Centralizing Zakat – the Wrong Solution

Amelia Fauzia

Amid the public uproar surrounding suspicions of corruption in the Bank Century payouts and bailout and doubts about the government’s performance in general, the Department of Religion is planning to centralize the management of zakat charitable donations. This is being done by a draft bill currently on on the table of Parliament which would replace existing law number 38 of 1999 on the Management of Zakat. It is very clear that centralisation would not help the zakat movement, and thus philanthropy and the people’s welfare, but would in fact wreck it by making it dependent on an already troubled government bureaucracy.

The Problems of Centralisation
The Department of Religion assumes that centralisation of zakat will put an end to management problems such as zakat distributions marred by chaos and even fatalities, and problems with the accountability of Muslim philanthropic institutions; they assume that centralization would even mobilize and maximise these institutions’ efficiency. Far from being an effective response to zakat problems, centralizing its collection raises a further problem, that of a giving an institution of dubious management capacity a monopoly over zakat management at the cost of losing the philanthropic institutions that already exist.

Research into philanthropy by the Center for the Study of Religion and Culture (CSRC) at UIN Syarif Hidayatulah showed that 98.50% of Muslims made zakat fitrah donations, and 34.70% made zakat mal contributions from their excess earnings. The total amount of Muslim philanthropic contributions in 2004 was estimated at Rp. 19.3 trillion. The major part of these contributions was given directly to those in need, to social organisations, and for education and religious purposes including mosques and pesantren. It is only in the last few years that the percentage of zakat channelled through Muslim philanthropic bodies has increased, thanks to the growing trust of the public in non-government Zakat Collection Bodies (LAZ) like Dompet Dhuafa. It is this extraordinary funding potential that is driving the push for centralisation.

The central idea of the draft bill is to give government owned Zakat Collection Agencies (BAZ) a management monopoly, from the highest central levels right down to the villages. This centralisation assumes the existence of BAZ as a professional and trusted institution. The problem is that the public is still very suspicious of the capacity of most BAZ agencies, especially when it comes to management, accountability and the effectiveness of zakat utilisation. Only 1,001 of the 5,649 BAZ agencies proposed to manage zakat since the 1999 Zakat law was passed were actually formed, and it is estimated that only 300 of these were active in 2007 (Fauzia, 2008:230). Bureaucratic problems presented enormous obstacles. And this was happening at the same time as people were losing faith in the performance of haj management and religious community endowment funds (Dana Abadi Ummat).

And if that is not enough, under the draft bill unless the existing non-government LAZ merge with the government owned BAZ, they will not be allowed to operate. The fact is that the LAZ generally far out-perform BAZ, which are heavily burdened with all the problems of government bureaucracy. To date the majority of LAZ have been professional and accountable in managing zakat contributions, and because of this they have earned the trust of the public. This is shown by the fact that the amount of zakat collected by BAZNAS (the National Zakat Collection Body) fell short of that collected by LAZ such as Dompet Dhuafa, PKPU, Rumah Zakat, and YDSF. The proposed monopoly will sacrifice and swallow these LAZ civil society movements which have helped the state care for otherwise stretched communities by providing (for example) education and disaster rescue services, and by strengthening the economy.

The intent of this centralisation to manage the religious contributions of the public seems absurd. It can only further burden a government that already struggles to handle its reponsibilities. As well as this, the idea of centralisation falls well outside national and global trends towards decentralized systems and strengthening civil society.

The Failure of Centralized Zakat under the New Order
The draft bill’s concept of centralisation in reminiscent of the government style of Soeharto’s New Order. Soeharto tried to centralize zakat management in 1968. This initiative was backed by a proposal from 11 ulamas in Jakarta, among them Professor Hamka and KH. Hasan (a senior religious figure) that the president should promote zakat collections. On October 26, in a speech for the occasion of Isra Miraj celebration (recalling the Prophet Muhammad’s miraculous flight to Jerusalem and ascension to heaven), Soeharto made an announcement about zakat collections and appointed himself as the collector. His proposal to collect zakat using post-office money orders was supported by a number of leaders, and assisted by one of whom was Major-General Alamsyah Ratuprawiranegara.

This effort lasted for only three years. Each year the amount collected and put to use was announced in speeches delivered on days of Islamic importance. The amount of the last national zakat collection, reported on the eve of Idul Fitri in 1970, was Rp. 39.5 million and $2,475. This fell far short of Soeharto’s prediction of Rp. 2.5 trillion each year, to be used for the development and welfare of the Muslim population (Fauzia, 2008;193). This episode should be an important lesson that the government has tried top-down centralization, and failed.

Standardization and Supervision
What is needed now is not centralization to boost the effective utilization of zakat, but lifting the capacity, standards and supervision of the existing philanthropic institutions. These institutions are the driving force behind Indonesia’s philanthropic movement, and deserve to be appreciated and supported. The function of BAZNAS needs to be changed so it can effectively standardize and supervise, but not compete with BAZ and LAZ organizations for collecting and managing philanthropic funds. Similarly the Department of Religion should do much more to build the capacity of Muslim philanthropic institutions, by putting regulations in order and through supervision. Rather than improving the lot of the people, centralizing zakat will deliver it into the hands of a bureaucratic system that remains rife with opportunities for corruption.