Digitalizing Zakat is More Relevant Now

21 March 2017


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

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

Zakat is a form of alms-giving treated in Islam as a religious obligation. Digitalizing zakat is not merely a shifting from cash based to a non-cash based transaction. It’s more than that. The scope of digitalizing zakat is relevant in at least three areas. The first area is digital zakat collection. A report by WeAreSocial states that there are about 88.1 million active internet users in Indonesia as of January 2016. At that time, about 43 percent of the total adult population owned at least one smartphone and spent about three hours and 33 minutes on average accessing the internet.

Moreover, 20 percent of mobile activities were spent in mobile banking and 20 percent of mobile users admitted using a mobile phone to shop online. Those indicate that there is a captive market for digital transactions in Indonesian society. Hence, zakat operators should grab this opportunity by developing a zakat mobile application that makes it easier for people to pay zakat. Muzaki Corner is one of zakat mobile application that can serve people to pay zakat

Moreover, zakat operators also need to cooperate with bank and telecommunications providers who offer electronic money services. That will open a wider opportunity to establish hybrid donation channels for the donators. In addition, collaboration with the convenience store, insurance, stocks, travel agents and other institutions will allow more people to participate in alleviating poverty while gaining satisfaction through their daily consumption and investment.

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

Second, digitalizing zakat should take place in zakat distribution and utilization. This becomes more relevant nowadays as our country is very wide and remote in some areas. Besides, Indonesia is vulnerable to natural disasters, which creates a genuine need for a direct response. This makes digital zakat distribution much reliable than cash distribution.

However, it is not merely about shifting from cash to transferring zakat electronically. It also about the recipient database that will prevent redundancy and promote more equal distribution based on the need in certain areas. In addition, digital distribution will reduce operational costs so that charity organizations can spend more on staff development. It also anticipates fraud in fund distribution, since every single activity can be monitored via the system.

Third, digitalizing zakat is also urgent for data management. Law No. 23/2011 about national zakat management requires BAZNAS to give a report on national zakat management to the President. The report should capture the activity of all zakat operators including more than 500 BAZNAS office at every level and private zakat operators (LAZ). This report is crucial as the basis of decision-making and policy creation. Wrong or even incomplete data may lead to invalid interpretation. Moreover, integration of collected data is also a vital point.

Data is useless if it is scattered and unrelated. Realizing this point, BAZNAS has developed a national zakat management information system called SIMBA since 2012. SIMBA allows zakat operators to record their collection and distribution activities in a certain format so that SIMBA can capture national data reports in real time – online. This system has been disseminated to all provinces and there was a national data entry in October 2016. Now, some private zakat operators are also using it.

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

Shifting to a digital zakat operation is not a simple action but it is important to start immediately. It is because the poor and needy are waiting to see this significant improvement, which will give them a better opportunity to escape from poverty.