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In search of credible zakat governance
Apart from fasting, Muslims are obliged to pay alms and zakat (tithes) during Ramadan
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Apart from fasting, Muslims are obliged to pay alms and zakat (tithes) during Ramadan.
Zakat are mandatory alms that serve to purify the wealth of eligible Muslims with certain criteria and specific calculations.
In Indonesia, amil zakat institutions play an intermediary role of collecting zakat and distributing them to eight beneficiaries, which include the institutions themselves. The other seven beneficiaries are the needy, the poor, people who convert to Islam, slaves, the debt-ridden, the wayfarer and people who fight for God.
The unique feature of amil zakat institutions results in the question of accountability. Transparency matters to the zakat institutions. Even though zakat payers sincerely seek to please God, the institutions are responsible for receiving the payments, and in the allocating and utilizing of the collected funds.
The earned credibility from such responsibilities helps the zakat institutions to avoid the risk of disproportional zakat allocation among the beneficiaries.
According to the 2011 fatwa on zakat from the Indonesian Ulema Council (MUI), unless the amil zakat is paid by the government, such institutions are only allowed to receive one-eighth or 12.5 percent of collected zakat.
As most zakat funds are organized privately by NGOs, providing an appropriate accountability mechanism is essential to avoid fraud.
In 2011, the Financial Accounting Standard Board of Institute of Indonesia Chartered Accountants (DSAK IAI) and the National Sharia Council of MUI issued a series of financial accounting statements (SAK), constituting the Indonesia Islamic Accounting Standards (PSAK Syariah).
The above SAK 109 regulates the principle of zakat reporting by amil zakat institutions. However, while many local-level amil zakat institutions are still struggling to implement the accounting standards for zakat, the prevailing loose governance mechanism demands more stringent good governance guidelines.
The sound attempts at good zakat management by the national zakat institution BAZNAS has been referred to as the best practice of an amil zakat institution regarding transparency and accountability.
However, sporadic local institutions at regency to even community levels have erected hurdles for BAZNAS in obtaining the data of zakat realization in Indonesia, let alone integrating zakat management.
Hence, the struggle to widely disseminate the skills of zakat management and accounting should be seen as an agenda item for all stakeholders.
Higher education authorities, standard-setting bodies, the Religious Affairs Ministry and other parties should be committed to training and education for local amil zakat institutions.
The absence of comprehensive governance for zakat institutions should also be highlighted. The framework of good governance for amil zakat institutions should be drafted carefully for several reasons.
First, amil zakat institutions are nonprofit organizations and comply with sharia as best as possible. Reformative legal action is needed as we lack supporting governance for the institutions. For example, to validate reports by zakat institutions, it is important to have specific audit procedures in accordance with sharia.
However, Indonesia lacks the national framework of sharia governance and sharia audits. As institutions focus more on the mainstream criteria in the audit, zakat management in accordance with the sharia is lacking.
Human capital remains a classic problem in the institutions. While several accountants have been certified in the relevant sharia methods, the public seems unaware of the need for such specific certified accountants.
All accountants deal with accounting issues while sharia-certified accountants follow the guidelines of the Quran and Sunnah (Prophet’s sayings) in assessing the collection and distribution of tithes. For instance, the transactions should comply with sharia as well as accounting standards, and very few professionals obtain both skills at once.
As expected, there are many more amil zakat institutions compared with sharia-certified accountants, particularly in rural areas. Besides, working for amil zakat institutions is not considered a prestigious profession compared with working for companies or the government. Effective communication and promotion of the profession of such amil could encourage Muslim millennials to take up these professions.
Hence, more certified amil would increase public trust in zakat management. The increasing professional or certified amil zakat institutions could lead to better inputs for the government regarding zakat management and governance. For instance, groups of certified amil might have a greater influential ability in intervening in government policy by providing recommendations or criticism systematically rather than individual amil.
It is important to optimize national zakat management through the role of integrated amil zakat institutions. For decades, zakat governance has merely relied on religious norms and guidelines. Engaging in systematic zakat governance would better guarantee public and religious accountability of zakat collection, distribution and use.
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The writer is a master’s graduate from the Durham University Business School’s program on Islamic finance and management,
