability and types of information that can be
found in these media. Content analysis was employed to identify types of
information that can be found in these media. The results of the content analysis
were compared with types of information considered important by administrators
and donors to answer the following research questions:
RQ.4(a) What media and type of information is currently used and disclosed?
The summary of media used by zakat agencies to discharge accountability is
presented in Table 8-1. It is immediately apparent that the use of informal
mechanisms to discharge accountability is more common than the use of formal
mecahnisms. It is only three zakat agencies that produce annual reports but most
zakat agencies have website, social media (Facebook) and internal printed media.
Table 8-1 Media Used by Zakat Agencies to Discharge Accountability

BAZNAS LAZ
Media Small Large Small Large Total
n=5 n=1 n=2 n=3
Annual reports 1 20% 0 0% 0 0% 2 66.67% 3
Newspaper 1 20% 1 100% 0 0 0 0 2
Internal printed media
1 20% 1 100% 2 100% 2 66.67% 6
(Magazine)
Internet (Website) 5 100% 1 100% 2 100% 3 100% 11
Social media (Facebook) 4 80% 1 100% 2 100% 3 100% 10
8.2.1 Magazine
Six zakat agencies published magazines regularly. These magazines were
sent to their stakeholders regularly (monthly, bimonthly, or quarterly) and were
free of charge. The content analysis was conducted on six magazines published by
six zakat agencies. The years of publication varied from 2013 to 2015. The results
indicate that several types of accountability-related information could be found in
these magazines. Table 8-2 reports the results of the content analysis of the
magazines based on the number of articles.
194 Chapter 8: The Accountability of Zakat Agencies: A Comparison between Administrators’ and Donors’ Perceptions
Table 8-2 Summary of Magazine Contents
Number of BAZNAS LAZ
magazine
providing Total
Type of
No this Small Large Small Large n=6
information
information n=1 n=1 n=2 n=2 (Articles)
(Articles) (Articles) (Articles) (Articles)
n=6
1 Number of articles - 11 11 34 30 86
Organisational
2 1 1 0 0 0 1
structure
Programmes and
3 5 0 2 9 12 23
activities
Human interest
stories (information
4 about how zakat 4 0 1 1 2 4
funds help
beneficiaries)
Acknowledgment
5 of donor 4 1 1 2 0 4
contributions
Financial
information – the
6 4 1 1 0 2 4
amount of zakat
collected
Financial
information – the
7 4 1 1 0 2 4
usage of the zakat
fund
Religious
8 6 8 2 13 11 34
information
Other information,
9 such as science and 6 0 4 9 3 16
health
2013 and
10 Year of publication 2014 2014 2014
2015
The number of pages was in the range of 24 to 60 pages, whereas the

number of articles was in the range of 11 to 20 articles in every magazine.
Magazines published by private zakat agencies contain more articles than
magazines published by government-sponsored zakat agencies. A total of 86
articles from magazines was coded and the results indicated that most information
was not related to accountability, such as religious information (34 articles or
39.53% of total articles) and science information (16 articles or 18.60% of total
articles).
In general, the disclosure of programmes and activities information is higher

in private zakat agencies than government-sponsored zakat agencies. While
programme and activities information was found in five (out of six) magazines,
with a total of 23 (out of 86) articles, the number of articles about programmes
and activities published by private zakat agencies (9 to 12 articles) is higher than
the number of articles about programmes and activities published by government-
sponsored zakat agencies (0 to 2 articles). This may indicate that private zakat
agencies consider programme and activities information very important.
Four (out of six) zakat agencies publish financial accountability-related

information in their magazines. However, the number of financial information is
relatively low and only consisted of four (out 86 or 4.65%) articles. This financial
information was unaudited and detailed the amount of zakat collected and
distributed. There was also only one article about the structure of an organisation.
In addition to articles, photos of beneficiaries were shown to illustrate the
programmes and activities conducted by zakat agencies.
8.2.2 Website
All participating zakat agencies had websites where they posted

accountability-related information. Table 8-3 presents the type of information
identified in the websites of zakat agencies. There was no identifiable
accountability disclosure pattern based on the size or types of zakat agencies,
because accountability information disclosed by zakat agencies on their website
was relatively similar between large and small zakat agencies or between
government-sponsored agencies and private zakat agencies.
Table 8-3 Type of Information Disclosed on Website
BAZNAS LAZ
No Type of Information Total
Small Large Small Large
n=5 n=1 n=2 n=3
1 Statement of mission and objectives 4 1 1 3 9
2 History of the organisation and legal information 4 1 1 2 8
Governance
3 Information about the organisation’s structure 3 0 0 2 5
4 Profile of boards, CEO, and other senior staff 1 0 0 1 2
5 Boards and committee activities 0 0 0 0 0
6 Remuneration of boards, CEO, and other senior 0
0 0 0 0
staff
Future Plans
7 Future plans 0 0 0 1 1
8 Overview of programmes and activities 5 1 2 3 11
9 Information about how to access zakat agency 0 0 0 0 0
services
10 Organisation’s policy related to the allocation of 1 0 0 1 2
resources
11 Organisation’s policy for selecting beneficiaries, 1 0 0 0 1
including the criteria to select beneficiaries
Beneficiaries
12 Overview of beneficiaries 4 1 2 3 10
13 Human interest stories (information about how 4 1 2 3 10
zakat funds help beneficiaries)
14 Information about related to parties’ transactions 0 0 0 0 0
15 Acknowledgement of donor and volunteer’s 1 0 0 1 2
contributions
16 Religious information 0 0 2 2 4
17 Auditor's report or other type of assurance report 0 0 0 2 2
18 Audited financial report 0 0 0 2 2
19 Total revenue and its sources 2 0 0 2 4
20 Fundraising costs 2 0 0 2 4
21 Usage of the zakat fund for beneficiaries 2 0 0 2 4
(excluding amil fund)
22 Usage of the amil fund 2 0 0 2 4
23 Usage of other donations (excluding zakat) 2 0 0 2 4
Performance Information
24 Financial ratios – Amil fund ratio 0 0 1 0 1
Non-financial Performance Information
25 The number of beneficiaries 0 0 0 1 1
Basic information such as address, contact details, and bank accounts were
available on the website. The majority of zakat agencies (9 out of 11) disclosed
information about their missions and objectives. An analysis of the statements of
missions and objectives indicated that accountability was important, because the
majority of zakat agencies stated ‘accountability’ or other words that are usually
associated with accountability, such as transparency, professional, amanah, and
trustworthy in the statements of missions and objectives of. For example,
A trustworthy (amanah) organisation that brings prosperity to

society. (Small Local BAZNAS B).
To be a role model of private zakat agencies that amanah (trustworthy),

professional, accountable and to be a prominent zakat agency. (Large
LAZ K).
The majority of zakat agencies also disclosed information about the history
of their organisations and legal information on their website. Legal information is
particularly important for zakat agencies because it gives legitimacy to collect
zakat. Providing legal information also increases public trust because it signals to
the public that a zakat agency is a legal organisation and approved by the
government.
Five (out of 11) zakat agencies disclosed governance information on their

website. There were two large zakat agencies compared to three small zakat
agencies that disclosed governance information. The content of the governance
information was mainly in relation to the structure of the organisation. Only one
small zakat agency and one large private zakat agency disclosed information
about the profile of their board. However, governance information related to
accountability, such as the activities of the board and remuneration of the board,
CEO, and other senior staff was not available. It is possible that remuneration
information is considered confidential information; therefore, zakat agencies are
reluctant to disclose this information.
All zakat agencies disclosed information about their beneficiaries and
human-interest stories on their website. Private zakat agencies used many pictures
of smiling beneficiaries and narrative information about beneficiaries. On the
other hand, government-sponsored zakat agencies mostly only used narrative
information to explain about their beneficiaries. Information about beneficiaries
usually covered the number of beneficiaries and described the condition of
beneficiaries before and after the beneficiaries received assistance from the zakat
agencies.
All zakat agencies disclosed information about their programmes and

activities on their website. For example, a small private zakat agency disclosed a
success story of a freshwater fish farming programme in a village. Photos and
stories were shown to describe the programmes and activities offered by zakat
agencies. Compared to other types of information, the disclosure of programmes
and activities was relatively extensive. Information about programs and activities
was usually concluded by a request to make donations to support the programmes
or activities. Although zakat agencies disclosed extensive information about
programmes and activities, programmes and activities information that might be
beneficial for beneficiaries was limited. None of the zakat agencies disclosed
information about how to access zakat agencies services and only one small
government-sponsored zakat agency disclosed information about organisational
policies in selecting beneficiaries.
With regards to financial and performance information, the disclosure of

financial and performance information was also limited. While four zakat
agencies disclosed financial information on their website, the quality of the
financial information varied. Only two zakat agencies disclosed their annual
reports in pdf format on their website, while two other zakat agencies only
provided balance sheets, statements of financial position, and statements of cash
flow (without notes relating to financial statements). In relation to performance
information, no zakat agencies disclosed performance information on their
website.
8.2.3 Social Media
Social media, such as Facebook, can be used to disclose information to
demonstrate accountability. Table 8-4 details types of information disclosed on
the Facebook page of zakat agencies. Eight zakat agencies had a Facebook
account, while three others zakat agencies did not. Based on the number of
persons who ‘liked’ or the number of ‘friends’, the number of individuals who
accessed information about zakat agencies using Facebook was quite substantial.
In general, the Facebook accounts of private zakat agencies were accessed by
more individuals than the Facebook accounts of government-sponsored zakat
agencies. A Facebook account of a large zakat agency was accessed by more than
85,000 persons, as indicated by the number of persons who liked this Facebook
account, while a Facebook account of a small zakat agency was accessed by only
600 persons. Zakat agencies usually updated their Facebook page whenever there
was a new activity or programme. Therefore, the content of information on
Facebook was more up-to-date than the content of the websites of the zakat
agencies.
Table 8-4 Type of Information Disclosed on Facebook

BAZNAS LAZ
No Type of Information Small Large Small Large Total
n=5 n=1 n=2 n=3
Number of zakat agencies that 3 1 2 2 8
1
have a Facebook account
2 Overview of programmes or 3 1 2 2 8
activities
3 Human interest stories 0 1 2 2 5
(information about how zakat
funds help beneficiaries)
4 Religious information 1 0 2 1 4
5 Updated 3 1 2 2 8
615 4,324
10,558 to
6 Members/Like to 2,026 to –
85,489
1,360 7,339
8 Linked to website 2 1 2 2 7
Basic information about the addresses of the zakat agency’s offices and
contact details was available. The most common accountability information on
Facebook was information about programmes and activities. For example, a
private zakat agency posted information about the distribution of cash financial
assistance and recent training given to a group of farmers about organic farming.
Although general information about a programme was available, information that
could be used to measure the performance of a programme was not available. For
example, information about the goals or objectives of a programme, financial
resources allocated for a programme, targets that would be achieved by a
programme, and output indicators (such as the number of participants) were not
available. Therefore, information provided on Facebook was not sufficient to
evaluate the accountability of a zakat agency.
All private zakat agencies posted information about their beneficiaries,

especially how financial assistance given by a zakat agency helped beneficiaries.
In contrast, only one government-sponsored agency posted information about the
impact of its activities on the welfare of beneficiaries. Four zakat agencies posted
information about religious information on Facebook. This religious information
related to Islamic teaching, including the importance of giving zakat from a
religious perspective. There were several types of accountability related
information that were not found on Facebook, such as mission and objectives,
governance information, financial information, and performance information.
8.2.4 Annual Reports

This section presents the findings about the use of annual reports to render
accountability. The annual reports analysed consisted of annual reports produced
by two large private zakat agencies for the year of 2013 (LAZ I and LAZ J) and
one annual report produced by a small, local government-sponsored zakat agency
(Local BAZNAS E) 32 for the year 2014. The summary of information available in
annual reports is presented in Table 8-5.
32 The code for zakat agencies can be found in Table 5-3 Distribution of Interviewees
Table 8-5 Type of Information Disclosed in Annual Reports
Small Large
No Type of Information BAZNAS LAZ
n=1 n=2
1 Statement of mission and objectives 1 2
2 History of the organisation and legal information 1 2
Governance
3 Information about the organisation’s structure 1 2
4 Profile of the Boards, CEO and other senior staff 1 0
5 Boards and committee activities 1 0
6 Remuneration of Boards, CEO and other senior staff 0 0
Future Plans
7 Future plans 1 2
8 Overview of programmes and activities 1 2
9 Information about how to access zakat agency services 0 0
10 Organisation’s policy related to the allocation of resources or 1 1
donated funds
11 Organisation’s policy for selecting beneficiaries, including the 1 0
criteria to select beneficiaries
Beneficiaries
12 Overview of beneficiaries 1 2
13 Human interest stories (information about how zakat funds help 1 1
beneficiaries)
14 Information about related parties’ transactions 0 0
15 Acknowledgement of donors and volunteer’s contributions 0 1
16 Auditor's report or other types of assurance reports 0 2
17 Audited financial reports 0 2
18 Total revenue and its sources 1 2
19 Fundraising costs 0 0
20 Usage of zakat funds for beneficiaries (excluding amil fund) 1 2
21 Usage of the amil fund 1 1
22 Usage of other donations (excluding zakat fund) 1 2
Financial and Non-financial Performance
23 Financial performance information – Amil fund ratio (amil 0 1
fund/total zakat collected)
24 Narrative analysis of non-financial performance information 1 0
The number of pages of the three annual reports ranged from 46 to 131
pages. All annual reports detailed information about the mission and objectives,
the history of the organisation, information about the organisation’s structure, and
future plans. However, only the annual report produced by a government-
sponsored zakat agency presented information about the profile of the board
members and the activities of the board. Furthermore, none of the annual reports
presented information about the remuneration of the boards.
The information about zakat agencies’ programmes and activities was quite
extensive in all annual reports. The number of pages used to disclose information
about programmes and activities was 11 of 46 pages (23.91%) of the annual report
for LAZ I, 63 of 74 (85%) pages of the annual report for LAZ J, and 23 of 133
(17.29%) pages of the annual report for local BAZNAS D. The annual reports
also contained descriptions and pictures about programmes and activities.
Information about the number of beneficiaries was available in all programmes
and activity reports; however, financial information for every programme was
only available in the annual reports produced by local BAZNAS D and LAZ I.
In terms of financial information, only LAZ I disclosed a complete set of

financial statements, including notes for the financial statements. LAZ J only
produced balance sheets, statements of financial position, and the statements of
cash flow without notes for the financial statements. The financial statements of
LAZ I and LAZ J were audited, therefore their financial statements complied with
Indonesian accounting standards. The financial statement of local BAZNAS D
was unaudited and did not comply with Indonesian accounting standards. The
financial statement of Local BAZNAS D consisted of only a statement of cash
flow.There was a note for this cash flow statement that explained the financial
assistance according to the categories of beneficiaries.
Performance information in all annual reports was limited. Information

about financial ratios was not available, with the exception of information about
the amil fund ratio. Although there was information about programmes, activities,
and financial information, it was difficult to measure the financial and non-
financial performances of every organisation due to insufficient information about
inputs and outputs. For example, all zakat agencies reported that they gave seed
capital to groups of farmers. Although they reported on the groups of farmers that
received the seed capital, it was difficult to measure the outputs because the
amount of assistance was different for every group and every group had a
different number of members.
8.2.5 Mass Media

While mass media is easily accessible to the public, most zakat agencies do
not use this medium to discharge accountability. There are only two zakat
agencies (a small and a large government-sponsored zakat agency) that publish
their financial information in commercial newspapers. The small government-
sponsored zakat agency published unaudited zakat revenues and disbursement in
commercial newspapers, while the large government-sponsored zakat agency
published audited financial statements that consists of balance sheet, income
statements and cash flow statements without notes to the financial statement.
8.3 A COMPARISON BETWEEN ADMINISTRATORS’ AND DONORS’

PERCEPTIONS ON THE ACCOUNTABILITY OF ZAKAT
AGENCIES
This section compares the understanding of accountability based on the

perceptions of administrators and donors to answer the following research
question:
RQ.4.b Do administrators and donors have different views on to whom, for what
and how to discharge accountability?
Further, this section also compares the perceptions of andministrators and donors
on accountability with information disclosed by zakat agencies, and the actual
media used to discharge zakat agency accountability to answer the following
research question:
RQ.4.c Is there an expectations gap?
8.3.1 A Comparison between Administrators’ and Donors’ Perceptions on
the Meaning of Accountability
The first comparison is related to the responses of administrators and donors
to the open-ended question about their views and perceptions regarding the
meaning of accountability, as presented in Table 8-6. A comparison of the views
of administrators and donors, suggests that donors focused on the usage of the
zakat fund and transparency, while administrators focused on transparency and
compliance with Syari’ah requirements. This indicates that donors focused on the
secular aspect of accountability, while administrators tried to balance between
sacred and secular accountability. It is possible that donors have a higher interest
in secular accountability than sacred accountability because their reasons for
giving zakat are not only to fulfil religious duty, but also to help poor individuals.
On the other hand, administrators are more balanced in their views about secular
and sacred accountability. Therefore, administrators linked the accountability of
zakat agencies to both the sacred aspect of accountability (compliance with
Syari’ah requirements) and secular accountability (such as transparency, financial
reporting, and others).
Table 8-6 A Comparison between the Perceptions of Administrators and Donors

on the Meaning of Accountability
Administrators Donors
No Meaning of Accountability n=11 n=239
Freq. % Freq. %
1 Zakat fund is used appropriately 0 0 139 50.21
2 Transparency 11 100 40 16.74
3 Reliable and accurate financial reports 6 54.55 21 8.79
4 Good administration 5 45.45 12 5.02
5 Trustworthy 8 72.73 8 3.35
6 Compliance with regulation 1 9.09 5 2.09
7 Compliance with Syari’ah requirements 10 90.91 3 1.26
9 Justification 4 36.36 0 0
10 Responsiveness 2 18.18 0 0
11 Others 0 0 3 1.26
12 Did not respond 0 0 8 3.35
“Should Zakat Agencies be Accountable”
The comparison of administrators’ and donors’ perceptions regarding
“should zakat agencies be accountable” is presented in Table 8-7, while the
comparison of reasons for demonstrating accountability is presented in Table 8-8.
Administrators and the majority of donors (88.28%) agreed that zakat agencies
should be accountable. Regarding the reasons for accountability, there was
agreement between administrators and donors that zakat agencies should be
accountable because accountability can increase public trust, is required by
regulation, demonstrates trustworthiness and a good stewardship of resources, and
because zakat is ‘public money’ donated by the public. On the other hand,
religious reasons were mentioned by 54.55% of administrators and 6.16% of
donors. This finding also indicates that administrators considered sacred and
secular accountability to be equally important, while donors focused on secular
accountability.
Table 8-7 Should Zakat Agencies be Accountable?

No Should zakat agencies be accountable? n=11 n=239
Freq. % Freq. %
1 Yes 11 100 211 88.28
2 No 0 0 10 4.18
3 Did not respond 0 0 18 7.53
Total 11 100 239 100
Table 8-8 Why Should Zakat Agencies be Accountable?

No Why should zakat agencies be accountable? n=11 n=211
Freq. % Freq. %
1 Gain public trust 9 81.82 48 22.75
2 Required by regulation 5 45.45 9 4.27
Amanah (trustworthiness or stewardship of
3 5 45.45 26 12.32
resources)
A zakat agency is a financial institution that
4 5 45.45 19 9.00
administers zakat funds donated by Muslims
5 There is an obligation to give account 0 0 76 36.02
6 Avoid malfeasance 0 0 15 7.11
7 Religious reasons 6 54.55 13 6.16
8 Did not mention their reason 0 0 5 2.37

the Stakeholders of Zakat Agencies
Table 8-9 summarises the responses of the administrators of zakat agencies
and donors regarding to whom zakat agencies should be accountable.
Administrators and donors agreed that zakat agencies should be accountable to a
wide range of stakeholders that included God, the government, the Central
BAZNAS, the board, donors, and others. There was a high level of agreement
between administrators and donors regarding accountability to God. However,
there were both differences and agreement in relation to their views about
accountability to secular stakeholders.
Table 8-9 Comparison of the Perception of Administrators and Donors on “To

Whom Zakat Agencies Should be Accountable”
No To Whom n=11 n=239
Frequency % Frequency %
1 God 11 100 205 95
2 Government 11 100 125 59
3 Donors 10 91 160 76
4 Central BAZNAS 10 91 136 64
5 Boards 10 91 90 43
6 Beneficiaries 6 55 100 48
7 Parent Organisation 33 5 45 0 0
8 Parliament 3 27 25 12
9 Academics 34 2 18 0 0
10 Media 1 9 44 21
11 Peer Organisations 0 0 72 34
12 MUI 0 0 55 26
13 Volunteers 0 0 43 21
The majority of administrators and donors had similar perceptions on

accountability to the government, donors, and the Central BAZNAS. In relation to
the percentage of respondents who said that zakat agencies should be accountable
33 Parent organisation was not listed in the questionnaire. Although respondents could add information
about individual(s) or organisation(s) that are considered to be a stakeholder of a zakat agency, no
respondents added a new stakeholder name.
34 Academics were not listed in the questionnaire. Although respondents could add information about
individual(s) or organisation(s) that were considered stakeholders of a zakat agency, no respondents
added a new stakeholder name.
to the government, all administrators agreed that zakat agencies should be
accountable to the government, while only 59% of donors agreed. With regards to
accountability to donors, the majority of administrators (90.91%) stated that zakat
agencies need to be accountable to donors, while only 160 donors (76%) agreed.
Likewise, ten administrators (91%) and 136 donors (64%) agreed that zakat
agencies should be accountable to the Central BAZNAS.
Administrators and donors had different perceptions concerning

accountability to boards and beneficiaries. While the majority of administrators
indicated that zakat agencies should be accountable to the board, the majority of
donors stated that zakat agencies should not be accountable to the board.
Similarly, the majority of administrators (54.55%) stated that zakat agencies
should be accountable to beneficiaries, while only 90 donors (48%) agreed. It is
possible that donors do not understand the role of the board in the administration
of zakat agencies, therefore they stated that zakat agencies should not be
accountable to the board.

the Scope of Accountability
The second core element of accountability is the scope of accountability.
Table 8-10 summarises the scope of accountability based on the views and
perceptions of the administrators and donors of zakat agencies. In general, both
administrators and donors agreed that the scope of a zakat agency consists of
sacred and secular dimensions. However, there were variations in their
perceptions relating to the scope of secular accountability.
The majority of administrators and donors agreed that zakat agencies should
be accountable for finances, Syari’ah, and their mission. All administrators and
most donors (91%) stated that financial accountability is important for zakat
agencies. Syari’ah accountability is mentioned by ten (out of 11) administrators
and 88% of donors. Accountability for mission was mentioned by nine (87%)
respondents and considered important or very important by 77% of donors. With
respect to performance accountability (outcomes, efficiency, and effectiveness),
five (45%) administrators mentioned that zakat agencies should be accountable
for their performance. On the other hand, most donors considered accountability
for outcomes (81%), efficiency (77%), and effectiveness (81%) to be important or
very important.
Table 8-10 A Comparison between the Perception of Administrators and Donors

on the Scope of Accountability of Zakat Agencies
No The Scope of Accountability n=11 n=239
Freq. % Mean Freq.* %
1 Finances 11 100 4.80 218 91
2 Syari’ah 10 91 4.72 211 88
3 Ethics 0 0 4.55 206 86
4 Outcome 5 45 4.33 193 81
5 Efficiency 5 45 4.28 185 77
6 Effectiveness 5 45 4.27 193 81
7 Governance 0 0 4.26 188 79
8 Legal 2 18 4.33 193 81
9 Mission 9 82 4.23 183 77
10 Amil fund 0 0 3.93 151 63
∗ Based on the number of respondents who stated ‘important’ and ‘very important’
Accountability for amil fund, which is related to financial and Syari’ah

accountability, was not mentioned by administrators and had the lowest mean
score based on the opinion of donors. Accountability for ethics and governance
was also not mentioned by administrators, although most donors considered these
elements of accountability to be important or very important.

Information that Should be Disclosed by Zakat Agencies to Discharge
Accountability and Actual Reporting
It has been argued that the scope of accountability determines the type of
information that should be disclosed by an organisation (Stewart, 1984). Table
8-11 presents the type of information that should be disclosed by zakat agencies
according to the perceptions of administrators and donors. It also presents the type
of information that is usually disclosed by zakat agencies in various media. The
findings indicate the existence of an accountability gap because actual information
disclosed by zakat agencies is different from the views of donors and
administrators on type of information that should be disclosed by zakat agencies.
Table 8-11 A Comparison between the Perception of Administrators and Donors on Types of Information that Should be Disclosed
by Zakat Agencies
Administrators Donors Actual Information
n=11 n=239 Annual
No Type of Information Website Magazine Facebook
Mean Report
Freq. % Freq. % (n=11) (5) (n=8)
Score (n=3)
I Organisation Overview
1 Statement of mission and objectives 1 9 4.25 205 85.77 3 9 0 0
2 History of the organisation 1 9 3.50 129 53.97 3 8 0 0
II Governance
3 Information about the organisation’s structure 0 0 3.82 163 68.20 2 5 1 0
4 Profile of Boards, CEO and other senior staff 0 0 3.82 156 65.27 1 2 0 0
5 Boards and committee activities 0 0 3.83 162 67.78 1 0 0 0
6 Remuneration of Boards, CEO and other senior staff 0 0 3.61 133 55.65 0 0 0 0
III Future Plans
7 Future plans 3 27 4.35 217 90.79 3 1 0 0
IV Organisation Policy and Programmes
8 Overview of programmes and activities 11 100 4.22 201 84.10 3 5 4 8
9 Information about how to access zakat agency services 0 0 4.14 197 82.43 0 0 0 0
10 Organisation’s policy related to the allocation of resources or donated fund 0 0 4.19 205 85.77 2 2 0 0
Organisation’s policy for selecting beneficiaries, including the criteria to
11 5 45 4.26 198 82.85 1 1 0 0
Administrators Donors Actual Information
n=11 n=239 Annual
No Type of Information Website Magazine Facebook
Mean Report
Freq. % Freq. % (n=11) (5) (n=8)
Score (n=3)
V Beneficiaries
12 Overview of beneficiaries 5 45 4.48 221 92.47 3 10 0 0
13 Human interest stories (information about how zakat funds
0 0 4.32 212 88.70 2 10 4 5
help beneficiaries)
VI Other Non-financial Information
14 Information about related parties’ transactions 0 0 4.07 184 76.99 0 0 0 0
15 Acknowledgement of donors and volunteer’s contributions 0 0 3.55 139 53.97 1 2 4 0
VII Financial Information
16 Auditor's report or other type of assurance report 5 45 4.25 194 81.17 2 2 0 0
17 Audited financial report 5 45 4.36 200 83.68 2 2 0 0
18 Total revenue and its sources 11 100 4.35 209 87.45 3 4 5 0
19 Fundraising costs 0 0 3.88 169 70.71 0 0 0 0
20 Usage of zakat fund for beneficiaries (excluding amil fund) 11 100 4.31 213 89.12 3 2 5 0
21 Usage of the amil fund 0 0 4.26 197 82.43 2 4 3 0
22 Usage of other donations (excluding the zakat fund) 0 0 4.30 207 86.61 3 1 4 0
VIII Financial Performance
23 Financial performance information 0 0 4.11 193 80.75 1 1 0 0
IX Non-financial Performance
24 Non-financial performance information 6 54.54 4.02 182 76.15 3 1 0 0
While only one administrator (out of 11) highlighted the importance of
disclosing organisational information such as organisation mission and objectives
and the history of the organisation, nine (out of 11) organisations disclosed
organisational information. Content analysis of several types of media indicated
that information about the mission and objectives of zakat agencies could be
found in three (out of 3) annual reports and nine (out of 11) websites of zakat
agencies. From the perspective of donors, most donors believed that it was
important for zakat agencies to disclose organisational information.
With regards to governance information, the majority of donors considered

governance information to be important or very important but administrators did
not mention disclosing governance information in their comments. Five zakat
agencies disclosed this information in their websites, two zakat agencies disclosed
governance information in annual reports and one zakat agency disclosed
governance information in internal printed magazines.
All administrators stated that zakat agencies should disclose information

about their programmes and activities and the majority of donors stated that
information about programmes and activities was important or very important.
Information about programmes and activities was disclosed by zakat agencies in
various types of media, such as annual reports, websites, magazines, and social
media. Although information about programmes and activities was available,
information about how beneficiaries could access the zakat agency’s services was
not available.
Analysis of media used by zakat agencies to disclose accountability

information indicates that information about beneficiaries is widely available in
various media. This information was found in two (out of 3) annual reports, ten
(out of 11) websites of zakat agencies, four (out of 5) internal printed magazines
and five (out of 8) social media. Five (out of 11) administrators and the majority
of donors stated the importance of disclosing information about beneficiaries,
All administrators agreed that zakat agencies should disclose financial

information about total revenue and its sources and information about the usage of
the zakat fund. Less than half of the administrators (45%) stated zakat agencies
should disclose an auditor’s report and other types of assurance reports and
audited financial statements. Furthermore, no administrators mentioned that zakat
agencies should disclose information about fundraising costs, the usage of amil
funds, and the usage of other donations. From the perceptions of donors, the
majority of financial information variables received a high rating. Although its
disclosure was generally considered important, the disclosure of financial
information was limited. Only two zakat agencies published a complete set of
audited financial statements in their annual reports. The most common financial
information was un-audited total revenue and its sources and the usage of zakat
fund. This finding indicates the existence of an accountability gap, especially on
With regards to performance information, administrators only mentioned

non-financial performance accountability and did not mention financial
performance accountability. On the other hand, the majority of donors considered
financial and non-financial performance information to be important or very
important. The actual practice indicates that the disclosure of financial and non-
financial performance information is limited because it only one zakat agency
disclosed this information on their website and three zakat agencies disclosed this
information in annual reports. This finding supports the existence of an
accountability gap, especially on performance information.

Media that Should be Used by Zakat Agencies to Discharge
Accountability and the Actual Media that are Used to Discharge
Accountability
This section compares the perceptions of administrators and donors
regarding the types of media that should be used by zakat agencies to discharge
accountability and the types of media that are used by zakat agencies to
disseminate accountability information. The results are presented in Table 8-12.
Overall, there were differences and similarities amongst the views of
administrators, the expectations of donors, and the actual media used to
disseminate accountability information. The findings also suggest that a gap exists
between the views of administrators and their own organisational practices.
Table 8-12 A Comparison between the Perceptions of Administrators and Donors

on Media that Should be Used by Zakat Agencies to Discharge Accountability
Actual
Media Used
by Zakat
No Media (n=11) n=239 Agencies
(n=11)
Freq. % Mean Freq. % Freq. %
1 Annual reports/financial reports 10 91 4.42 206 86 3 27
2 Internet/website 10 91 4.11 188 79 11 100
3 Internal printed media 7 64 4.13 188 79 6 55
(Magazines/bulletin/pamphlets
published by zakat agencies)
4 Mass media 7 64 3.89 163 68 2 18
5 Letter (sent by zakat agencies to 4 36 3.80 150 63 1 9
their donors)
6 Public announcement in mosque 5 45 3.64 136 57 NA NA
7 Social media (Facebook) 5 45 3.24 108 45 8 73
8 Staff of zakat agencies 2 18 3.36 94 39 NA NA
9 Friend, relative, or family 2 18 3.12 92 38 NA NA
member
10 Customised report 11 100 NA NA NA 11 100
Administrators agreed with donors on most media that should be used by

zakat agencies to disseminate information, however, the actual reporting practices
varied. For example, most administrators (91%) and donors (86.19%) agreed that
the annual report is an important medium to discharge accountability and zakat
agencies should use annual reports to discharge accountability but only three
(27%) zakat agencies published annual reports. One large private zakat agency
published a complete set of annual reports that included an audited financial
statement and notes to the financial statement. This financial statement complied
with Indonesian accounting standards. One large private zakat agency produced
annual reports that contained narrative information and audited financial
statements without notes for the financial statements. One small government-
sponsored zakat agency produced annual reports that contained narrative
information and an un-audited financial statement.
The majority of administrators (91%) and donors (78.66%) also believed

that zakat agencies should use the internet to disseminate accountability.
Consistent with the views regarding the importance of organisational websites to
discharge accountability, all zakat agencies had an organisational website.
Seven administrators (64%) stated that zakat agencies should use internal
printed media and mass media to disseminate accountability information. Most
donors also considered that internal printed media (78.66%) and mass media
(68.20) were important media to disseminate accountability information. While
six zakat agencies published an internal magazine, only two zakat agencies used
mass media to disseminate accountability information.
With regards to social media, the majority of zakat agencies (73%) used
social media to communicate with their external stakeholders. However, only five
(45%) administrators mentioned social media as a medium for discharging
accountability and 108 donors (45%) stated that social media was an important or
very important medium for discharging accountability.
The findings presented in this section indicate that an accountability gap

also exists in relation to media that should be used to discharge accountability.
Although administrators and donors agreed in relation to most media that should
be used by zakat agencies, the actual practice is different, especially in relation to
the use of annual reports and mass media to discharge accountability.
8.4 DISCUSSION
The results of this study indicate that zakat agencies use various media to
render accountability. Zakat agencies use annual reports, the internet, magazines,
and mass media to disseminate accountability information. Although there is an
effort from zakat agencies to provide an account by using various media, the
findings also indicate that these media might not be used effectively.
There is also an indication that several stakeholders may not have sufficient
information from zakat agencies. In addition to media that are usually publicly
available, zakat agencies also produced customised reports for regulators and their
parent organisation. This indicates an accountability gap because information
provided by zakat agencies does not meet their information demands. Because this
media is not publicly available, donors are not aware about this information and
the survey of donors did not ask about this report.
The content analysis of magazines published by zakat agencies found that

zakat agencies provided financial and non-financial information in their
magazines. This indicates that zakat agencies use magazines to discharge
accountability. The results of the content analysis indicated that the type of
information published in the annual reports varies. This finding supports Yasmin
et al. (2013), who concluded that the quality of information disclosed by faith-
based organisations in annual reports varies.
With regards to the internet and websites, the majority of zakat agencies
disclosed information about their mission, programmes, and beneficiaries on their
websites. However, only four zakat agencies provided financial information on
their websites. This finding supports Connolly and Dhanani (2013), who found
that charitable organisations did not fully utilise the internet to discharge
accountability.
All zakat agencies that had a Facebook account disclosed brief information
about religious activities and programmes, however, financial information was not
available. This finding indicates that zakat agencies might be inclined to use
Facebook as a medium to advertise their activities but not to disseminate
accountability information (Lovejoy & Saxton, 2012).
The content of magazine, website, Facebook, and internal printed media

also contains religious information. This finding suggests the existence of sacred
dimension in the disclosure of zakat agencies. This finding mirrors that of Hardy
and Ballis (2013), who observed that the main feature of accountability
information in mass media and magazines published by faith-based organisation is
“rich in religious discourse but reveals little in term of commercial accountability”
(p. 546).
A comparison into the views of administrators and donors regarding the

meaning of accountability indicates that accountability consists of sacred and
secular dimensions. The majority of donors related accountability with the
appropriate use of zakat funds, which indicates that holding a zakat agency to
account is important to donors. On the other hand, the majority of administrators
linked accountability with transparency, reliable and accurate financial reports,
good administration, and trustworthiness, which indicates that administrators want
to create an image as an accountable zakat agency. Several administrators and
donors also linked accountability with Syari’ah compliance, which indicates the
existence of sacred accountability.
All administrators and most donors stated that zakat agencies should be
accountable for a variety of reasons. Administrators and donors stated that
demonstrating accountability is important to gain public trust, to satisfy
regulation, to demonstrate trustworthiness, and to comply with religious
requirements. In relation to the importance of giving an account to gain public
trust, this finding suggests that donors and administrators were aware of the
importance of accountability to foster knowledge-based trust (Connolly &
Hyndman, 2013a; Yasmin, et al., 2013). While knowledge-based trust exists, the
results of the content analysis of media used by zakat agencies to disseminate
accountability information indicates that several zakat agencies provide limited
accountability information disclosure. This finding indicates that several zakat
agencies might also depend on ‘identity’ to build trust and attract donations
(Yasmin, et al., 2013). These findings confirm the findings of a previous study
that suggested the existence of identity-based trust in Islamic charitable
organisations (Yasmin, et al., 2013).
The results of the interviews and survey also suggest that administrators and
donors agreed that there are two dimensions of accountability in zakat agencies:
sacred accountability to God and secular accountability to other human beings.
These results mirror the results of previous studies that found the existence of
sacred and secular stakeholders in Christian faith-based organisations (Bigoni, et
al., 2013; Crofts, 2009; Irvine, 2002; Joannides, 2012; Laughlin, 1988, 1990).
While previous studies in a Christian context mostly consider secular and

sacred accountability as an independent concept, the findings of this study
indicate that zakat agencies might consider sacred and secular accountability as an
inter-related concept. The results of factor analysis show that Syari’ah
accountability and financial accountability loads into the same factor. From the
perspective of administrators, the comment of interviewees indicates that zakat
agencies should give account to God and secular/external stakeholders.
Administrators consider that accountability to external stakeholders is important
because Islam teaches Muslims to give a written account to every party involved
in a transaction.
The concept of accountability in zakat agencies is related to the concept of

stewardship. As the steward of God, Muslims believe that all human beings must
be accountable to God and other human beings. Syari’ah compliance is important
for rendering sacred accountability to God. Likewise, compliance with Syari’ah
requirements is also important to gain support from donors. For example, it would
be unlikely for Muslims to give zakat to a zakat agency that does not comply with
Syari’ah requirements. Administrators also believe that accountability to other
human beings is needed to achieve accountability to God and considered as a
subset of accountability to God. For zakat agencies, the motivation for them to be
accountable to other human beings is not only to gain public trust and to attract
funding but also to achieve accountability to God.
With regards to type of information that should be disclosed by zakat

agencies and media that should be used by zakat agencies to disseminate
accountability information, the findings presented in this chapter indicate the
existence of an accountability gap. Administrators and donors agreed that annual
reports and/or financial statements are necessary to discharge the accountability of
zakat agencies; however, only three zakat agencies produced annual reports with
financial information. This finding indicates that there is a gap between
administrators and donors’ perception of the media that is important to
disseminate accountability information and actual practice.
From a type of information perspective, in formation about future plans,

organisation policies and programmes, and financial and performance information
are considered important by donors but the disclosure of these types information
is limited. For example, there are only four zakat agencies that publish
information about future plans and five zakat agencies that disclose financial
information. This finding indicates that information considered important by
donors is not available. This finding indicates an accountability gap because
information provided by zakat agencies does not meet the information needs of
donors. The results of this study correspond with the results of previous studies
that found the existence of an accountability gap (Connolly & Hyndman, 2013b;
Hyndman, 1990, 1991).
8.5 SUMMARY
This chapter compared the perception of administrators and donors on three

core elements of accountability that included to whom, for what, and how to
discharge accountability. The findings of this study indicate that administrators
and donors both agreed and disagreed over several elements of accountability.
Administrators and donors agreed that zakat agencies should be accountable to
God and a wide range of secular stakeholders. They also agreed that zakat
agencies should be accountable from financial and Syari’ah aspects. The findings
also indicate that administrators are aware about various media that can be used to
discharge accountability but zakat agencies might not use these forms of media to
discharge accountability effectively. With regards to type of information and
media to disseminate accountability information, the findings indicate the
presence of an accountability gap between the perceptions of administrators and
donors on type of information and media to disseminate accountability
information and actual organisational practice.
Chapter 9: Summary, Recommendations,
and Conclusion
9.1 INTRODUCTION
This final chapter draws on the skeletal framework (discussed in Chapter 4),
previous empirical studies (discussed in Chapter 3), and empirical findings from
this study (presented in Chapters 6 to 8) to provide the summary and conclusion
of this thesis. This chapter is structured as follows. Section 9.2 revisits the
research motivation and questions. Section 9.3 highlights the research perspective,
while Section 9.4 presents a summary of the research design. A summary of the
findings of this study is presented in Section 9.5. Section 9.6 discusses the
theoretical and practical contributions of this study while Section 9.7 highlights
the limitations. Finally, Section 9.8 presents recommendations for future research.
9.2 RESEARCH MOTIVATION AND QUESTIONS
The motivation for carrying out this research was based on three factors.
First, this study was motivated by government and public demands for zakat
agencies to be more accountable. However, there is a lack of clarity regarding the
meaning of accountability and how accountability should be operationalised in the
context of zakat agencies, especially in terms of “to whom”, “for what”, and
“how” accountability should be discharged. This lack of clarity around the notion
of accountability creates confusion for zakat agencies.
This study was also motivated by the call for more research to understand
the notion of accountability in various types of organisations (Dhanani &
Connolly, 2012; Hardy & Ballis, 2013; Hyndman & McDonnell, 2009; Yasmin, et
al., 2013) because the understanding of accountability in various types of
organisations is limited (Unerman & O'Dwyer, 2006a). This limited
understanding has practical implications, especially for regulators in formulating
regulations to improve organisational accountability.
Chapter 9: Summary, Recommendations, and Conclusion 221

Finally, this study was also motivated by a gap in the academic literature,
particularly in relation to faith-based charitable organisations. It has been
suggested that religious belief may influence the accountability practised by faith-
based charitable organisations, however, little is known about how accountability
is exercised in Islamic faith-based charitable organisations (Yasmin, et al., 2013).
Most published studies have focused on accountability within the context of
secular charitable organisations (Connolly & Hyndman, 2013b; Schmitz, et al.,
2012), Christian faith-based organisations (Crofts, 2009, 2014; Irvine, 2002;
Laughlin, 1988, 1990), Hindu and Buddhist faith-based organisations (Jayasinghe
& Soobaroyen, 2009) and Western Islamic not-for-profit organisations (Yasmin,
et al., 2013). This study was undertaken to fill a gap in this knowledge by
investigating the understanding of accountability in Islamic faith-based charitable
organisations.
Based on these motivations, the aim of this study was to examine the
understanding of accountability as perceived by the administrators and donors of
zakat agencies. To achieve this aim, the following research questions were
proposed:


222 Chapter 9: Summary, Recommendations, and Conclusion

d) According to the donors of zakat agencies, by what means should zakat
agencies discharge their accountability?
9.3 RESEARCH APPROACH
This study adopted a middle range thinking perspective (Laughlin, 1995,

2004, 2007). This study employed the existing literature to develop a skeletal
framework of accountability. This skeletal framework guided this study to gain
understanding about the accountability of zakat agencies.
9.4 RESEARCH DESIGN
As this study aimed to answer research questions about “how accountability

is understood” by the administrators and donors of zakat agencies, a mixed
methods research design was adopted. Interviews were conducted with the
administrators of zakat agencies to gain insight into their perceptions of the
accountability of zakat agencies. A survey was conducted with donors to gain
insight into their perceptions of the accountability of zakat agencies. Factor
analysis was conducted on the survey data to summarise the views of donors on
the core elements of accountability. Spearman tests were performed to investigate
the inter-relationship among the core elements of accountability. Document

analysis was conducted to identify how zakat agencies actually discharge their
accountability.
9.5 RESEARCH FINDINGS
This section summarises the major findings and is presented in accordance

with the research questions in the light of theoretical framework presented in
Chapter 4. The summary of findings is presented in Table 9.1.

Table 9-1 Summary of Findings
Findings of This Study

Research Questions Existing Literature Actual Practice Impact of Finding on Literature
Views of Administrators Views of Donors

RQ.1.a and RQ.2.a Resource providers, such as: Resource providers: the board, Resource providers: the board, Not applicable Supports the existing literature on
donors, volunteers, staff, donors, and the parent donors, and the parent accountability to resource providers,
To whom should government, the parent organisation organisation regulators, beneficiaries, and others
zakat agencies be organisation, the board
accountable?
Regulators, such as the Regulators: such as the Regulators such as Not applicable
government and the Central government and the Central Government and the Central
BAZNAS BAZNAS BAZNAS
Beneficiaries Beneficiaries Beneficiaries Not applicable
Others, such as the media, Others, such as media and Others, such as MUI, the Not applicable
academics academics media, and peak body
Accountability literature on The ultimate accountability of Zakat agencies should be ∗ New finding: in relation to the
religious organisations zakat agencies is to God. accountable to God Islamic faith-based charitable
indicates that religious organisations context and extends
This finding suggests that sacred This finding suggests that
organisations are accountable accountability literature about faith-
accountability to God does not sacred accountability to God
to God based organisations
only exist in religious does not only exist in religious
organisations, but also in Islamic organisations, but also in ∗ Opportunity for future research to
faith-based charitable Islamic faith-based charitable investigate the existence of sacred
organisations. organisations. accountability in non-Islamic faith-
based charitable organisations

RQ.1.a and RQ.2.a Previous literature classifies stakeholders from Not applicable The results of the factor Not applicable New finding: the results of the factor
various aspects: analysis indicate that analysis suggest that donors have a
To whom should zakat
∗ Based on contractual relationship: primary donors classify the different understanding of the
agencies be stakeholders of zakat classification of stakeholders. The
and secondary stakeholders (Carroll, 1989).
accountable? (cont.)
∗ Based on ability to enforce accountability: agencies into two results of the factor analysis suggest
those who have a bond of accountability categories: primary that donors may not classify
and those who only have a link of stakeholders that stakeholders based on their power
accountability (Stewart, 1984). consist of the and ability to enforce accountability,
∗ Based on their involvement in the government, the but rather the visibility of actions.
administration of organisation: internal Central BAZNAS,
donors, MUI, and For example, the existing literature
stakeholders (such as the executive and indicates that the board have an
staff); external stakeholders (such as donors beneficiaries; while
secondary stakeholders important role in the administration
and the government) and interface of an organisation. However, the
stakeholders that link between internal and are the board, media,
and academics. donors of zakat agencies consider
external stakeholders (such as the board) the board to be a secondary
(Van Puyvelde, et al., 2012) stakeholder. It is possible that donors
∗ Based on their role in providing resources may not have information about the
and oversight functions: internal roles and activities of the board,
stakeholders (those who provide resources) therefore they consider the board to
such as donors and the board and external be secondary stakeholders.
stakeholders (those who perform oversight
function) such as the government (Flack,
2007).
Previous literature suggests that not-for-profit Priority to government, Priority to government, Not applicable Supports the existing literature
organisations give priority to accountability to the central BAZNAS and the central BAZNAS and (Cordery & Baskerville, 2011;
regulators and donors rather than to other donors. donors. Najam, 1996; Smith et al., 2012).
stakeholders.
Research Questions Existing Literature Findings of This Study Actual Impact of Finding on Literature

Views of Administrators Views of Donors Practice
RQ.1.b and RQ.2.b Stewart’s (1984) ladder of Zakat agencies should be It is important to demonstrate Not New finding: The application of
accountability accountable in all elements of accountability in area of applicable Stewart’s (1984) ladder of
What is the scope of Stewart’s (1984) ladder of accountability. accountability in zakat agencies needs
accountability of zakat accountability. to be extended to include Syari’ah, amil
agencies? fund and ethics accountability.
Accountability literature on ∗ Syari’ah accountability that ∗ Syari’ah accountability that Not ∗ New finding: in relation to the zakat
religious organisations indicates that indicates sacred indicates sacred accountability. applicable agencies and Islamic charitable
religious organisations have sacred accountability. organisations context and extends the
and secular accountability. ∗ Secular accountability such as existing accountability literature
∗ Secular accountability such financial, process and regarding faith-based organisations.
as financial and performance accountability
performance accountability ∗ An opportunity for future research to
investigate the existence of sacred
accountability in non-Islamic faith-
based charitable organisations.
Laughlin (1998, 1990) indicates The administrators believe Factor analysis suggests that Not New finding: from the data analysis
sacred and secular dichotomy in that secular accountability the scope of accountability of applicable perspective, (i.e. factor analysis). The
religious organisations while several is equally as important as zakat agencies can be finding supports Laughlin (2007) who
authors suggest that financial sacred accountability. condensed into “financial and argues that sacred and secular activities
accountability is as important as Syari’ah accountability” and are different in every organisation.
sacred accountability (Irvine, 2002; “governance and performance Because the core function of zakat
Jacobs & Walker, 2004). accountability”. agencies is to distribute religious
donation, financial accountability can
Laughlin (2007) explained that the be considered as an important or sacred
activities considered sacred or activitiy. Financial accountability is
secular differ in every organisation. important because it is related with
public trust and support. This finding
also conforms with Irvine (2002);
Jacobs & Walker (2004) who find that
financial accountability is important in
organisations that need public support.

RQ.1.c and RQ.2.c ∗ Information disclosed ∗ Administrators ∗ Donors also recognised ∗ Every organisation ∗ Confirm previous literature that
by an organisation recognised that zakat that zakat agencies discloses different types donors and administrators consider
What information
should enable its agencies should disclose should disclose various of information. financial accountability is important
(financial and non-
stakeholders to access various types of types of information to for organisation that depend on
financial) do the
information to discharge ∗ Type of information public support (Dixon et al., 2006)
administrators of zakat the accountability of the discharge their
their accountability, usually disclosed by zakat
organisation in every accountability.
agencies consider
such as financial and agencies: ∗ Confirm previous literature that
element of Stewart’s
necessary to be
(1984) ladder of performance ∗ The results of the factor 1) Human interest
financial information is important but
disclosed by zakat analysis suggest that the inssuficient to capture all aspect of
accountability. information. stories.
agencies to discharge scope of accountability accountability (Lee, 2008)
∗ 2) Statement of mission
their accountability? ∗ Donors are more The administrators of of zakat agencies can be and objectives.
interested in financial zakat agencies did not condensed into:
mention governance 3) History of the
information than other organisation
types of information. information. 1) Financial and
beneficiary 4) Information about
the organisation’s
information
structure
2) Governance and 5) Overview of
programmes programs and
information activities
3) Performance 6) The amount of zakat
information collected and
4) Other information distributed
7) Usage of the amil
fund.
Research Questions Existing Literature Findings of This Study Actual Practice Impact of Finding on Literature

RQ.1.d and RQ.2.d ∗ Accountability ∗ Administrators ∗ Annual report is very ∗ Accountability is ∗ Supports the existing literature
By what means should can be acknowledged the important to discharge discharged through formal that an annual report is an
zakat agencies discharged importance of annual report accountability and informal mechanisms important tool for disseminating
through formal to discharge accountability. accountability information.
discharge their
and informal ∗ Donors do not only depend ∗ While the majority of
accountability?
mechanisms. ∗ Various forms of media can on annual reports to obtain administrators and donors ∗ Supports the existing literature
be used to discharge accountability information. stated that the annual report that donors rarely read annual
∗ Accountability accountability: is an important medium to reports
can be (1) Customised formal ∗ Donors stated that various discharge accountability,
discharged reports; forms of media can be used to only three zakat agencies ∗ New finding: Provide insight
through various (2) Annual reports, discharge accountability published annual reports. that actual practices may be
forms of media, (3) Internet (website); information. different than beliefs.
such as annual (4) Internal printed media; ∗ The majority of donors did
∗ The results of the factor not read the annual reports. ∗ Supports the existing literature
reports, the (5) Mass media
analysis suggest that these (but new finding from data
internet, internal (6) Public announcements
media can be condensed into ∗ Six zakat agencies publish analysis perspective, i.e. the use
printed media, in mosques;
two groups: magazines but only five of factor analysis) that annual
and others (7) Letter
zakat agencies provide reports are not the only source
(8) Verbal information (1) Primary sources of
∗ Annual report is from the staff of zakat information, that consist
financial information in of information because donors
the main their magazines. also depend on other sources of
agencies of annual reports, the
mechanism for information.
Internet, internal printed ∗ All zakat agencies have a
discharging ∗ Customised reports are media, letters, and mass website however there was ∗ New finding: the results of the
accountability. directed toward regulators media. only four zakat agencies factor analysis suggest that
(government and the Central
(2) Secondary sources of that provide financial donors consider reliability and
BAZNAS) and major donors.
information, that consist information in their accessibility of information
of verbal information website. Therefore, it can sources. Arguably, primary
from the members of be concluded that zakat sources of information are more
family, information from agencies did not fully reliable but less accessible than
staff, public utilised the internet to secondary sources of
announcements in discharge accountability. information.
mosques, and social
media.

∗ Eight zakat agencies have a

Facebook account. While
information about
programme and activities can
be found in Facebook,
information related to
accountability, such as
financial information, the
objectives of a programme,
and the number of
beneficiaries are not
available. Therefore, it can be
concluded that Facebook is
not used as a medium to
RQ.3
What inter- Qualitative research Not applicable The results of non- Not applicable New finding: from data analysis
relationships exist indicates that the core parametric correlation test perspective, (i.e. the use of factor
amongst the core elements of accountability on the factor scores of the analysis and non-parametric
elements of are inter-related. core elements of correlation analysis). The results of
accountability in the accountability indicate that non-parametric correlation test
context of zakat several variables are support the results of previous
agencies? correlated. qualitative studies that indicated the
existence of inter-relationship
among the groups of stakeholders,
the scope of accountability, types of
information and sources of
information.

Impact of Finding on
Research Questions Existing Literature Findings of This Study
Literature
RQ 4 Is there an expectations gap in the scope and disclosure of zakat agency accountability between administrators and donors?
a. What media and type of Presented in the summary Zakat agencies use various media to discose accountability information that incluse annual Support the existing literature
information is currently of existing literature in reports, the internet (website), internal printed media, and mass media that accountability information
used and disclosed? RQ.1.d and RQ.2.d. can be discharged through
various medi
• Administrators and donors agreed that zakat agencies should be accountable to a wide Support and the existing
b. Do administrators and Presented in the summary literature that the accountability
range of stakeholders that include resource providers (such as Board and donors),
donors have different of findings of RQ.1.d and of faith-based organisations
regulators (government and the Central BAZNAS), beneficiaries and others
views on to whom, for RQ.1.d. consist of sacred and secular
what and how to • Administrators and donors agreed that the ultimate accountability of zakat agencies is to elements
discharge accountability? God
• For the scope of accountability, administrators and donors agreed that the accountability
of zakat agencies consists of sacred and secular accountability.
• Administrators and donors agreed that zakat agencies should disclose various types of
information to public.
c. Is there an expectations An accountability gap • While administrators and donors share similar views on to whom, for what and how, the Supports the existing literature
gap? exists because information actual practice may indicate an accountability gap. about the possibility of
provided by an accountability gap.
organisation does not • For example, administrators and donors agreed that an annual report is an important
meet information required medium to discharge accountability but there are only three zakat agencies that disclose
by donors (Hyndman, annual reports.
1990; 1991) • Powerful stakeholders such as government, the central BAZNAS and large donors usually
asked for customised information which indicate that publicly available information about
zakat agencies cannot satisfy their information needs.
• Future plans information, organisation policies and programmes information, financial
information, and performance information are considered important by donors but the
disclosure of these information is limited. There are only five zakat agencies that disclose

9.5.1 Research Question 1: How is accountability understood by the
This research question consists of four sub-research questions. Interviews
with the administrators of zakat agencies were conducted to answer the four sub-
research questions. The summary of findings is presented according to sub-
research questions, as follows.
RQ.1.a To whom do the administrators of zakat agencies believe zakat

The most important finding for this research question was that zakat
agencies should be accountable to God. This finding corresponds with the
literature regarding accountability in religious organisations, suggesting that the
ultimate accountability of faith-based organisation is to God (Abdul-Rahman &
Goddard, 1998; Crofts, 2009; Joannides, 2012).
Administrators also stated that zakat agencies should be accountable to a

wide range of secular stakeholders, such as the government, donors, the central
BAZNAS, the board, and beneficiaries. A minority of participants also stated that
zakat agencies should be accountable to MUI, Parliament, academics, and the
media. This finding is consistent with the findings of a previous study conducted
in the US in secular charitable organisation context about leadership views in
relation to whom a charitable organisation should be accountable (Schmitz, et al.,
2012). This finding also supports the literature suggesting that not-for-profit
organisations should be accountable to a wide range of stakeholders (Dhanani &
Connolly, 2012; Ebrahim, 2003a; Gray, et al., 2009; Unerman & O'Dwyer,
2006b).
Previous literature has emphasised the importance of power in an

accountability relationship (Carroll, 1989; Cordery & Baskerville, 2011; Stewart,
1984). The sources of power to enforce accountability identified in the literature
are resources (Pfeffer, 1981), contractual relationship, and regulation (Carroll,
1989; Cordery & Baskerville, 2011; Mitchell, et al., 1997). The majority of
stakeholders mentioned by administrators has the power to enforce accountability.
For example, donors have power because they provide resources to zakat
agencies, while the government and the Central BAZNAS have power because

legislation states that zakat agencies should account to them. With regard to
accountability to God, the power of God to enforce accountability is implicit;
however, this power is perceived as real by administrators. Likewise, MUI is not
able to enforce accountability but several donors stated that zakat agencies should
be accountable to MUI. This finding indicated that power to enfornce
accountability is a complex concept.
RQ.1.b What is the scope of accountability of zakat agencies according to the

The findings for this research question identified that zakat agencies should
be accountable in all areas of Stewart’s (1984) ladder of accountability.
Administrators stated that zakat agencies have accountability for finance, process,
mission, programme, and performance. The majority of respondents also stated
that zakat agencies should demonstrate Syari’ah accountability. This finding
indicates that the scope of accountability of zakat agencies also extends into the
sacred aspect. This finding corresponds with the results of previous studies that
identified the existence of sacred and secular accountability in faith-based
organisations, such as churches (Irvine, 2002; Jacobs, 2005; Laughlin, 1988,
1990; Quattrone, 2004), Buddhist and Hindu temples (Jayasinghe & Soobaroyen,
2009), and Islamic religious councils (Abdul-Rahman & Goddard, 1998).
This finding also indicates that financial accountability and process

accountability are as important as Syari’ah accountability. This provides a new
insight into the understanding of sacred and secular activities because it supports
Laughlin (2007), who claimed that the meaning of sacred and secular activities
differs in every organisation. In the context of zakat agencies, Syari’ah
accountability is important and sacred because zakat agencies are faith-based
organisations. Syari’ah accountability is important because Muslims believe that
every human being has to account to God in the afterlife (Nahar & Yaacob, 2011).
Likewise, financial accountability is important for zakat agencies because it can
induce trust. Trust is required to secure the continuity of support from resource
providers (Connolly, et al., 2012; Furneaux & Wymer, 2015)

RQ.1.c What information (financial and non-financial) do the administrators
The scope of accountability determines the types of information that should
be disclosed by an organisation to discharge its accountability. All interviewees
stated that zakat agencies should disclose various financial information, such as
information about total revenue and its sources, the usage of the zakat fund for
beneficiaries, auditor’s reports and other types of assurance reports. The majority
of administrators also stated that zakat agencies should disclose non-financial
information, such as the overview of zakat agencies programmes and activities,
information about the beneficiaries of zakat, information about future plans, and
others. This finding supports Hyndman (1991) and Connolly and Hyndman
(2013b) who found that administrators are usually aware of the various types of
financial and non-financial information that should be disseminated by charitable
organisations.
In terms of Syari’ah accountability, participants did not explicitly describe

information that should be disclosed to discharge Syari’ah accountability.
However, several participants alluded to the existence of a Syari’ah advisor in a
zakat agency. The existence of a Syari’ah advisor gives a signal that a zakat
agency complies with Syari’ah.
RQ.1.d According to the administrators of zakat agencies, by what means

Participants stated that zakat agencies use various media to disseminate
accountability information. The majority of administrators acknowledged that an
annual report is an important medium for discharging accountability. This finding
conforms to the existing literature that indicates an annual report as the main tool
for discharging accountability (Connolly & Hyndman, 2013b; Crofts, 2014;
Ebrahim, 2003a; Hines & Jones, 1992; Palmer, 2013). The majority of
administrators also stated that zakat agencies use customised reports to discharge
accountability to regulators and the parent organisation, as information required
by regulators and the parent organisation is not available in annual reports.
Administrators also mentioned that zakat agencies use the internet, magazines,
Facebook, and mass media to disseminate accountability information. This

finding corresponds with the findings of previous studies that identified the use of
the internet (Dumont, 2013; Saxton & Guo, 2011), magazines (Hardy & Ballis,
2005), and mass media (Mack & Ryan, 2007) to discharge accountability.
9.5.2 Research Question 2: How is accountability understood by the donors

of zakat agencies?
The objective of this research question was to identify the perceptions of
donors regarding the notions of accountability. To achieve the objective of this
research question, this research question was divided into four sub research
questions. A survey was used to answer these sub research questions and the
summary of findings is presented according to the sub research questions as
follow.
RQ.2.a To whom do the donors of zakat agencies believe zakat agencies

The findings indicate that zakat agencies should be accountable to a wide
range of stakeholders. The majority of donors stated that zakat agencies should be
accountable to God, donors, the central BAZNAS, the public, the government,
and beneficiaries. On the other hand, the majority of donors stated that zakat
agencies should not be accountable to beneficiaries, the board, MUI, peer
organisations, volunteers, the media, and Parliament. This finding provides new
insight, as previous empirical studies that investigated the understanding of
accountability from the perspective of donors did not identify the existence of a
sacred accountability to God. For example, Connolly et al. (2012) and Connolly
and Hyndman (2013a) only found that charitable organisations should be
accountable to a wide range of secular stakeholders, such as donors and
regulators.
The results of the factor analysis suggest that there are two categories of
stakeholders. The first category consists of God, the government, donors, the
central BAZNAS, beneficiaries, MUI, and the public. The second category
consists of volunteers, the zakat forum, the media, the board, and Parliament. This
classification of stakeholders conflicts with the classification of stakeholders
based on power (Carroll, 1989) and the role of stakeholders in an organisation

(Flack, 2007; Van Puyvelde, et al., 2012), as regulators, resource providers, and
beneficiaries loaded into the same factor.
The results of the factor analysis also indicate that donors may not only also
consider power and a contractual relationship in the classification of stakeholders,
but also other factors such as organisational mission and objectives and the
visibility of the role of stakeholders on zakat agencies. Because zakat agencies are
created to help beneficiaries, donors may consider that accountability to regulators
and donors cannot be achieved if zakat agencies are not accountable to
beneficiaries. Therefore, accountability to donors, regulators, and beneficiaries is
“mutually supportive” (Connolly & Hyndman, 2013a, p. 268).
The results of MANOVA tests on the factor scores indicated that there was
no significant difference between the perception of donors who gave to local
Imams, government-sponsored zakat agencies, and private zakat agencies. The
results of MANOVA tests also indicated that the demographic attributes of
respondents did not relate to their views on to whom zakat agencies should be
accountable.
RQ.2.b. What is the scope of accountability of zakat agencies according to the

Donors were asked to rate the importance of demonstrating accountability in
several aspects that represent the scope of accountability identified in the
literature. The results of the factor analysis suggest that the scope of
accountability of zakat agencies can be simplified into “financial and Syari’ah
accountability” and “governance and performance accountability”. The financial
and sacred accountability factor consists of accountability for finance, ethics,
Syari’ah, and the amil fund, while “governance and performance accountability”
consists of legal accountability, mission accountability, governance, and
performance accountability (efficiency, effectiveness, and outcomes). Financial
and sacred accountability can be considered the primary accountability, while
governance and performance accountability can be considered the secondary
accountability.

The results of factor analysis suggest that financial accountability, ethical
accountability, and amil fund accountability are considered as important as
Syari’ah accountability. Financial accountability and amil fund accountability are
considered to be important activities because zakat agencies depend solely on
public donations, that is, zakat. As indicated in previous studies, financial
accountability is important to gain trust and support from external resource
providers (Furneaux & Wymer, 2015; Irvine, 2002). This finding is also
consistent with Cordery (2006) and Crofts (2009) who claimed that financial
accountability in faith-based organisations is a part of stewardship activities;
therefore, it is considered a sacred activity. This classification of the scope of
accountability also supports the new concept of sacred and secular accountability
proposed by Laughlin (2007), who considered sacred and secular to be relative
concepts. The donors of zakat agencies might consider financial accountability,
amil fund accountability, and ethics accountability to be as important as Syari’ah
accountability, thus explaining why these areas of accountability loaded into the
same factors.
RQ.2.c. What information (financial and non-financial) do the donors of

zakat agencies expect and consider necessary to be disclosed by zakat
Data analysis showed that all types of information were considered
important and very important by most donors. It is possible that the donors of
zakat agencies consider that information disclosed by an organisation should
enable its stakeholders to access the accountability of zakat agency in all elements
of the scope of accountability. This result supports the findings of previous studies
that indicated the importance of disclosing various types of information to
discharge organisational accountability (Connolly & Hyndman, 2013a; Yasmin, et
al., 2013). Factor analysis on the types of information produced four distinct
factors. This information was classified as “financial and beneficiary
information”, “governance and programme information”, “performance
information”, and “other information”.

RQ.2.d. According to the donors of zakat agencies, by what means should
The objective of this research question was to investigate the views of
donors regarding the various forms of media for disseminating accountability
information. Consistent with existing literature, the majority of donors (86%)
stated that an annual report is an important or very important medium for
discharging accountability (Connolly, et al., 2012; Ebrahim, 2003a; Palmer, 2013;
Torres & Pina, 2003). Although the majority of donors stated that an annual report
is an important or very important medium for disseminating accountability
information, the majority of donors (63%) did not have access to annual reports.
This study also sought to identify whether donors read annual reports.
Consistent with Connolly and Hyndman (2013a), the results indicate that the
majority of donors (76.9%) do not read annual reports. Further analysis indicates
that the proportion of donors who read annual reports is higher within the group of
donors who give zakat to formal zakat agencies (government-sponsored zakat
agencies and private zakat agencies) compared to the donors who give zakat to
local Imams. It is possible that the donors to local Imams may not be interested in
reading annual reports because they do not give zakat to formal zakat agencies.
Therefore, they are not interested in assessing the accountability of formal zakat
agencies.
The results of the factor analysis suggest that there are two different sources
of information. The first factor consists of information from family members,
information from staff, public announcements in mosques, and social media. The
first factor consisted of information variables pertaining to informal and verbal,
and was thus labelled “informal media”. The second factor consisted of the
internet, annual reports, internal publications, letters, and mass media. The second
factor related to formal and written information, and was thus labelled “formal
media”. Formal media is more reliable but less accessible than informal media.
This finding suggests that donors do not depend on single sources of information,
for example, annual reports, but also other sources of information, such as the
internet and mass media (Mack & Ryan, 2007).

9.5.3 Research Question 3: What inter-relationships exist amongst the core
elements of accountability in the context of zakat agencies?
The findings of this research question indicate that inter-relationships exist
amongst the core elements of accountability. For example, primary stakeholders
had a significant correlation with financial and sacred accountability, financial
information, and formal sources of information, while no significant correlation
existed between secondary stakeholders and other variables. Financial and sacred
accountability correlated with primary stakeholders, financial information,
governance information, performance information, informal sources, and formal
sources of information, while performance and governance accountability related
to financial information, performance information, other information, and formal
sources of information. Formal sources of information had significant correlation
with other variables, except secondary stakeholders and other information. Thus,
this finding provides empirical quantitative evidence regarding the inter-
relationship among the core elements of accountability indentified in previous
qualitative studies (Connolly, et al., 2012; Kilby, 2006; O'Dwyer & Boomsma,
2015).
9.5.4 Research Question 4: Is there an expectations gap in the scope and

disclosure of zakat agency accountability between administrators and
donors?
The findings of this research question indicate that there are differences
between the views of administrators and donors about the types of information
that should be disclosed and the types of information that are actually disclosed by
zakat agencies. The summary of findings is presented according to sub-research
questions, as follows.
RQ.4.a. What media and type of information is currently used and disclosed?
With regards to the types of media for discharging accountability, zakat
agencies use more than one medium to discharge accountability. Zakat agencies
use magazine, website, annual report, and mass media to discharge accountability.
However, there are only three zakat agencies that publish annual reports. It is
possible that the role of the annual report as a media to discharge accountability is
replaced by other media.

RQ.4.b Do administrators and donors have different views on to whom, for
what and how to discharge accountability?
Administrators and donors agreed that zakat agencies should be
accountable to a wide range of stakeholders that include sacred and secular
stakeholders. Administrators and donors agreed that zakat agencies should be
accountable to God, resource providers, regulators, beneficiaries, and others. They
also agreed that the ultimate accountability of zakat agencies is to God. For the
scope of accountability, donors and administrators agreed that the scope of
accountability of zakat agencies consists of sacred and secular elements and zakat
agencies need to disclose various types of information to satisfy every element of
the scope of accountability. Regarding media to disseminate information,
administrators stated that several media, such as annual reports, the internet, and
internal printed magazines are directed towards donors and other stakeholders
while customised reports are directed towards regulators. From the perspective of
donors, they depend on various formal (written) and informal (verbal media) to
obtain information about zakat agencies. Administrators and donors also agreed
that an annual report is an important medium to discharge accountability.
RQ.4.c Is there an expectations gap?

Overall, the findings presented in this section indicate the existence of an
accountability gap because several stakeholders may not have sufficient
information from zakat agencies. While administrators and donors share similar
views on to whom, for what, and how, the actual practice may be different from
the views of administrators. All administrators and most donors agreed that zakat
agencies should disclose organisation policies, programmes, and financial and
performance information but the disclosure of these types information is limited.
For example, there are only five zakat agencies that disclose financial information.
The same gaps were also observed for other types of information. As a result,
powerful stakeholders such as government, the Central BAZNAS, and large
donors demand customised report from zakat agencies. This finding indicates that
administrators are aware of the various types of information that should be
disclosed, however, their actual practice is different – an insight previously
suggested by Hyndman (1990, 1991).

A gap was also observed between the views of administrators and donors
regarding media that should be used to disseminate accountability information and
the actual media that was used to disseminate accountability information. For
example, while most administrators and donors stated that zakat agencies should
use annual reports to discharge accountability, only three zakat agencies published
annual reports. Further, most donors and administrators agreed that zakat agencies
should use the internet to discharge accountability and all zakat agencies had their
own website but accountability information disclosed on the websites of zakat
agencies was limited.
There are several possible reasons that might cause the gap. From a demand
perspective, it is possible that donors may not demand accountability information
as stated in the existing literature (Connolly & Hyndman, 2013a; Hyndman &
McMahon, 2010; Yasmin, et al., 2013). From the supply side, it is possible that
zakat agencies may not have sufficient expertise and resources to prepare
accountability information.
9.6 RESEARCH CONTRIBUTIONS
This study has both theoretical and practical contributions as follows.
9.6.1 Empirical Enrichment of the Theoretical Framework

This study makes the following theoretical contributions.
1. The novelty of this study compared with previous empirical investigations

lies with the context of study. This study provides empirical insight into the
understanding of accountability within a specific context, namely in the
context of Islamic faith-based organisations in developing countries. While
previous research has provided rich descriptions and exploration of
accountability within Christian faith-based organisations and secular
charitable organisations in Western countries, little attention has been
dedicated to the accountability of Islamic organisations, in particular
organisations that administer zakat. The findings of this study fill this gap.

2. Based on the perceptions of administrators and donors, this study has
identified that the stakeholders of zakat agencies consist of sacred and secular
stakeholders. This study found that zakat agencies should be accountable to
God. In addition to God, administrators and donors stated that zakat agencies
should be accountable to resource providers (such as donors, volunteers, and
the board), regulators (such as the government and the Central BAZNAS),
beneficiaries, and other stakeholders (such as the media and academics). The
results of factor analysis suggest that two different classifications of
stakeholders exist. The first classification is the primary stakeholders that
consists of God, donor, government, the central BAZNAS, beneficiaries, and
MUI while the second classification is the secondary stakeholders that
consists of media, peak body (the Forum Zakat), and Parliament.
The classification of sacred and secular stakeholders as primary stakeholders

provides a new insight into the understanding of power in an accountability
relationship. Arguably, most primary stakeholders are powerful stakeholders
with various sources of power. For example, the power of the government
and the Central BAZNAS to enforce accountability originates from
regulation, while MUI has power because MUI has the religious authority to
issue fatwa. Donors have power because they possess financial resources
(Carroll, 1989; Pfeffer, 1981).
The belief of donors that zakat agencies should be accountable to God

indicates that the sources of power are not limited to physical powers, such as
regulation and resources, but also spiritual power. Administrators consider
accountability to God to be important because they believe that all human
beings must account to God for every action and inaction. While the power of
God to enforce accountability is not physically observed, donors perceived
the spiritual power of God to be real. Therefore, donors stated that zakat
agencies should be accountable to God.

In relation to accountability to beneficiaries, this finding suggests that donors
may not only consider power to classify the stakeholders, but also the moral
dimension and the charity’s values. As observed by Connolly and Hyndman
(2013a), the participants of the survey may have considered accountability to
donors and beneficiaries to be mutually supportive. Therefore, beneficiaries
are also considered primary stakeholders.
3. Based on the framework of Stewart’s (1984) ladder of accountability, this

study identified the scope of accountability of zakat agencies. The findings of
this study confirm that Stewart’s (1984) ladder of accountability is applicable
in the context of zakat agencies. However, the use of Stewart’s (1984) ladder
of accountability in zakat agencies should be modified, because the
accountability of zakat agencies also includes Syari’ah accountability.
4. Laughlin (1988, 1990) proposed that a sacred and secular dichotomy exists in
religious organisations. Laughlin (2007) further explained that the activities
considered sacred or secular differ in every organisation. The findings of this
study have provided support to Laughlin (2007) about the relativity of sacred
and secular activities. In the context of zakat agencies, donors considered
financial accountability to be as important as Syari’ah accountability, thus
explaining why both areas of accountability loaded into the same factor. This
finding also supports previous studies that consider financial accountability is
as important as sacred accountabuility in faith-based organisations that need
public support (Bigoni, et al., 2013; Irvine, 2002).
5. With regards to the types of information that should be disclosed by zakat

agencies, both the administrators and donors agreed that zakat agencies
should disclose financial and non-financial information. Although donors
expect non-financial information, the finding indicates that both
administrators and donors put a strong emphasis on financial information.

6. Both administrators and donors agreed that zakat agencies should use various
media to disseminate accountability information. While existing literature has
emphasised the importance of formal reporting through annual reports, the
finding of this study provides evidence that accountability can be discharged
through various forms of formal and informal media.
7. While previous qualitative studies have identified that the core elements of
accountability are inter-related, this study provides preliminary quantitative
evidence that “to whom”, “for what”, and “how” are statistically correlated.
8. This study also identified the existence of an accountability gap. While there
is evidence that the administrators understand the types of information that
should be disclosed by zakat agencies to discharge accountability and the
media that should be used to discharge accountability, their actual practices
differ.
9.6.2 Practical Contribution and Recommendations for Practice

This study provides evidence about the information needs of donors, which
may be useful for regulators to determine the information that should be disclosed
by zakat agencies. This study has recommendations for practice as follows.
1. Zakat agencies collect public donations, particularly from the Muslim

community. The existing regulations only require zakat agencies to submit
audited financial statements to the Ministry of Religious Affairs and the
Central BAZNAS, but do not specify the publication of this audited financial
statement. While this study found that several zakat agencies voluntarily
published financial and non-financial information, the contents of the
information varied, making comparison difficult. Therefore, it would be
beneficial for external stakeholders if regulators issued a regulation or
guidance on reporting. This regulation or guidance should include
information that should be disclosed and media that should be used by zakat
agencies to disseminate this information. This regulation or guidance on
reporting would standardise the reports of zakat agencies, enabling external
stakeholders to make an informed judgement to determine future actions.

2. Based on the findings presented in Chapter 7, information that should be
disclosed by zakat agencies should include the following.
a) Donors stated that Syari’ah accountability is important; however, the

results of content analysis on various media that are used by zakat
agencies indicate that the disclosure of Syari’ah compliance is limited.
Therefore, it is suggested that zakat agencies disclose information about
their compliance to Syari’ah requirements.
b) Financial and beneficiary information that consists of information about:

• audited financial statements;
• auditor reports and other type of assurance reports;
• zakat and non-zakat fund collected and distributed;
• the usage of the amil fund;
• the overview of beneficiaries;
• organisational policies related to the allocation of resources and
selecting beneficiaries.
c) Governance and programme information that consists of information
about:
• the profile of board members and senior staff;
• information about the organisation structure;
• statement of mission and objectives;
• the overview of zakat agencies programme and activities.
d) Performance information that consists of information about:
• financial performance;
• non-financial performance.
e) Other information that consist of information about:
• the remuneration of boards, ceo and senior staff;
• board and committee activities;
• acknowledgement of donor and volunteer contributions;
• information about how to access the services of zakat agencies.

3. It is important for accountability information to be accessible to a wide range
of stakeholders (Coy, et al., 2001). This study finds that all zakat agencies
have a website and donors consider the internet a very important source of
information. The internet has several advantages for disseminating
accountability information in comparison to other media. It is accessible
anytime and anywhere at a relatively low cost. However, this study indicates
that the internet has not been fully utilised to discharge accountability.
Therefore, it is recommended that zakat agencies regularly publish their
financial and non-financial information on their website.
Public announcements in mosques offer a low-cost method for disseminating

accountability information, but the amount of information that can be
disseminated via this medium is limited and it can also only be accessed by
the local community. However, considering that most donors have access to
public announcements in mosques, it is suggested that zakat agencies also use
this medium to disseminate accountability information. Because the capacity
of public announcements in mosques is limited, it is suggested that zakat
agencies only disseminate a summary of critical information via this media.
Zakat agencies can advise their stakeholders to visit their website if their
stakeholders require more detailed information.
4. This study finds that “to whom”, “for what’, and “how” are inter-related. This
finding has practical implications for zakat agencies because this finding
indicates that every area of accountability requires different types of
information and media to discharge accountability.
9.7 RESEARCH LIMITATIONS
In addition to the limitations of the selected research methods discussed in

Chapter 5, several additional limitations have been identified in this study.

1. The analysis of the understanding of accountability from the perspective of
administrators was based on the data from 11 interviews, while the analysis of
the understanding of accountability from the perspective of donors was based
on 239 usable survey responses. The respondents of survey were selected
using convenience sampling and most of them were government employees
or well-educated individuals. Therefore, caution should be exercised in
replicating the findings of this study in other contexts.
2. This study only investigated the understanding of accountability from the

views of administrators and donors. It is possible that other groups of
stakeholders, such as volunteers or beneficiaries, may have different views
with regards to the accountability of zakat agencies.
3. The findings and discussion about the perception of donors on the notion of
accountability are limited to propositions and items that were put forward in
the questionnaires. Although several precautionary actions, such as pilot tests
and a review of the survey instrument by supervisors, were undertaken to
minimise the possibility of items or themes being omitted, it is still possible
that a few accountability related items or themes may have inadvertently not
been included in this study. To address this limitation, respondents were
allowed to add any additional information that was considered appropriate to
answer a particular survey question.
4. The sample size for document analysis only consisted of three annual reports
and six internal printed magazines. These were the maximum number of
annual reports that could be collected during the field work of this study. The
researcher could collect more than six editions of internal printed magazines
but due to time constraints, content analysis was only undertaken on six
magazines. This limited the conclusions that could be drawn from this sample
and limits the generalisability of the findings.
5. While the results of the survey indicated that the majority of participants give
zakat to local Imams, this study does not investigate the views of local Imams
on accountability of zakat agencies. It is possible that local Imams have
different understandings of accountability.

6. The study, through both literature and empirical findings, identified both
sacred and secular dimensions to the accountability of zakat agencies and,
notably, an espoused accountability to God. However, the study did not
explore the implications of this accountability in term of scope and the means
of discharge.
7. While the location of zakat agencies (and administrators) in noted, data on the
location of donors was not collected. It is possible that the perceptions of
donors from big cities may be different to the perceptions of donors from
small cities whereby the proximity of donors to zakat agencies may influence
the strength of the ‘trust bonding’ and thus the gap of accountability.
9.8 FUTURE RESEARCH
Based on the research findings and limitations, several future research

opportunities have been identified in this study.
1. This study only investigated the understanding of core elements of

accountability (to whom, for what, and how) by conducting a survey with
donors and interviewing the administrators of zakat agencies. There is an
opportunity to investigate the views of other stakeholders, such as
beneficiaries and the board regarding the accountability of zakat agencies.
Investigating the accountability of zakat agencies from the perspective of a
wide range stakeholders may produce conflicting results because different
stakeholders may have different expectations and understanding. In this case,
a Delphi method could be used to reconcile the different views regarding the
core elements of accountability (Basnan, 2010).

2. The study only conducted non-parametric correlation analysis between “to
whom”, “for what”, and “how” because the data was not normally distributed.
The sample size for the factor analysis was 230. This size of the sample is
only considered ‘fair’ and a larger sample size would increase the reliability
of factors (Comrey & Lee cited in Tabachnick & Fidell, 2007, p. 613). Future
research could investigate the relationship between these core elements of
accountability based on a larger sample allowing the factors to produce more
reliable results. A larger sample would also allow the application of more
sophisticated statistical methods, such as linear regression or path analysis, to
identify the relationship among variables.
3. Because the findings of this study suggest that accountability influences trust
in faith-based charitable organisations, other potentially fruitful topics for
future research in the context of faith-based charitable organisations would
be:
(1) Do Muslims switch or reallocate zakat based on accountability?
(2) Does an increase in the amount of money donated to zakat agencies
influence accountability expectation?
(3) How does trust in organisation/agencies/government/people/religion
influence accountability?
4. The majority of donors stated that they give most of their zakat to local
Imams. Local Imams are different from formal zakat agencies because they
operate in a small area. Because, they operate in a small area, transparency
can be achieved without producing a formal report. Therefore, future research
can explore about the understanding of accountability from the perspective of
local Imams.
5. A key finding of this study is that, and in the views of donors and
administrators, zakat agencies are accountable to God. However, and as noted
in the limitations in Section 9.7, the implications of this accountability were
not further investigated. Future research, through engagement with key
stakeholders of zakat agencies, could investigate such questions as “if zakat
agencies are accountable to God, what is the means through which this
accountability is to be discharged?”.

6. Chapter seven notes that there is, generally, no statistical difference in the
perceptions of the different groups of donors towards the accountability of
zakat agencies. Further research, through engagement with donors/donor
groups (e.g., through interviews), could address the question of “what does
this imply?” – that is, does this observation mean that all donors view and
understand accountability through a common ‘lens’ grounded in, for example,
religion, or are there other factors that motivate and harness this shared
understanding?

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Appendices
Appendix A Human Ethics Approval Certificate and Participation

Information Sheet
278 Appendices
Appendices 279
PARTICIPANT INFORMATION FOR
QUT RESEARCH PROJECT
– Interview: ZAKAT AGENCIES –
The Accounting for zakat: The Accountability of Indonesian not-
for-profit Organisations
QUT Ethics Approval Number: 1400000703
RESEARCH TEAM
Principal Researcher: Iwan Purwanto Sudjali – PhD Candidate - School of Accountancy
Principal Supervisor: Associate Professor Stuart Tooley - School of Accountancy
Associate Supervisor: Dr Craig Furneuex - School of Accountancy
QUT Business School - Queensland University of Technology (QUT)
DESCRIPTION
This project is being undertaken as part of a PhD thesis for Iwan Purwanto Sudjali.
The aim of this research is to examine the potential gap between: (1) the expectations of
stakeholders in term of disclosure of financial and non-financial information about zakat collection
and distribution; and (2) the disclosures of financial and non-financial information provided by
Indonesian zakat agencies. This research will: (1) explore the concept of zakat agency
accountability from the perspective of key stakeholders; (2) explore the concept of zakat agency
accountability from the perspective of zakat agencies; (3) identify accountability information
provided by zakat agencies; (3) ascertain whether the expectation of stakeholders on accountability
are being met; and if not, then (4) identify additional disclosures which are required to bridge this
gap.
You are invited to participate in this research because you involved in a government-sponsored
zakat agency or a not-for-profit organization that collect and distribute zakat and have knowledge
of how accountability is understand and discharged by zakat agencies. Because of this special
knowledge, you are able to help the research team to understand about the concept of zakat agency
accountability within government-sponsored zakat agencies and Islamic not-for-profit organization
context.
PARTICIPATION
Your participation will involve an interview at your office or a place that convenient to you and
will take approximately one-hour time. Questions will include: (1) who do you identify as the
stakeholders of your organization; (2) do you think that zakat agencies should be accountable for
the collection and distribution of zakat funds; (3) what type of information do your organisation
consider necessary for the stakeholders; and (4) what mechanism does your organization use to
Your participation in this project is entirely voluntary. You will have opportunity to view the
interview transcript. If you do agree to participate you can withdraw from the project without
comment or penalty. If you withdraw within 3 months after interview, on request any identifiable
information already obtained from you will be destroyed. You do not have to answer question(s)
that you are uncomfortable answering. Your decision to participate or not participate will in no
way impact upon your current or future relationship with QUT.
EXPECTED BENEFITS
It is expected that this project will not directly benefit you. However, it may benefit policy makers
and zakat agencies in developing an accountability framework, which will contribute towards
building and enhancing trust in zakat agencies. Specifically, your response is very important to my
research objective of improving our understanding on the concept of accountability in zakat
agencies and Islamic not-for-profit organisation contexts. If you would like a summary of the
280 Appendices
results, please email the researcher at iwanpurwanto.sudjali@student.qut.edu.au. The summary of
results is expected available at the end of June 2015.
RISKS
There are minimal risks associated with your participation in this research. These include risk that
your participation will be re-identifiable by people who read my thesis or other publications.
However, the likelihood of this risk occurring is low because your identity or the identity of your
organisations will be kept anonymous in the thesis or any other publications based on this data.
The participating organizations will be only referred to as cases with pseudonym. In addition, this
study will not disclose any confidential information or any unique characteristic of your
organization that make your participation easily re-identifiable.
PRIVACY AND CONFIDENTIALITY
All comments and responses will be treated confidentially unless required by law. The names of
individual persons are not required in any of the responses. Findings and reports from this project
will also not identify individual or organisational participants.
If you agree to be audio-recorded during interview:
• You will have the opportunity to verify your comments and responses prior to final inclusion;
• The audio recording will be destroyed at the end of this research;
• The audio recording will not be used for any other purposes;
• It is only the research team who will have access to the audio recording.
Any notes and data provided during the meeting will be kept confidential. Any data collected as part
of this project will be stored securely as per QUT’s Management of research data policy. All hard/paper
copies of the information will be stored in a facility provided by QUT and always locked-up. Electronic
data will be stored on a QUT mainframe drive and will be protected by password. It is only the research
team who will have access to the data.
Please note that non-identifiable data collected in this project may be used as comparative data in
future projects or stored on an open access database for secondary analysis.
CONSENT TO PARTICIPATE
We would like to ask you to sign a written consent form (enclosed) to confirm your agreement to
participate.
QUESTIONS / FURTHER INFORMATION ABOUT THE PROJECT
If have any questions or require further information please contact one of the research team
members below.
Name: Iwan Purwanto Sudjali Name: Associate Professor Stuart Tooley
(PhD Candidate) (Principal Supervisor)
Phone: +61 7 3138 9872 Phone: +61 7 3138 6845
Email: iwanpurwanto.sudjali@student.qut.edu.au Email: stuart.tooley@qut.edu.au
Name: Dr Craig Furneaux (Associate

Supervisor)
Phone: +61 7 3138 1186
Email: c.furneaux@qut.edu.au
CONCERNS / COMPLAINTS REGARDING THE CONDUCT OF THE PROJECT

QUT is committed to research integrity and the ethical conduct of research projects. However, if
you do have any concerns or complaints about the ethical conduct of the project you may contact
the QUT Research Ethics Unit on [+61 7] 3138 5123 or email ethicscontact@qut.edu.au. The QUT
Research Ethics Unit is not connected with the research project and can facilitate a resolution to
your concern in an impartial manner.
Appendices 281
Thank you for helping with this research project. Please keep this sheet for
your information.
282 Appendices
CONSENT FORM FOR QUT RESEARCH
PROJECT
The Accounting for zakat: The Accountability of Indonesian not-for-
profit Organisations
QUT Ethics Approval Number: 1400000703
RESEARCH TEAM CONTACTS

Name: Iwan Purwanto Sudjali Name: Associate Professor Stuart
(PhD Candidate) Tooley
(Principal Supervisor)
Phone: +61 7 3138 9872 Phone: +61 7 3138 6845
Email: iwanpurwanto.sudjali@student.qut.edu.au Email: stuart.tooley@qut.edu.au
Name: Dr Craig Furneaux

(Associate Supervisor)
Phone: +61 7 3138 1186
Email: c.furneaux@qut.edu.au
STATEMENT OF CONSENT
By signing below, you are indicating that you:
• Have read and understood the information document regarding this project.
• Have had any questions answered to your satisfaction.
• Understand that if you have any additional questions you can contact the research
team.
• Understand that you are free to withdraw at any time, without comment or penalty.
• Understand that you can contact the Research Ethics Unit on [+61 7] 3138 5123 or
email ethicscontact@qut.edu.au if you have concerns about the ethical conduct of
the project.
• Understand that the project will include an audio recording.
• Understand that data collected in this project may be used as comparative data in
future projects.
• Agree to participate in the project.
Name
Signature
Date
Please return this sheet to the researcher.
Appendices 283
284 Appendices
Appendix B Interview Questions Matrix
Interview Questions Research Questions
Introduction: About the Study:

• Brief introduction about myself and my study.
• Interviewee is asked to sign the consent form.
1. Can you tell me about the recent development in the Opening Questions
administration of zakat agencies?
2. What is your opinion on the growth of zakat agencies?
3. What do you understand by the term of
“accountability” in the context of zakat agency?
4. Do you consider that zakat agency should demonstrate
accountability to their stakeholders? Why? How?
5. To whom should zakat agencies be accountable to? RQ1.a
Why? To whom do the
administrators of zakat
Internal Stakeholders External Stakeholders agencies believe zakat
agencies should be
 Boards  God
accountable?
 Staff and  Government
employees (National,
 Volunteers Provincial, and
 Donors Local)
 Beneficiaries  Minister of
 Others, please Religious Affair
specify ………  MUI (Indonesian
Ulema Council)
 Peak Body (Forum
Zakat)
 Media
 Professional Bodies
 Community/Public
 Others, please
specify …………
6. From these stakeholders, which stakeholder do you
consider as the most important? Why?
7. Who are the main target audiences for financial and
non-financial information? Why?
Appendices 285
8. What should be accounted for by zakat agencies? RQ1.b
9. Should zakat agencies account for amil fund? What is the scope of
accountability of zakat
agencies according to
the administrators of
zakat agencies?
10. How does your organisation demonstrate RQ1.c
accountability to your stakeholders? What information
11. Do you see an importance for zakat agencies to (financial and non-
disclose financial and non-financial information to financial) do the
their stakeholders? Why? Why Not? administrators of zakat
agencies consider
12. What kind of information (financial and non-financial)
necessary to be
do you think important to be disclosed to your
stakeholders? disclosed by zakat
agencies to discharge
13. Being a faith-based organisation, do you think that their accountability?
your organisation is accountable in ways that different
from secular organisations? Why?
14. If you have corporate donors, do corporate donors
have different accountability requirement from
individual donors? Why?
15. What is your organisation’s preferred form of RQ1.d
disclosures (annual reports, online magazine, leaflets, According to the
advertising, social media, etc.) why? administrators of zakat
16. Accounting and audit are western system of agencies, by what
accountability, do you think that these mechanisms of means should zakat
accountability are compatible with Islamic values? agencies discharge
Why? their accountability?
17. Do you think that a certification to financial
statements from an independent body (such as audit
firm or oversight committee) is important for zakat
agency accountability? Why?
18. Do you publish (or not publish) annual reports (or/and
others reports) in the last financial year? Why?
If you publish annual reports:
19. What role do you see annual reports serving in term of
zakat agency accountability?
20. To whom do you usually give a copy of your annual
reports?
21. How do you make your annual report available to
them (by mail, email, publish in website, etc.)?
286 Appendices
If you do not publish annual reports:

22. If you do not publish annual reports, how do you
communicate about the usage of zakat funds and your
activities to your stakeholders?
23. How do you make this information available to your
stakeholders?
Appendices 287
Appendix C Survey Instrument
STATEMENT OF CONSENT
Pernyataan Kesediaan untuk Berpartisipasi dalam Penelitian
By completing this survey, you are indicating that:
• Agree to participate in this study as a survey respondent.
Dengan mengisi survey ini berarti Anda menyatakan:

• Setuju untuk berpartisipasi dalam penelitian ini sebagai response survey.
• Menyadari bahwa keikutsertaan Anda dalam penelitian ini bersifat sukarela.
• Telah membaca dan memahami lembar informasi peserta yang menjelaskan penelitian ini.
Part A: The following set of questions focus on who you give your zakat to and why
Bagian A: Pertanyaan-pertanyaan berikut terkait tentang siapa yang menjadi
penerima zakat Anda dan alasan mengapa Anda menyerahkan zakat
kepada individu atau organisasi tersebut
1 Please select the statement that best describes your practice in giving zakat.
(Silahkan pilih pernyataan yang paling tepat mengambarkan kebiasaan Anda dalam
membayar zakat?)
a. I give all or most of my zakat directly to beneficiaries or a local Imam.
Go to question 2a, 2b, and 2c
(Saya biasanya memberikan seluruh atau sebagian besar zakat langsung kepada
Mustahik atau Takmir Masjid)
Lanjutkan ke pertanyaan no 2a, 2b, dan 2c
b. I give all or most of my zakat to a government-sponsored zakat agency.
Go to question 3a, 3b, and 3c
(Saya biasanya memberikan seluruh atau sebagian besar zakat ke BAZNAS
tingkat Provinsi/Kabupaten/Kota)
c. I give all or most of my zakat to a private zakat agency.
Go to question 4a, 4b and 4c
(Saya biasanya memberikan seluruh atau sebagian besar zakat kepada Lembaga
Amil Zakat)
2a Why do you give all or most of your zakat directly to beneficiaries or Local Imam?
You may indicate more than one answer.
(Mengapa Anda memberikan semua atau sebagian besar zakat langsung kepada
Mustahik atau Takmir Masjid)
(Anda dapat mengindikasikan lebih dari satu jawaban)
a. It is more convenient to give my zakat directly to beneficiaries or Local Imam
288 Appendices
than to a government-sponsored zakat agency or a private zakat agency
(Memberikan zakat langsung kepada Mustahik atau Imam Masjid setempat
adalah lebih mudah dibandingkan dengan memberikan zakat kepada BAZNAS
tingkat Provinsi/Kabupaten/Kota atau Lembaga Amil Zakat).
b. I want to support the programmes and activies of my Local Imams
(Saya ingin memdukung program-program atau kegiatan-kegiatan
pendayagunaan zakat yang dibuat oleh Takmir Masjid).
c. I want to help beneficiaries who live in my neighbourhood
(Saya ingin membantu Mustahik yang hidup disekitar rumah saya).
d. If I give to my Local Imam, I will know how my zakat is used.
(Bila saya memberikan zakat kepada Imam Masjid setempat, saya dapat
mengetahui penggunaan dana zakat yang saya serahkan).
e. If I give to my Local Imam, I will know the beneficiaries of my zakat.
(Bila saya memberikan zakat kepada Imam Masjid setempat, saya dapat
mengetahui penerima zakat yang saya serahkan).
f. I trust the local Imam to use my zakat for appropriate purposes
(Saya percaya bahwa Takmir Masjid akan menggunakan dana zakat yang saya
berikan sesuai dengan kaidah agama)
g. Other, please specify ….
(Lain-lain, mohon dijelaskan …..)
2b Why do you not give most or all zakat to a government-sponsored zakat agency in
your hometown?
(You may indicate more than one answer)
Mengapa Anda tidak memberikan seluruh atau sebagian besar kewajiban zakat
Anda kepada BAZNAS tingkat Provinsi/Kabupaten/Kota di tempat tinggal Anda?
(Anda dapat memilih lebih dari satu jawaban).
a. Giving zakat to a government-sponsored zakat agency is less convenient than
giving zakat directly to a private zakat agency.
Memberikan zakat kepada BAZNAS tingkat Provinsi/Kabupaten/Kota adalah
kurang praktis apabila dibandingkan dengan memberikan zakat langsung
kepada Mustahik atau Takmir Masjid.
b. If I give my zakat to the government-sponsored zakat agency in my hometown, I
can not help the beneficiaries who live in my neighbourhood.
Apabila saya memberikan zakat kepada BAZNAS tingkat
Provinsi/Kota/Kabupaten, saya tidak dapat membantu Mustahik yang ada di
sekitar tempat tinggal saya.
c. I do not know the existence of government-sponsored zakat agency in my
hometown
Saya tidak mengetahui keberadaan BAZNAS tingkat Provinsi/Kabupaten/Kota di
d. Programmes and activities offered by government-sponsored zakat agency in my
Appendices 289
hometown are not interesting.
Program-program dan kegiatan-kegiatan pendayagunaan zakat yang dilakukan
oleh BAZNAS tingkat Provinsi/Kota/Kabupten di tempat tinggal saya kurang
menarik.
e. I do not know individuals who manage the government-sponsored zakat agency
in my hometown.
Saya tidak mengenal orang-orang yang mengelola BAZNAS tingkat
Provinsi/Kota/Kabupaten tempat tinggal saya.
f. If I give my zakat to the government-sponsored zakat agency in my hometown, I
will not know the usage of zakat that I give to them.
Provinsi/Kota/Kabupaten, saya tidak dapat mengetahui penggunaan dana zakat
yang telah saya berikan.
g. If I give my zakat to the government-sponsored zakat agency in my hometown, I
will not know the beneficiaries of my zakat.
Provinsi/Kota/Kabupaten, saya tidak dapat mengetahui Mustahik yang
menerima dana zakat yang telah saya berikan.
h. Zakat was deducted from my salary by my employer and was not given to a
government-sponsored zakat agency (default option from my employer).
Pemberi kerja memotong langsung zakat dari penghasilan saya dan
menyerahkan zakat tersebut ke amil zakat selain BAZNAS tingkat
Provinsi/Kota/Kabupaten.
i. Other, please specify ………………………………………………
Lain-lain, mohon dijelaskan ……………………………………………
2c Why do you not give most or all zakat to a private zakat agency?
Anda kepada Lembaga Amil Zakat?
a. Giving zakat to a private zakat agency is less convenient than giving zakat
directly to a government-sponsored zakat agency.
Memberikan zakat kepada Lembaga Amil Zakat kurang praktis apabila
dibandingkan dengan memberikan zakat langsung ke mstahik atau Takmir
Masjid.
b. If I give my zakat to the government-sponsored zakat agency in my hometown, I
can not help the beneficiaries who live in my neighbourhood.
Provinsi/Kota/Kabupaten, saya tidak dapat membantu Mustahik yang ada di
c. I do not know the existence of private zakat agency in my hometown.
290 Appendices
Saya tidak mengetahui keberadaan Lembaga Amil Zakat di tempat tinggal saya
d. Programmes and activities offered by private zakat agencies in my hometown are
not interesting.
oleh Lembaga Amil Zakat kurang menarik.
e. I do not know individuals who manage private zakat agencies in my hometown.
Saya tidak mengenal orang-orang yang mengelola Lembaga Amil Zakat.
f. If I give my zakat to a private zakat agency in my hometown, I will not know the
usage of zakat that I give to them.
Apabila saya memberikan zakat kepada Lembaga Amil Zakat, saya tidak dapat
mengetahui penggunaan dana zakat yang telah saya berikan.
g. If I give my zakat to a private zakat agency in my hometown, I will not know the
beneficiaries of my zakat.
mengetahui Mustahik yang menerima dana zakat yang telah saya berikan.
h. Zakat was deducted from my salary by my employer and was not given to a
private zakat agency (default option from my employer)
menyerahkan zakat tersebut ke amil zakat selain Lembaga Amil Zakat.
i. Other, please specify ……………………………………………….….
Lain-lain, mohon dijelaskan ………………………………
j. Go to PART B (Skip Questions No. 3a, 3b, 3c, 4a, 4b, and 4c)
k. Silahkan lanjutkan ke Bagian B (Anda tidak perlu menjawab pertanyaan
No. 3a, 3b, 3c, 4a, 4b, dan 4c)
3a Why do you give all or most zakat to a government-sponsored zakat agency?
You may indicate more than one answers.
Mengapa Anda memberikan seluruh atau sebagian besar zakat Anda kepada
BASNAS Provinsi/Kabupaten/Kota?
Anda dapat memilih lebih dari satu jawaban.
a. Because that government-sponsored zakat agency is near my home.
(Karena lokasi lembaga tersebut dekat dengan tempat kediaman saya)
b. Because that government-sponsored zakat agency is managed by trustworthy
individuals.
(Karena lembaga tersebut dikelola oleh orang yang dapat dipercaya)
c. Because the representatives of government sit in that organisation
(Karena perwakilan pemerintah terlibat dalam pengelolalaan lembaga zakat
tersebut).
d. Because that government-sponsored zakat agency has a well-known reputation.
(Karena lembaga pengelola zakat tersebut terkenal)
e. Because that government-sponsored zakat agency is able to deal with a
substantial amount of donations.
(Karena lembaga pengelola zakat tersebut mampu mengelola dana zakat dalam
Appendices 291
jumlah yang besar).
f. Because that government-sponsored zakat agency is transparent on how they
used zakat funds.
(Karena lembaga pengelola zakat tersebut transparan dalam penggunaan dana
zakat)
g. Because zakat is deducted from my salary and given to that organisation by my
employer (default option of employer).
(Karena zakat dipotong langsung oleh pemberi kerja dan oleh pemberi kerja
disalurkan ke lembaga pengelola zakat tersebut.)
h. Because it is convenience to give zakat to that organisation.
(Karena mudah memberikan zakat ke lembaga pengelola zakat tersebut).
i. Because that organisation is accountable in zakat collection and distribution
(Karena organisasi tersebut tranparent dalam penerimaan dan penyaluran
zakat).
j. Other, please specify …….
Lainnya, mohon dijelaskan ….
3b Why do you not give most or all zakat directly to beneficiaries or a local Imam?
Anda langsung kepada mustahik atau Takmir Masjid?
a. Giving zakat to directly to beneficiaries or local Imams is less convenient than
giving zakat a government-sponsored zakat agency.
Memberikan zakat langsung kepada Mustahik atau Takmir Masjid kurang
praktis apabila dibandingkan dengan memberikan zakat kepada BAZNAS tingkat
b. My local Imam is less transparent in providing information about the amount of
zakat received and distributed that government-sponsored zakat agencies.
Takmir Masjid kurang transparan dalam menyediakan informasi tentang zakat
yang diterima dan disalurkan apabila dibandingkan dengan BAZNAS tingkat
Provinsi/Kota/Kabupaten
c. Because my local Imam is unable to deal with a substantial amount of zakat
funds.
Takmir Masjid tidak sanggup mengelo dana zakat dalam jumlah yang besar
d. I do not know activities that are funded by zakat collected by my local Imam.
Saya tidak mengetahui kegiatan-kegiatan yang dilaksanakan oleh Takmir Masjid
dalam menggunkanan dana zakat.
e. Programmes and activities offered by my local Imamprivate are not interesting.
Takmir Masjid kurang menarik.
f. Zakat was deducted from my salary by my employer and was not given to a
292 Appendices
menyerahkan zakat tersebut kepada BAZNAS tingkat Provinsi/Kota/Kabupaten.
g. Other, please specify …………………………………………………………
Lain-lain, mohon dijelaskan ……………………………………………………
3c Why do you not give most or all zakat to a private zakat agency?
Anda kepada Lembaga Amil Zakat?
l. Giving zakat to a private zakat agency is less convenient than giving zakat
directly to a government-sponsored zakat agency.
Memberikan zakat kepada Lembaga Amil Zakat kurang praktis apabila
dibandingkan dengan memberikan zakat ke BAZNAS tingkat
m. Because zakat should be given to a zakat agency created by government.
Zakat seharusnya diberikan kepada pemerintah atau lembaga pengelola zakat
yang dibentuk pemerintah.
n. I do not know the existence of private zakat agency in my hometown.
Saya tidak mengetahui keberadaan Lembaga Amil Zakat di tempat tinggal saya
o. Programmes and activities offered by private zakat agencies in my hometown are
not interesting.
oleh Lembaga Amil Zakat kurang menarik.
p. I do not know individuals who manage private zakat agencies in my hometown.
Saya tidak mengenal orang-orang yang mengelola Lembaga Amil Zakat.
q. If I give my zakat to a private zakat agency in my hometown, I will not know the
usage of zakat that I give to them.
mengetahui penggunaan dana zakat yang telah saya berikan.
r. If I give my zakat to a private zakat agency in my hometown, I will not know the
beneficiaries of my zakat.
mengetahui Mustahik yang menerima dana zakat yang telah saya berikan.
s. Zakat was deducted from my salary by my employer and was not given to a
menyerahkan zakat tersebut ke amil zakat selain Lembaga Amil Zakat.
t. Other, please specify ………………………………….
Lain-lain, mohon dijelaskan ………………………………
 Go to PART B (Skip Questions No 4a, 4b and 4c)
Appendices 293
 (Silahkan lanjutkan ke Bagian B (Anda tidak perlu menjawab pertanyaan
nomor 4a, 4b and 4c)
4a Why do you give all or most zakat to a private zakat agency (LAZ)?
You may indicate more than one answer.
Mengapa Anda memilih memberikan seluruh atau sebagian besar zakat kepada
LAZ?
a. Because it close or near my home.
(Karena kantor lembaga pengelola zakat tersebut dekat dengan tempat
kediaman saya)
b. Because that organisation is managed by trustworthy individuals.
(Karena lembaga pengelola zakat tersebut dikelola oleh orang-orang yang dapat
dipercaya)
c. Because that organisation has a well-known reputation.
(Karena lembaga pengelola zakat tersebut memiliki reputasi yang terkenal)
d. Because that organisation is able to deal with a substantial amount of donations
(Karena lembaga pengelola zakat tersebut mampu mengurus donasi dalam
jumlah besar)
e. Because that organisation is transparent on how they used zakat.
(Karena lembaga pengelola zakat tersebut transparan dalam pengunaan dana
zakat)
f. Because zakat is deducted from my salary and given to that organisation by my
employer (default option of employer).
(Karena zakat dipotong langsung oleh pemberi kerja dan oleh pemberi kerja
disalurkan ke lembaga pengelola zakat tersebut.)
g. Because it is convenience to give zakat to that organisation
(Karena memberikan zakat ke lembaga pengelola zakat tersebut dapat dilakukan
dengan mudah.)
h. Other, please specify …….
(Lainnya, mohon dijelaskan ….)
 Go to PART B (Silahkan lanjutkan ke Bagian B)
4b Why do you not give most or all zakat directly to beneficiaries or a local Imam?
Anda langsung kepada mustahik atau Takmir Masjid?
a. Giving zakat to directly to beneficiaries or local Imams is less convenient than
giving zakat a private zakat agency.
Memberikan zakat langsung kepada Mustahik atau Takmir Masjid kurang
praktis apabila dibandingkan dengan memberikan zakat kepada lembaga amil
zakat.
b. My local Imam is less transparent in providing information about the amount of
zakat received and distributed than private zakat agencies.
294 Appendices
Takmir Masjid kurang transparan dalam menyediakan informasi tentang zakat
yang diterima dan disalurkan bila dibandingkan dengan lembaga amil zakat.
c. Because my local Imam is unable to deal with a substantial amount of zakat
funds.
Takmir Masjid tidak sanggup mengelola dana zakat dalam jumlah yang besar
d. I do not know activities that are funded by zakat collected by my local Imam.
Saya tidak mengetahui kegiatan-kegiatan yang dilaksanakan oleh Takmir Masjid
dalam menggunkanan dana zakat.
e. Programmes and activities offered by my local Imam are not interesting.
Takmir Masjid kurang menarik apabila dibandingkan dengan program
pendayagunaan zakat yang dibuat oleh lembaga amil zakat.
f. Zakat was deducted from my salary by my employer and was not given to a
menyerahkan zakat tersebut ke Lembaga Amil Zakat.
g. Other, please specify ……………………………………………….
4c Why do you not give most or all zakat to a government-sponsored zakat agency in
your hometown?
Anda kepada Badan Amil Zakat Nasional tingkat Provinsi/Kabupaten/Kota di
tempat tinggal Anda?
j. Giving zakat to a government-sponsored zakat agency is less convenient than
giving zakat directly to a private zakat agency.
Memberikan zakat kepada Badan Amil Zakat Nasional tingkat
Provinsi/Kabupaten/Kota adalah kurang praktis apabila dibandingkan dengan
memberikan zakat kepada lembaga amal zakat.
k. I do not know the existence of government-sponsored zakat agency in my
hometown
Saya tidak mengetahui keberadaan Badan Amil Zakat Nasional tingkat
Provinsi/Kabupaten/Kota di sekitar tempat tinggal saya.
l. Programmes and activities offered by government-sponsored zakat agency in my
hometown are not interesting.
oleh Badan Amil Zakat Nasional tingkat Provinsi/Kota/Kabupten di tempat
tinggal saya kurang menarik.
m. I do not know individuals who manage the government-sponsored zakat agency
in my hometown.
Saya tidak mengenal orang-orang yang mengelola Badan Amil Zakat Nasional
Appendices 295
tingkat Provinsi/Kota/Kabupaten tempat tinggal saya.
n. If I give my zakat to the government-sponsored zakat agency in my hometown, I
will not know the usage of zakat that I give to them.
Apabila saya memberikan zakat kepada Badan Amil Zakat Nasional tingkat
Provinsi/Kota/Kabupaten, saya tidak dapat mengetahui penggunaan dana zakat
yang telah saya berikan.
o. If I give my zakat to the government-sponsored zakat agency in my hometown, I
will not know the beneficiaries of my zakat.
Apabila saya memberikan zakat kepada Badan Amil Zakat Nasional tingkat
Provinsi/Kota/Kabupaten, saya tidak dapat mengetahui Mustahik yang
menerima dana zakat yang telah saya berikan.
p. Zakat was deducted from my salary by my employer and was not given to a
government-sponsored zakat agency (default option from my employer).
menyerahkan zakat tersebut ke amil zakat selain Badan Amil Zakat Nasional
tingkat Provinsi/Kota/Kabupaten.
q. Other, please specify ……………………………………………………
Part B: The following set of questions focus on the concept of accountability in
general and in the context of zakat collection and distribution
Part B: Pertanyaan-pertanyaan berikut terkait tentang konsep akuntabilitas
dalam konteks lembaga pengelola zakat
5 Based on your understanding, what is the meaning of accountability?
Menurut pemahaman Anda, apakah yang dimaksud dengan akuntabilitas?
......................................................................................................................
6 Do you think that individuals or organisations that collect and distribute zakat should
be accountable to their stakeholders?
Menurut pendapat Anda, apakah lembaga-lembaga yang mengumpulkan dan
menyalurkan zakat seharusnya menunjukan akuntabilitas kepada para pemangku
kepentingan?
a. Yes, why?
Please, explain ..............................................................................
 Please proceed to question No.7
(Ya, mengapa? Mohon jelaskan, ....................................................................
 Silahkan lanjutkan ke pertanyaan No.7)
b. No, why not?

Please, explain .........................................................................................
 Please proceed to question No. 9
(Tidak, mengapa tidak? Mohon jelaskan, ....................................................
 Silahkan lanjutkan ke pertanyaan No.9)
7 To whom a zakat agency should be accountable?

You may indicate more than one stakeholder
296 Appendices
Menurut pemahaman Anda, kepada siapakah lembaga pengelola zakat seharusnya
bertanggung jawab? (Anda boleh memilih lebih dari satu jawaban)
a. God (Tuhan)
b. Government / Minister of Religious Affair (Pemerintah dan Kementrian Agama)
c. Parliament (DPR)
d. Indonesian Ulema Council (Majelis Ulama Indonesia)
e. The Central BAZNAS (BAZNAS Pusat)
f. Peak Body (Forum Zakat)
g. Boards (Dewan Pembina)
h. Donors (Muzakki)
i. Beneficiaries (Mustahiq)
j. Volunteers (Sukarelawan)
k. Media (Media)
l. Public (Masyarakat)
m. Other (please specify, ……….…), (Lainnya, mohon sebutkan ………………)
Appendices 297
8 What is the scope of accountability of zakat agencies?
If you were asked to evaluate the
Plaese level of importance of these elements
indicate of accountability for zakat
your accountability, what level of
answer importance would you give to the
by giving following items?
Should zakat agencies be Berapa nilai yang Anda berikan
a tick
accountable in these elements of
mark (√) untuk area akuntabilitas berikut ini?
accountability scope? Silahkan lingkari atau silang
Silahkan jawaban pilihan Anda
Apakah pengelola zakat harus
memberi
Less Importamnt
bertanggung jawab dalam elemen
Kurang Penting
tanda
Very Important
Sangat Penting
akuntabilitas berikut ini?
Not Important
Tidak Penting
centang
(√) pada
Important
Medium
pilihan
Penting
Sedang
Anda
Yes No
1 2 3 4 5
Ya Tidak
Finances
For example, to demonstrate that
resources are used appropriately and
as designated purposes
Akuntabel dalam hal Pengelolaan 1 2 3 4 5
Keuangan
Misalnya, melaporkan bahwa
pengelolaan keuangan dilakukan
secara cermat.
Amil Fund
For example, amil fund is accounted
appropriately and used solely to
finance the activities of people or
organisation that collect zakat
1 2 3 4 5
Dana Amil
Misalnya, penggunan dana amil
telah dipertanggungjawabkan dan
hanya digunakan untuk operasional
organisasi
Ethics
For example, to treat ethically their
beneficiary
Etika 1 2 3 4 5
Misalnya, amil zakat menunjukan
perilaku yang beretika dalam
memperlakukan mustahik
Syari’ah Accountability
For example, the administration of
zakat complies with Syari’ah
Requirements 1 2 3 4 5
Akuntabel dalam hal Syari’ah
Misalnya, patuh terhadap ketentuan
Syari’ah dalam pengelolaan zakat
298 Appendices
Legal Accountability
For example, all government
regulations about zakat agency is
satisfied
Hukum dan Peraturan 1 2 3 4 5
Perundangan
Misalnya, organisasi pengelola zakat
seharusnya telah mendapatkan izin
dari Pemerintah.
Governance
For example, governance of an
organisation that collect/receive zakat
should follow best practices 1 2 3 4 5
Tata Kelola Organisasi
Misalnya. tata kelola lembaga zakat
mengikuti praktek-praktek terbaik
Effectiveness
For example, ability to execute every
programme
Efektifitas 1 2 3 4 5
Misalnya, mampu menjalankan
kegiatan-kegiatan yang telah
direncanakan
Efficiency
For example, to conduct activities
efficiently (measured by the inputs of
every programme)
Efisiensi 1 2 3 4 5
Misalnya, melaksanakan kegiatan
dengan efisien (diukur dengan input
yang digunakan untuk melaksanakan
satu kegiatan atau program)
Outcome
For example, to account for the
impacts of their activities to their
beneficiaries and society
Outcome
Misalnya, bertanggung jawab atas 1 2 3 4 5
dampak yang ditimbulkan dari
kebijakan yang diambil oleh
pengelola zakat terhadap
kesejahteraan mustahik dan
masyarakat
Mission
For example, to demonstrate that that
every activity is in line with the
mission of organisation 1 2 3 4 5
Misi Organisasi
Misalnya, bertanggung jawab atas
tercapainya misi organisasi.
Part C: The next questions are related to the role of annual reports on the
Part C: Pertanyaan-pertanyaan berikut ini tentang peran laporan tahunan dalam
akuntabilitas lembaga zakat
Appendices 299
9 Do you read annual reports or financial reports produced by individuals or
organisations that collect your zakat?
Apakah Anda membaca laporan tahunan dan laporan keuangan yang dibuat oleh
orang atau organisasi yang menerima zakat Anda?
a. Yes, please proceed to question No. 10
Ya, silahkan lanjutkan ke pertanyaan No.10
b. No, please proceed to question No. 11
Tidak, silahkan lanjutkan ke pertanyaan No.11
10 Why do you read annual reports or financial reports produced by individuals or

organisations that collect your zakat?
.................................................................................................................................
Mengapa Anda membaca laporan tahunan dan laporan keuangan yang dibuat oleh
orang atau organisasi yang menerima zakat Anda?
.................................................................................................................................
 Please proceed to question No. 11
 Silahkan lanjutkan ke pertanyaan No.11
11 Why do you not read the annual reports or financial statements of zakat agencies?
(You may give more than one answers)
Mengapa Anda tidak membaca laporan tahunan atau laporan keuangan lembaga
zakat (Anda dapat memilih lebih dari satu jawaban):
a. I do not understand financial information presented in annual reports or financial
statements
Saya tidak memahami informasi keuangan yang disajikan dalam laporan
tahunan atau laporan keuangan
b. I am not interested in the affairs of zakat agencies
Saya tidak tertarik dengan kegiatan-kegiatan yang dilakukan lembaga pengelola
zakat
c. I believe that the government has monitor the activities of zakat agencies
Saya percaya bahwa pemerintah telah mengawasi kegiatan operasional lembaga
pengelola zakat
d. The content of annual reports does not contribute to my information needs
Isi laporan tahunan tidak sesuai dengan kebutuhan informasi saya
e. I rely on other sources of information about zakat agencies.
Saya bergantung pada sumber informasi lainnya.
f. I trust individuals that administer zakat agencies.
Saya mempercayai pengurus lembaga pengelola zakat.
g. I do not have access to annual reports of financial statements
Saya tidak mempunyai akses terhadapa laporan tahunan dan keuangan
h. I do not give zakat to government-sponsored zakat agencies or private zakat
agencies
Saya bergantung kepada orang lain sebagai sumber informasi tentang kegiatan-
kegiatan lembaga penyalur zakat
300 Appendices
i. Other (please specify), -----------------------------------------------------------
Lainnya, mohon sebutkan, -------------------------------------------------------
Part D: The next questions are related to the dissemination of information to

the stakeholders
Bagian D: Pertanyaan-pertanyaan berikut terkait tentang penyebarluasan
informasi kepada para pemangku kepentingan
12 If you were asked to rate the importance of the following sources of information for
the accountability of zakat agencies, how much importance do you place on the
following sources of information about zakat agencies (1 is not important and 5 is
very important)?
Jika Anda diminta untuk menilai sumber informasi berikut ini dalam konteks
penyebarluasan informatisi lembaga pengelola zakat, berapakah nilai yang akan
Anda berikan untuk sumber-sumber informasi berikut ini (1 untuk tidak penting dan
5 untuk sangat penting)?
Do You Have
Access to these
How do you rate the
sources of
importance of the following
information?
source of information?
Apakah Anda
memiliki akses
Berapa nilai yang Anda berikan
terhadap
untuk sumber informasi berikut
Source of Information sumber
ini?
informasi
(Sumber Informasi) tersebut
Less Importamnt
Very Important
Kurang Penting
Sangat Penting
Not Important
Tidak Penting
Yes No
Important
Medium
Penting
Ya Tidak
Sedang
5 4 3 2 1
a. Annual reports
Laporan Tahunan
b. Mass media
(television/radio/commercial
magazines or newspapers)
Mass Media
(Televisi/Radio/Majalah dan
Surat Kabar)
c. Magazines, newslletter,
bulletins, or pamphlets
published by zakat agencies
Majalah, selebaran, bulletin
atau pamphlet yang
diterbitkan lembaga
Appendices 301
pengelola zakat
d. Internet (website)
Internet (website)
e. Verbal information from the
staff of zakat agency
Informasi lisan dari
pegawai lembaga zakat
f. Verbal information from a
friend, a relative or a family
member
Informasi lisan dari teman,
saudara, atau anggota
keluarga lainnya
g. Public announcement in
Mosques
Pengumunan di Masjid-
Masjid
h. Social Media (such as
Twitter or Facebook)
Media social seperti
Facebook atau Twitter
i. Other, (please specify) …
Lainya, mohon sebutkan …
13 Do you expect information listed below from zakat agencies and how do you rate the
importance of the following information to be disclosed in the annual reports of
zakat agencies?
(Informasi apa yang Anda harap dari lembaga pengelola zakat dan seberapa
pentingkah informasi berikut ini untuk para pemangku kepentingan?)
How Important?
Tingkat Kepentingan
Less Importamnt
Very Important
Kurang Penting
Sangap Penting
Not Important
Tidak Penting
Type of Information
Important
Medium
Penting
Sedang
(Type Informasi)
5 4 3 2 1
1. Statement of mission and objectives
Uraian tentang misi dan tujuan
organisasi
2. History of the organisation
Uraian tentang sejarah organisasi
3. Overview of organisation programme and
302 Appendices
activities
Uraian tentang program dan aktivitas
organisasi
4. Organisational structure
Struktur Organisasi
5. Profile of boards, CEOs, and senior staff
Profil Pengurus dan Staff Senior
6. Boards or committees’ activities (such as
number of meeting)
Informasi tentang aktivitas dari Dewan
Pengurus
7. Information about the renumeration of
Boards
Informasi tentang renumerasi Dewan
Pengurus
8. Future plans
Informasi tentang Rencana Kerja
9. Overview of zakat agencies beneficiaries
Uraian tentang penerima bantuan zakat
10. Human interest stories (information about
how zakat fund help beneficiaries)
Informasi tentang bagaimana zakat
membantu mustahik
11. Information about how to access zakat
agency services
Informasi tentang bagaimana mengakses
kegiatan yang ditawarkan lembaga zakat
12. Organisation policy related to the
allocation resources (the proportion of
zakat funds for amil and for other
category of beneficiaries)
Kebijakan organisasi dalam
pengalokasian sumberdaya (terutama
proporsi dana zakat untuk amil dan tujuh
kategori mustahik lainnya)
13. Organisation policy in selecting
beneficiaries including the criteria to
Kebijakan organisasi dalam memilih
penerima zakat termasuk kriteria dalam
pemilihan penerima zakat
14. Acknowledgement of donors and
volunteers’ contribution
Penghargaan atas sumbangan dari
mustahik dan sukarelawan
15. Auditor’s report or other types of
assurance reports
Appendices 303
Laporan Auditor Independen dan laporan
kepatuhan lainnya
16. Audited financial statements
Laporan Keuangan yang telah Diaudit
17. Total revenue (zakat received) and
sources of revenue
Total penerimaan termasuk informasi
perincian sumber-sumber penerimaan
18. The amount and the usage of amil fund
Jumlah dana zakat untuk amil dan
perincian penggunaanya
19. The proportion of zakat funds for
beneficiaries (except amil)
Proportion dana zakat untuk mustahik
selain amil berserta perinciannya
20. Administration and fundraising costs
Biaya administrasi dan biaya untuk
mengumpulkan zakat
21. Revenue and usage of other funds (except
zakat fund)
Penerimaan dan pengunaan dana infak
dan sedekah
22. Related parties transcations
Informasi tentang transaksi dengan pihak-
pihak terkait.
23. Financial performance information:
Actual spending against budget
Informasi tentang kinerja keuangan:
Pengeluaran dibandingkan dengan
anggaran
24. Non-financial performance information:
the number of service provided
Informasi tentang kinerja non-keuangan:
Jumlah pelayanan yang diberikan dalam
satu tahun
25. Other, please specify …
Informasi lainnya, mohon sebutkan ……
14 Have you ever asked for information about the administration of zakat from
individuals or organisations that collect your zakat?
Apakah Anda pernah meminta informasi tentang pengelolaan zakat kepada orang
atau organisasi yang menerima zakat Anda?
a. Yes, why?
Please, explain ..............................................................................
(Ya, mengapa?
304 Appendices
Mohon jelaskan, .......................................................................................)
b. No, why not?

Please, explain ..............................................................................
(Tidak, mengapa tidak?
Mohon jelaskan, ........................................................................................)
15 In addition to the information already being presented by zakat agencies; do you

have any suggestions about information that you think would be useful and should
be disclosed by zakat agencies?
Selain informasi yang saat ini telah disajikan oleh lembaga pengelola zakat kepada
masyarakat, apakah Anda memiliki saran tentang informasi yang menurut Anda
berguna dan seharusnya disajikan oleh lembaga pengelola zakat?
Part E: Demographic Information

Bagian E: Informasi Pribadi
16 What is your occupation? (Apa pekerjaan Anda?)
a. Government employee (Pegawai Negeri Sipil)
b. State-owned company employee (Pegawai BUMN/BUMD)
c. Entrepreneur/Self employed (Wiraswasta)
d. Professional (Profesional seperti dokter, akuntan, dan lain-lain)
e. Employee of private companies (Pegawai swasta)
f. Other, please specify …. (Lain-lain, mohon jelaskan ……………)
17 Which age group do you belong to? (Berapakah umur Anda?)
a. Under 21 (dibawah 21)
b. 21-30
c. 31-40
d. 41-50
e. 51-60
f. Over 60 (diatas 60)
18 What is your highest level of educational qualification?
Tingkat Pendidikan terakhir?
a. Elementary School (SD)
b. Junior high school (SMP)
c. Senior high school (SMU atau sederajat)
d. Diploma / Vocational Training (Diploma atau yang sederajat)
e. Bachelor (Sarjana)
f. Master (Magister)
g. PhD (Doktor)
To recognise your participation in this study, QUT will donate AUD $1 to your
preferred zakat agency. Which zakat agency is your preference:
Sebagai ungkapan terima kasih atas partisipasi Anda, saya akan menyumbangkan
Rp10.000,00 untuk setiap lembar survey lengkap yang dikembalikan ke Tim Peneliti.
Anda dimohon untuk memilih salah satu lembaga pengelola zakat dari daftar berikut
ini:
Appendices 305
a. BAZNAS Kota Bogor
b. BAZ Kota Semarang
c. BAZ Kota Malang
d. BAZ Kabupaten Sragen
e. BAZ Province Jawa Tengah
f. BAZ Province DKI Jakarta
g. BAZ Province Jawa Barat
h. LAZ Bamuis BNI
i. LAZ Al-Azhar Peduli Umat
j. LAZ Dewan Dakwah
k. Yayasan Al-Hilal
The research team would like to invite you to participate in an interview. In this
interview, the research team would like to hear further from you about your
understanding on the concept of zakat agencies accountability. If you are willing to
participate in this interview, please contact the research team at XXXXX (pre-paid
mobile phone number)
Tim peneliti memohon Anda untuk berpartisipasi lebih lanjut dalam penelitian ini
sebagai narasumber wawancara. Dalam wawancara tersebut, saya ingin mengetahui
lebih lanjut mengenai pendapat Anda tentang konsep akuntabilitas. Bila Anda
bersedia mohon hubungi Tim Peneliti pada nomer beeikut ini XXXX.
Thank you very much for participating in this survey.
The return of completed manual questionary indicates your consent to participate in
this study. (Submitting the questionary indicates your consent to participate in this
study).
Terima kasih telah berpartisipasi dalam penelitian ini.
Pengembalian lembar survey yang telah terisi mengindikasikan bahwa Anda telah
setuju untuk berpartisipasi dalam penelitian ini.
306 Appendices
Appendix D The Data Dictionary and Rules for Coding
General Coding Arrangements
(1) The results of data analysis were recorded in an Excel spreadsheet.
(2) A row was allocated for every type of information.
(3) A column was allocated for every type of medium to record the presence or
absence of a particular type of information.
(4) For annual reports, every page of the first annual report was read, if a
particular type of information listed in Appendix E was identified, “1” was
recorded in the column allocated for the first annual report. After all pages
were read, all information that was blank was coded “0”. The same process
was employed for the second and third annual reports.
(5) For magazines, every article of the first magazine was read. If a particular
type of information listed in Appendix E was identified, “1” was recorded in
the column allocated to the first magazine. After all pages were read, all
information that was blank was coded “0”. The same process was employed
for the rest of magazines.
(6) For the website of zakat agencies, every page of the website of the zakat
agency was read. If a particular type of information listed in Appendix E was
identified, “1” was recorded in the column allocated to the first website. After
all web pages were read, all information that was blank was coded “0”. The
same process was employed for the websites of other zakat agencies.
(7) For the Facebook account of zakat agencies, every post in the Facebook
account of the first zakat agency was read. If a particular type of information
listed in Appendix E was identified, “1” was recorded in the column allocated
to the first Facebook account. After 25 posts were read, the coding was ended
and all information that was blank was coded “0”. The same process was
employed for the rest of the Facebook accounts.
Appendices 307
Appendix E Type of Information Identified in Literature
No Type of Information Description
1. Overview - Organisation
1 Statement of mission and Statement of goals, statement of objectives,
objectives statement of objectives
2 History of the organisation Information about when a zakat agency was
established, by whom, their original name (if
applicable)
Governance Information
3 Boards and committee activities Description of board activities, such as the number
of meeting
4 Profile of Boards, CEO and Description of the profile of board and CEO, such
other senior staff as the level of education, previous experience,
professional position in other organisations,
professional membership, and others
5 Information about organisation • Organisation chart
structure • Description of the name of individuals who held
senior positions.
6 Remuneration of Boards, CEO Description of remuneration or salary or
and other senior staff honorarium for the members of boards, CEO and
other senior staff
1. Future Plans
7 Future plans Future plans, programme information for next year,
budget information for next year, statement of
quantified objectives for the next year
2. Organisation Policy and
Programme
8 Organisation’s policy for Information about criteria used to accept or reject
selecting beneficiaries including funding application
the criteria to select
beneficiaries
9 Overview of programmes and Information about the names of existing
activities programmes and activities, the description of
existing programmes and activities and the location
of existing programmes and activities.
10 Organisation’s policy related to Information about how zakat agencies divides the
the allocation of resources zakat fund in relation to every category of
beneficiaries
11 Information about how to access Information about the procedures to obtain the
zakat agency services assistance from zakat agencies, information about
documents that are needed to support application
5. Beneficiaries
12 Overview of beneficiaries Description about the beneficiaries of zakat,
description about how zakat is distributed to every
category of beneficiaries
13 Human interest stories Information about how the zakat fund increases the
quality of life of beneficiaries
6. Other Non-financial
Information
14 Information about related Information about financial transactions with the
308 Appendices
parties’ transaction parent organisation, other organisations that are
created or owned by the same parent organisations
15 Acknowledgement of donors Description to recognise and appreciate the
and volunteer’s contribution contribution of donors, volunteers
7. Financial Information
Audited financial statements A complete set of financial statements that consist
of balance sheets, statement of financial position,
cash flow statement and notes to financial
statements
Total revenues and sources of Total revenue and the breakdown of revenue
revenue sources, for example, revenue from zakat fund and
revenue from sedekah (voluntary donations)
Usage of zakat fund for Information about the distribution or usage of the
beneficiaries other than amil zakat fund to every category of beneficiaries
Usage of other donated funds Information about the distribution or usage of the
(except zakat fund) zakat fund to every category of beneficiaries
Usage of the amil fund Detailed information about the distribution or usage
of the zakat fund to every category of beneficiaries
Auditor's report or other type of Financial auditor reports, Syari’ah auditor report
assurance report
Fundraising costs The cost to raise donations
8. Performance Information
Financial performance Various financial performance indicators, financial
information ratios, such as gearing ratio, current administration
costs as a percentage of total expenditure,
fundraising ratio
Non-financial performance The number of beneficiaries that received financial
information and non-financial assistance
Appendices 309
Appendix F Initial Eigenvalues and Criterion Value from Monte Carlo
Parallel Analysis
Initial Eigenvalues and Criterion Value from Monte Carlo Parallel Analysis for to
Whom Zakat Agencies Should be Accountable
Criterion Value from Monte

Component
Initial Eigenvalues Carlo PCA for Parallel Decision
Number
Analysis
1 4.505 1.3745 Accept
2 1.325 1.2788 Accept
3 1.107 1.2006 Reject
Parallel analysis was conducted based on 12 variables, 239 samples and 100 replications.
Initial Eigenvalues and Monte Carlo for Parallel Analysis for the Scope of
Accountability

Initial Eigenvalues
Component Number Carlo PCA for Parallel Decision
from PCA
Analysis
1 4.410 1.3551 Accept
2 1.147 1.2261 Reject
Parallel analysis was conducted based on 10 variables, 239 samples and 100 replication
Initial Eigenvalues and Monte Carlo PCA for Parallel Analysis for Type of
Information to Disseminate Accountability

Component Initial Eigenvalues
Carlo PCA for Parallel Decision
Number from PCA
Analysis
1 10.225 1.6215 Accept
2 2.072 1.5240 Accept
3 1.598 1.4433 Accept
4 1.543 1.3777 Accept
5 1.141 1.3229 Reject
Initial Eigenvalues and Monte Carlo PCA for Parallel Analysis

For Medium to Discharge Accountability

Component Initial Eigenvalues
Carlo PCA for Parallel Decision
Number from PCA
Analysis
1 3.504 1.2959 Accept
2 1.576 1.2007 Accept
310 Appendices
Appendix G Scree Plot
Scree Plot for to Whom Zakat Agencies Should be Accountable
Appendices 311
Scree Plot for the Scope of Accountability of Zakat Agencies
312 Appendices
Scree Plot for Type of Information to Discharge the Accountability of Zakat Agencies
Appendices 313
Scree Plot for Media to Discharge the Accountability of Zakat Agencies
314 Appendices
Appendix H Pearson Correlations of the Core Elements of Accountability
1 2 3 4 5 6 7 8 9
(1) Primary Stakeholders 1.000
(2) Secondary Stakeholders –0.478** 1.000
(3) Financial and Sacred
Accountability 0.246** –0.014 1.000
(4) Performance
Accountability 0.074 –0.046 0.260** 1.000
(5) Financial Information 0.186** –0.048 0.508** 0.379** 1.000

(6) Governance
Information 0.105 0.048 0.378** 0.098 0.372** 1.000
(7) Performance
Information 0.069 –0.053 0.357** 0.169* 0.457** 0.256** 1.000
(8) Other Information 0.119 –0.118 –0.002 0.186* 0.270** 0.161* 0.082 1.000
** * **
(9) Informal Sources 0.077 0.040 0.221 0.027 0.186 0.235 0.104 0.173* 1.000
** ** ** ** ** **
(10) Formal Sources 0.206 –0.003 0.424 0.309 0.516 0.263 0.277 0.089 0.065
Appendices 315
Appendix I The Results of MANOVA Test for Factor Scores on to Whom
Zakat Agencies Should be Accountable by the Groups of Donors Who Give
to Local Imam, Government-Sponsored Zakat Agencies, and Private Zakat
Agencies
Multivariate Testsa
Effect Value F df Error df Sig. Squared
Intercept Pillai's Trace 0.000 0.023b 2.000 235.000 0.978 0.000
b
Wilks' Lambda 1.000 0.023 2.000 235.000 0.978 0.000
Hotelling's Trace 0.000 0.023b 2.000 235.000 0.978 0.000
b
Roy's Largest Root 0.000 0.023 2.000 235.000 0.978 0.000
The Pillai's Trace 0.012 0.707 4.000 472.000 0.587 0.006
Groups of Wilks' Lambda 0.988 0.707b 4.000 470.000 0.588 0.006
Donors Hotelling's Trace 0.012 0.706 4.000 468.000 0.588 0.006
Roy's Largest Root 0.012 1.423c 2.000 236.000 0.243 0.012
a. Design: Intercept + Recipient_of_zakat
b. Exact statistic
c. The statistic is an upper bound on F that yields a lower bound on the significance level.
316 Appendices
Appendix J The Results of MANOVA for Factor Scores on to Whom Zakat
Agencies Should be Accountable by Demographic Attributers of Donors
Multivariate Testsa
Partial
Hypothesis
Effect Value F Error df Sig. Eta
df
Squared
Wilks' Lambda 0.987 1.406b 2.000 217.000 0.247 0.013
Roy's Largest Root 0.013 1.406b 2.000 217.000 0.247 0.013
Age Group Pillai's Trace 0.020 0.732 6.000 436.000 0.624 0.010
Wilks' Lambda 0.980 0.729b 6.000 434.000 0.626 0.010
Hotelling's Trace 0.020 0.726 6.000 432.000 0.629 0.010
Education Pillai's Trace 0.022 2.406b 2.000 217.000 0.093 0.022
Wilks' Lambda 0.978 2.406b 2.000 217.000 0.093 0.022
Area of Pillai's Trace 0.024 2.666b 2.000 217.000 0.072 0.024
Employment Wilks' Lambda 0.976 2.666b 2.000 217.000 0.072 0.024
Age Group * Pillai's Trace 0.038 1.423 6.000 436.000 0.204 0.019
Education Wilks' Lambda 0.962 1.422b 6.000 434.000 0.204 0.019
Area of Wilks' Lambda 0.985 0.535b 6.000 434.000 0.782 0.007
Employment Hotelling's Trace 0.015 0.533 6.000 432.000 0.784 0.007
Education * Pillai's Trace 0.019 2.095b 2.000 217.000 0.126 0.019
Area of Wilks' Lambda 0.981 2.095b 2.000 217.000 0.126 0.019
Employment Hotelling's Trace 0.019 2.095b 2.000 217.000 0.126 0.019
Education * Wilks' Lambda 0.967 1.236b 6.000 434.000 0.287 0.017
Area of Hotelling's Trace 0.034 1.234 6.000 432.000 0.287 0.017
Employment
a. Design: Intercept + AgeNew + EduDummy + OccupationDummy + AgeNew * EduDummy + AgeNew *
OccupationDummy + EduDummy * OccupationDummy + AgeNew * EduDummy * OccupationDummy
b. Exact statistic
Appendices 317
Appendix K The Results of MANOVA for Factor Scores on the Scope of
Accountability by the Groups of Donors
Multivariate Testsa
Partial
Hypothesis
df
Squared
b
Wilks' Lambda 0.999 0.144 2.000 197.000 0.866 0.001
The Groups Pillai's Trace 0.021 1.054 4.000 396.000 0.379 0.011
of Donors Wilks' Lambda 0.979 1.054b 4.000 394.000 0.379 0.011
b. Exact statistic
318 Appendices
Appendix L The Results of MANOVA for Factor Scores on the Scope of
Accountability by Demographic Attributers of Donors
Multivariate Testsa
Effect Value F Error df Sig.
df Squared
Wilks' Lambda 0.978 2.045b 2.000 179.000 0.132 0.022
Age Groups Pillai's Trace 0.048 1.488 6.000 360.000 0.181 0.024
Wilks' Lambda 0.952 1.494b 6.000 358.000 0.179 0.024
Wilks' Lambda 0.988 1.068b 2.000 179.000 0.346 0.012
Employment Pillai's Trace 0.038 3.514b 2.000 179.000 0.032 0.038
Sector Wilks' Lambda 0.962 3.514b 2.000 179.000 0.032 0.038
Areas of Wilks' Lambda 0.995 0.153b 6.000 358.000 0.988 0.003
Areas of Wilks' Lambda 0.989 0.997b 2.000 179.000 0.371 0.011
Employment Hotelling's Trace 0.011 0.997b 2.000 179.000 0.371 0.011
Age Groups * Pillai's Trace 0.042 1.294 6.000 360.000 0.259 0.021
Areas of Hotelling's Trace 0.043 1.284 6.000 356.000 0.264 0.021
Employment
b. Exact statistic
Appendices 319
Tests of Between-Subjects Effects
Type III
Mean Partial Eta
Source Dependent Variable Sum of df F Sig.
Square Squared
Squares
Corrected Model Fin Acc 24.839a 15 1.656 1.735 0.048 0.126
Perform Acc 8.372b 15 0.558 0.536 0.918 0.043
Intercept Fin Acc 1.335 1 1.335 1.399 0.238 0.008
Perform Acc 1.293 1 1.293 1.241 0.267 0.007
Age Group Fin Acc 6.377 3 2.126 2.228 0.087 0.036
Perform Acc 0.746 3 0.249 0.239 0.869 0.004
Education Fin Acc 1.334 1 1.334 1.398 0.239 0.008
Perform Acc 0.154 1 0.154 0.148 0.701 0.001
Employment Fin Acc 1.688 1 1.688 1.770 0.185 0.010
Sector Perform Acc 2.913 1 2.913 2.795 0.096 0.015
Age Group * Fin Acc 1.639 3 0.546 0.573 0.634 0.009
Education Perform Acc 2.783 3 0.928 0.890 0.447 0.015
Age Group * Fin Acc 0.542 3 0.181 0.189 0.904 0.003
Employment Perform Acc
0.333 3 0.111 0.106 0.956 0.002
Sector
Education * Fin Acc 1.762 1 1.762 1.847 0.176 0.010
Employment Perform Acc
0.014 1 0.014 0.013 0.908 0.000
Sector
Age Group * Fin Acc 3.006 3 1.002 1.050 0.372 0.017
Education * Perform Acc
Employment 3.567 3 1.189 1.141 0.334 0.019
Sector
Error Fin Acc 171.746 180 0.954
Perform Acc 187.578 180 1.042
Total Fin Acc 196.595 196
Perform Acc 195.966 196
Corrected Total Fin Acc 196.585 195
Perform Acc 195.950 195
a. R Squared = .126 (Adjusted R Squared = .054)
b. R Squared = .043 (Adjusted R Squared = -.037)
320 Appendices
Appendix M The Results of MANOVA for Factor Scores on Type of
Information by the Groups of Donors
Multivariate Testsa
df Squared
b
Wilks' Lambda 0.996 0.214 4.000 203.000 0.931 0.004
b. Exact statistic
Appendices 321
Appendix N The Results of MANOVA for Factor Scores on Type of
Information by Demographic Attributers of Donors
Multivariate Testsa
Partial
Hypothesis
df
Squared
Wilks' Lambda 0.998 0.113b 4.000 186.000 0.978 0.002
Wilks' Lambda 0.943 0.923 12.000 492.401 0.524 0.019
Wilks' Lambda 0.990 0.482b 4.000 186.000 0.749 0.010
Education Wilks' Lambda 0.993 0.113 12.000 492.401 1.000 0.002
Employment Wilks' Lambda 0.966 0.535 12.000 492.401 0.892 0.011
Sector Hotelling's Trace 0.035 0.532 12.000 554.000 0.894 0.011
Sector Hotelling's Trace 0.031 1.454b 4.000 186.000 0.218 0.030
Education * Wilks' Lambda 0.969 0.485 12.000 492.401 0.924 0.010
Sector
b. Exact statistic
322 Appendices
Appendix O The Results of MANOVA for Factor Scores on Type of
Information by the Groups of Donors
Multivariate Testsa
df Squared
Wilks' Lambda 0.996 0.214b 4.000 203.000 0.931 0.004
The Group of Pillai's Trace 0.032 0.832 8.000 408.000 0.575 0.016
Donors Wilks' Lambda 0.968 0.831b 8.000 406.000 0.576 0.016
b. Exact statistic
Appendices 323
Appendix P The Results of MANOVA for Factor Scores on Type of
Information by Demographic Attributers of Donors
Multivariate Testsa
df Squared
Wilks' Lambda 0.994 0.512b 2.000 173.000 0.600 0.006
b
Wilks' Lambda 0.988 0.358b 6.000 346.000 0.905 0.006
Wilks' Lambda 0.994 0.507b 2.000 173.000 0.603 0.006
Sector
b. Exact statistic
324 Appendices
Appendix Q The Results of MANOVA for Factor Scores on Medium to
Discharge Accountability by the Groups of Donors
Multivariate Testsa
Partial Eta
Effect Value F Hypothesis df Error df Sig.
Squared
b
Wilks' Lambda 0.999 0.051 2.000 188.000 0.950 0.001
b. Exact statistic
Appendices 325
Appendix R The Results of MANOVA for Factor Scores on Medium to
Discharge Accountability by Demographic Attributers of Donors
Multivariate Testsa
Partial
Hypothesis
df
Squared
Wilks' Lambda 0.994 0.512b 2.000 173.000 0.600 0.006
Wilks' Lambda 0.988 0.358b 6.000 346.000 0.905 0.006
Wilks' Lambda 0.994 0.507b 2.000 173.000 0.603 0.006
Sector
b. Exact statistic
326 Appendices
Appendix S Cross-tabulation of Respondents by Demographic Profiles
Cross-tabulation of the groups of respondents who give to local Imams,

government-sponsored zakat agencies and private zakat agencies by employmen
sectors
Employment Local Imam BAZNAS LAZ Total

Sectors F % F % F % F %
Government
Employee 138 0.59 37 0.16 27 0.12 202 84.5
State-owned
Companies 8 0.03 2 0.01 2 0.01 12 5.0
Employee
Private
Companies or 2 0.01 3 0.01 9 0.04 14 5.9
Self Employed
Others 3 0.01 1 0.01 2 0.01 6 2.6
Total 151 0.64 43 0.19 40 0.18 234 100

government-sponsored zakat agencies and private zakat agencies by age category
Age Local Imam BAZNAS LAZ Total
Category F % F % F % F %
≤ 20 3 1.28 0 0 0 0 3 1.3
21–30 34 14.47 5 2.13 9 3.83 48 20.10
31–40 46 19.57 18 7.66 15 6.38 79 33.10
41–50 40 17.02 13 5.53 9 3.83 62 25.90
51–60 29 12.34 7 2.98 6 2.55 42 17.60
≥ 60 0 0 0 0 1 0.43 1 0.4
Total 152 67.68 43 18.30 40 17.02 235 100

government-sponsored zakat agencies and private zakat agencies by the level of
education
Local Imam BAZNAS LAZ Total
Education
F % F % F % F %
Junior High
School
0 0 0 0 1 0.43 1 0.4
Senior High
School
13 5.53 5 2.13 3 1.28 21 8.8
Diploma 23 9.79 2 0.85 5 2.13 30 12.6
Bachelor
Degree or 116 49.36 36 15.32 31 13.19 183 76.6
Higher
Total 152 64.68 43 18.30 40 17.02 235 100
Appendices 327

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ACCOUNTING FOR ZAKAT: THE

Iwan Purwanto Sudjali

Submitted in fulfilment of the requirements for the degree of

Accountability, Alms, Charitable Organisation, Donor, Beneficiaries, Faith-based

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies iii

This study focuses on the accountability of zakat agencies, as most Muslims

In term of context, this study focuses on Indonesian zakat agencies because

This study is motivated by an indication of a lack of trust and the possibility of

This study is also motivated by limited accountability studies regarding Islamic

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies v

Drawing on middle range thinking (MRT) perspectives (Laughlin, 1995, 2004,

Regarding the scope of accountability, administrators and donors held similar

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies vii

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies ix

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xi

Figure 1-1 Thesis Structure ..................................................................................... 16

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xiii

Table 2-1 Comparison of Zakat al-fitr and Zakat al-mal .......................................... 20

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xv

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xvii

AUD Australian Dollar

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xix

Amil Ar. A zakat collector. A zakat collector can be an

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xxi

Signature: QUT Verified Signature

Date: 10 September 2017

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xxiii

• My research supervisors, Associate Professor Stuart Tooley and Dr Craig

• The Director of Higher Degree Research Studies, Dr Stephen Cox.

• Badan Pemeriksa Keuangan – Republik Indonesia, for granting me paid study

• Australian Award Scholarship for providing me with a scholarship and

• Dr Jonathan Bader, Gayleen Furneaux, Millen Tsefai, Dennis O’ Connell, and

• Professional editors, Kylie Morris and Fiona Crawford, who provided

Accounting for Zakat: the Accountability of Indonesian Zakat Agencies xxv

The practice of philanthropic giving is encouraged in many religions. This is

Islamic charitable giving can be categorised as either a voluntary endeavour

This study focuses on organisations that collect and distribute zakat

The collection and distribution of zakat changed in Indonesia as a result of

1.2 RESEARCH MOTIVATIONS

1 A more comprehensive discussion of accountability is presented in the Theoretical Framework.

Although the President, the Minister of Religious Affairs, several authors,

1.3 RESEARCH AIM, OBJECTIVES, AND QUESTIONS

It has been argued that accountability is a socially constructed concept and

RQ.1 How is accountability understood by the administrators of zakat agencies?

The second objective of this study is to gain an understanding of the

RQ.2 How is accountability understood by the donors of zakat agencies?

RQ.3 What inter-relationships exist amongst the core elements of accountability

An accountability gap can exist if inconsistencies occur between the

1.4 RESEARCH CONTRIBUTIONS

This study has both theoretical and practical contributions.

2. This study identifies the stakeholders of Islamic faith-based charitable

4. Based on the framework of Stewart’s (1984) ladder of accountability,

5. The results of factor analysis suggest that the scope of accountability of

6. With regards to the type of information that should be disclosed by

7. Zakat agencies use several types of media to discharge accountability.

8. While previous qualitative studies have identified that the types of

9. This study provides evidence about to whom zakat agencies should be

1.5 THESIS OUTLINE

As depicted in Figure 1.1, this thesis consists of nine chapters, as follows.

Chapter 2: A Contextual Understanding of Zakat: Its Meaning, Impost, and

This chapter provides a contextual understanding of zakat by presenting an

This chapter discusses the empirical literature on accountability to provide