The governance of ummah funds by non-profit organisations

Islamic philanthropic organisations are non-profit organisations because they handle a significant portion of the public’s donations. These organisations must always put transparency and accountability first when performing their tasks.

However, in practise, philanthropic organisations still lack adequate transparency and accountability, which leads to several fraudulent activities.

Also, insufficient control of the organization’s expenditures neglects local culture and fails to notify the community about its activities. This appears to have occurred as a result of numerous scandals and power abuses committed by non-profit organisations.

A seminar was held on Islamic Economics, Finance, and Technology Australia (IEFTAR) 2022 where four prominent speakers were invited to address these issues on Saturday 1  October 2022 at Greenacre Citizen Centre to start a community discussion.

Dr Ratna Mulyany from the Faculty of Business Economics, Syiah Kuala University (FEB USK) Indonesia, Dr Cand Muhammad Hafidz Lidinillah from the Australian Sharia Economic Society (MES) Australia, Andri Nursafitri from Amanah Islamic Finance, and Lama Fadda from Launchgood shared their researches and professional practice on this special theme related to the governance of ummah funds.

Session One

The first session of the seminar featured two speakers; Br Andri Nursafitri from Amanah Finance and Sr Lama Fadda from Launchgood.

Andri discussed Amanah Islamic Finance’s function in overseeing money for Islamic home financing.

Amanah offers a variety of ijarah products that incorporate shariah-compliant goods that the  Muslim population in Australia can utilise, such as musyarakah and mudharabah.

Amanah also employs a competent audit institution to audit each of its shariah business activities and has a strong control function in place to manage the funds it receives.

In the meantime, Lama went into further detail on how Launchgood, one of the international platforms for Islamic crowdfunding, aids Muslim communities worldwide in obtaining finance for the success of various ummah initiatives.

According to Lama, it is crucial to establish a link between the campaign and the goal of the funds being raised by making use of the power of social networks and the internet to provide a way to raise money or support people who are in need.

Session Two

In the second session, Dr Ratna Mulyany a researcher in Islamic finance from the faculty of business economics at Syiah Kuala University (FEB USK) discussed the importance of implementing accountability in Islamic philanthropic organizations.

Accountability is a topic that many Islamic philanthropists have to pay more attention to.

In order to be accountable to donors and the community, Islamic philanthropic organisations have to prioritise financial openness and responsibility.

In her ongoing research, Dr Mulyany outlined the suggested accountability framework to be based on al Maqasid As-Syariah, stating that the accountability report’s goals were to safeguard the values of human life, safeguard the human self, safeguard the society, and safeguard the physical environment.

Despite the fact that almost all gifts and donations are made sincerely by individual donors without the need for additional documentation, it is the responsibility of every Islamic charitable organisation to uphold the organization’s obligation to be accountable to the donors and the community.

As the final speaker, Dr Cand Muhammad Hafidz Lidinillah who is the secretary general of MES Australia and also an employee at the Indonesian Ministry of Religion concluded the discussion by bringing up the topic of the Indonesian Hajj Fund Management.

Dr Lidinillah claims that a fiduciary relationship is presently used in the administration of Indonesia’s Hajj Fund. This is to include the interaction between representatives (wakeel and muwakkeel).

Such a relationship necessitates the creation of a wakalah contract between parties.

Dr Lidinillah concluded his presentation by recommending that the wakalah contract should include clauses that allow for more transparency for pilgrims and freedom of choice for any portfolio investment possibilities.