MANAJEMEN

ORGANISASI
FILANTROPI
ISLAM
KULIAH SESI 1
 OUTLINE
Part 1
• Generic Organizational Form
• Definition of Non-Profit Organization
• The Objectives of Non-Profit Organization
• The Classification of Non-Profit Organization
• The Demand for Non-Profit Organization
• Non-Profit Organization in Indonesia
• Three Core Philosophies of Non-Profit Oraganization

Part 2
• Islamic Philantrophy: Is it a voluntary activity?
• The Motives of Islamic Philantrophy
• The Instruments of Islamic Philanthrophy
• The Deriving Principles of Islamic Philanthrophy
GENERIC ORGANIZATIONAL
FORM
DEFINITIONS OF NON-PROFIT
ORGANIZATION
“An organization whose
founders are not entitled to
(a part of) the organization
profits, a condition traditionally
called non-distribution constraint
(Hansmann 1987:28).”
NPOs are best understood as “self-
governing, private, not-for-profit
organizations that are geared to
improving quality of life for
disadvantaged people”
(Vakil 1997: 2060)
“An organization that is self-
governing, institutionally
separate from government,
non-compulsory, and that meets
the non-distribution constraint
(United Nations 2003:17).”
No reason to depart from non-
distribution contraint
characterization of Non-Profit
organizations, however this does
not imply that Non-Profit
organizations are bared
from making profits.
THE OBJECTIVES OF NON-PROFIT
ORGANIZATION
 Unobservable.

 There is no concensus among economists regarding the objective of

non-profit organizations (Schiff and Weisbrod 1991:621).

 Organizational objectives may change overtime as societal

needs may evolve and new mission may be emerged.
Three Core Philosophies of NPO
Non-Profits Are Business
• If for-profits chase profits, then non-profits pursue their missio
• Charity VS Mission-Based Organizations:
Charity : Views it resources as combination of four things: people, money,
buildings and equipment. The Charity uses these four resources to provide
mission and when the resources are used up, mission stops.
• Mission-Based Organizations : Looks beyond these 4 combination of resources
and use business tools in performing their mission .

No One Gives You a Dime

• When performing activities for NPO, for example receiving grants or donations,
an NPO is performing services with the expectation of outcome required by the
funder.

Non-Profit Does Not Mean

No Profit
• NPOs need to consider both financial returns and mission returns.
THE CLASSICAL CLASSIFICATIONS OF
NON-PROFIT ORGANIZATION

Donative Non- Commercial Mutual Non- Entrepreneurial

Profit Non-Profit Profit Non-Profit
organization organizations organizations organizations

Funds
generated by
selling goods
Funded or services, Organization
Organization
mainly by through s are not run
s are run by
donations clients might by their
their funders
and subsidies be insured by funders
public or
private
schemes
THE CLASSIFICATIONS OF NON-PROFIT ORGANIZATION -
SOCIAL ENTERPRISE SPECTRUM (DEES, 2006)
 THE CLASSIFICATIONS OF NON-PROFIT ORGANIZATION -
SOCIAL ENTERPRISE SPECTRUM (DEES, 2006)

Full Philantrophic Partial Self- Cash Flow Self Operation Expense Full-Scale
Support Sufficiency Sufficiency Self-Sufficency Commercialization

Earned income
cover all operating
expenses, even
that expenses are
Earned income is
Sources of earned at the market rates. Revenue covers all
used to cover out-
No potential income is This organization costs at market
of-pocket
sources of earned available but only can cover some of rates, including
operating expenses
income are cover part of start-up expenses market costs of
which are below
appealing given necessary and capital capital, without
the market rates.
the organization’s operating expenditure. Cash hint of
Technically this
mission and expenses. This donation is still philantropic
organizations are
values. organization need needd during the subsidies even for
self-funding and
Philantrophic cash donation to start-up period. start-up expenses.
can generate
sources include pay some out-of- After the start-up This organization
excess cash.
donations, in-kind pocket operating periode, the often is structured
However, noncash
donations, and expenses, start-up operation would as, or converted to
philanthropic
volunteer labor. costs and capital stand on its own for-profit
subsidies is still
investments. and without organization.
needed.
relying on any
additional
philantrophy
sources.
 OTHER CLASSIFICATIONS OF NON-
PROFIT ORGANIZATION

Source: Salamon and Anheier (1996); Courtney (2002); Lewis and Kanji (2009); Charity Commission (2013)
ACTIVITY 1: CLASSIFYING
NPOS
THE DEMAND FOR NON-PROFIT
ORGANIZATION
Failure to cater unpopular
and minority needs

Inability to provide
sufficient goods and
services (Dollery adn Wallis
Demand for NPOs

2003: 27-28).
Government failure
Failure to detect and satisfy
new needs or socially
controversial needs

Misallocations between
government revenue and
spending.

Failure to provide some

goods and services
Market failure
(D. Leat 2016:64) Failure to reach optimal
welfare levels or welfare
allocation
THE DEMAND FOR NON-PROFIT
ORGANIZATION

If the market produced the private goods and services society needs,
philanthropy would not have much to add. Similarly, if government
provided public goods efficiently and effectively philanthropy
would have even less to do. … Philanthropy not only provides a
backup against government and market failure but does
so with minimum loss of individual freedom. For example,
foundations are rooted in concern with limited state power and the
autonomy of individual.

(Prewitt, 2006)
 NPOS IN INDONESIA …
Overlaps and interdependencies between
Varied in terms multiple layers of regulators

Organisasi non-Pemerintah
(ORNOP, non-governmental
organisations)
Lembaga Swadaya Masyarakat
(LSM - self-reliant community
institutions)

Lembaga Pengembangan Swadaya

Masyarakat (LPSM, self-help
community support institutions)

Organisasi Kemasyarakatan
(ORMAS, Societal Organisation)

Organisasi Nir-Laba or Lembaga

Non-Profit (LNP, Non-profit
Organisation)

Organisasi Masyarakat Sipil

(OMS, Civil Society Organisation)

Source: Adapted from interpretation of Law No. 17 of 2013, INCL (2015), COF (2015)
 NPOS IN INDONESIA …
1942-1945
Before 1942
(Japan colonialization period)
(Dutch colonialization Old Order regime
period) Era of flexibility, many societal
organizations coalesced into Political NGOs thrived and
Many NGOs (Sarekat Islam, political parties in preparation for competed with one and other
Muhammadiyah, Boedi the establishment of an to gain influence
Utomo, Organisasi Taman independent Indonesian nation.
Siswa, Partai Nasional Moreover, other types of NGOs,
Indonesia) supported the such as labour unions, farmers’
pursuit of the country’s and fishermen’s associations,
independence youth and women’s alliances,
were also established during the
period

New Order regime

1998 to present
Freedom of expression
influences the incredible
growth of NGOs in
Indonesia.
The presence of political
NGOs diminished, only
NGOs that supported
development activities
promoted by the government
were allowed to operate
 NPOS IN INDONESIA …
ICNL (2015) revealed that there are 48,886 associations and foundations registered at the
Ministry of Law and Human Rights, and 65,577 societal organizations (without status as
legal entities) registered at the Ministry of Home Affairs.

Big but small…

BPS in 2014 revealed that a single NGO employs, on average, five paid employees and
21 unpaid employees (volunteers), and provides services to about 423 individual
beneficiaries.

This fact can be explained by Law No. 17 of 2013 on Societal Organisations (Organisasi
Kemasyarakatan) which states that a societal organization (including associations and foundations)
can be set up by a minimum of three persons (except for foundations), with no associated
requirement for a certain minimum level of assets (except for foreign-affiliated foundations).
 ISLAMIC PHILANTROPHY: IS IT A
VOLUNTARY ACTIVITY?

 The term philanthropy is derived from two Greek words, philos (love), and
anthropos (humankind). Philanthropy is a sense oriented towards 'love of man'
with voluntary moral motivation, without any element of obligation.
 In Islam, its philosophical basis is the 'obligation' from 'Allah' to achieve
social justice. This understanding may create unity between love of the human,
moral motivation, and the obligations of Allah Ta’ala to achieve social justice in
this world.
 Philanthropy in Islam has a clear legal basis, both from the al-Qur'an and al-
Hadith. It has become the centerpiece of the development of the ummah.
 In Islamic philanthropy, the donor and the recipient has relationship, it is not only
to perpetuate the superior-inferior, but more importantly partnership with balance
and equality, and therefore the bad intentions can be avoided
ISLAMIC PHILANTROPHY
ORGANIZATIONS
• Nonprofit entities which aim to provide public good and assistance for
poor communities, either through organizations or directly to
individuals, and which are based on Islamic values or having Islamic
aims.
THE MOTIVES OF ISLAMIC
PHILANTROPHY

Individual gives
philanthrophy because of
Individual gives obligations motive as set
philanthropy in order to out in the teachings of
help the distress Islam (al-Qur'an: 09: 76). Individual gives
directly. This act is only This motive, as discussed philanthrophy for
temporary in nature and in Islamic literature, can helping the public in
it will last for only a be categorized as alms general, but the motive
short while. that only apply to is eternal treasure forever
tangible property only. or until the instruments
Example: Giving could not generate the
Shadaqah. (al-Qur'an: benefits.
02:205), (al-Qur'an, 02: Examples: Zakāh, nadhr,
20), (al-Qur’an: 03:190) fidyah, Kaffārah and
udhiyyah (al-Qur'an, 08:
60).
 THE INSTRUMENTS OF
ISLAMIC PHILANTROPHY
No Instrument Ownership Motives/Recipients Governnace
1 Zakat al-Fitrah Rulers Obligation to purify our soul Trustee
Obligation to
2 Zakat Rulers purify our wealth Trustee
Eternal goods
3 Waqf Allah for Allah Trustee
Used out goods for
4 Sādaqah Lillah Allah Allah Supervise/Facilitate
Keeping promises
5 Nadhr Allah to Allah Facilitate
Substitutes of
6 Fidyah Allah worship Facilitate
Kaffārah (Sadaqah Getting Allah's
7 Wajibah) Allah forgiveness Facilitate
Udhiyya (Qurban, Dam
8 Payment) Allah Pay fines to Allah Facilitate
Thanks for the
9 Aqīqah Allah birth Facilitate
PRINCIPLES OF ISLAMIC
PHILANTHROPHY IN THE QUR’AN

Welfare (ri’ayah)
Togetherness Justice (adalah)
‘Ali Imran (3): 117
(ukhuwah) An Nisa’ (4):58
Al Ma’un (107): 1-7
‘Ali Imran (3): 103 Ar Rum (30): 38
Al Hasyr (59): 7

Balance (tawazun) Universalism

Benefit (maslahah)
‘Ali Imran (3): 112 (shumuliyah)
An Nisa’ (4): 29
Al Qasas (28): 77 Al Hujurat (49): 13
 MODERNIZATION OF ISLAMIC PHILANTROPHY IN
INDONESIA

1. Legal Reform

Law No 23 in 2011,
the Foundation Law No 16 2001 (amended in 2004),
and the Waqf Law No 41 in 2004.
Tipe organisasi filantropi resmi di Indonesia:
 Organisasi Pengelola Zakat dibawah Kemenag dan BAZNAS (LAZ)
 Organisasi Kemanusiaan dan Donasi dibawah Kemensos dan undang-
undang Yayasan (Foundation Law)
 Waqf foundation
 MODERNIZATION OF ISLAMIC PHILANTROPHY IN
INDONESIA

 2. Management Reform
– Banking related and cashless transaction
– Full time professional staff
– Organizational capabilities
– Transparency, regular audit and accountability
– Modern fundraising
MODERNIZATION OF ISLAMIC PHILANTHROPY IN
INDONESIA

 3. Program Reform
– Education
– Health
– Disaster relief
– Economy
– Socio-religious program
– Advocacy of victim-eviction
– Migrant worker