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Innovative Waqf Business Model

  • “…does not deny the change of provisions by changing times” (Al-Nadwi, 1998, p. 353)
  • Umar Ibn Al-Khattab (R.A.), was the first person brougth innovation to optimize Waqf Funds (Baltaji, 2007; Sabarudin Ahmad et al., 2019).
  • Cash Waqf was innovated during 15th to 16th century by Ottoman Empire (Çizakça, 1998; Firdaus & Rizal, 2021)
  • Islamic Social Finance: Microfinance - creates financial inclusion to the bottom pyramids (Zamir Iqbal & Friedemann Roy, 2018).

> INTRO & PROBS

Introduction: Waqf and Innovation

The Problems of

the Existing Waqf Business Model / Traditional Model

Waqf Institution

Less Professionalism

Financial Sustainability

Deficit of Public Trust

Severe Lack of Innovation

> Problem With the Existing Waqf Business Model

  • Abdul Hamid and Mohammad Tahir (2017) ought that the centralization has led to mismanagement, and decentralization of Waqf is a fit structure of Waqf management.
  • dominated by traditional culture and raising many red flags (Billah, 2020)
  • the problem starts with the State Islamic Religious Council (SIRC), which is the sole trustee of all Waqf properties (Chowdhury et al., 2012)
  • Thus, made it fail to fulfil its raison d’etre (Marwan and Engku Rabiah, 2019).
  • Cash Waqf is the dominant number of articles in last 40 years (Khaled, 2021), and it is absence considerably in technological innovation, environmental circumstances and innovative ecosystem
  • 60% or higher of NPOs are relying on public interest grants as their main source of funding (African Venture Philanthropy Alliance, 2020; Sinyolo et al., 2017).
  • Rafiqul and Md Mahmudul (2013) claim due to structural economic of private and public sector.
  • Waqf donors felt insecure with regards to the Waqf distribution (Ahmad, 2019).
  • The higher the perception of transparency, the higher the Waqf authority’s trustworthiness (Zulfikar & Rusdianto, 2020)
  • High-income group tends to donate directly to private Waqf projects (Fauzias et al. (2022a).

despite various efforts and initiatives over the decades to improve Waqf Institutions,

"

Productivity Paradox

"

the existing Waqf business model in which has failed to deliver the intended results, it does face productivity paradox (Utomo et al., 2020)

Mainstream WBM into Third Sector

Business Process Reengineering (BPR)

Proposal for Solutions

> PROPOSAL FOR SOLUTIONS

of the Exisiting Waqf Business Model

  • Witesman (2016) propounds the third sector attempts to solve Market Failure Theory and Douglas’ Government Failure Theory.
  • This is also supported by Abdul Hamid and Mohammad Tahir (2017)

Innovative Waqf Business Model

  • When an organization holds contradictions, dilemmas, and tensions, and there are structural problems, BPR offers a strategic approach to address these challenges (Hammer & Champy, 1993).
  • BPR satisfies the 1st rule of Occam’s razor of knowledge discovery and actionable knowledge.
  • Most importantly, Occam’s razor has better predictive power (Pacer & Lombrozo, 2017)

Theoretical Underpinning

> THEORETICAL UNDERPINNINGS

of Waqf Business Model

Four Theoretical Underpinnings

of Waqf Business Model (WBM)

> Four Theoretical Underpinnings

  • What is Pro-Sumerism?

= Producer + Consumer

  • Prosumerism concept which is adapted by Benefidonor (Fauzias et al., 2022b) and integrated with Venture Philanthropy.
  • It posits under umbrella of effective altruism (Taggart & Zenor, 2022) .

ProSumerism

  • An example of this is a group of retired teachers or lecturers play a central role such as providing fund and expertise to endeavor the success and sustainability of a private school for underprivileged parents (e.g., Sekolah Agama Rakyat (SAR)). While Benefidonor means, those group of retired teachers or lecturers also accommodate that private school for their children. So, only certain Waqf projects, such as public facilities like dialysis centers, recreation centers, rehabilitation centers for autism, mosques, cemeteries, Waqf hotels and Waqf hospitals, are deemed to be compliant with the Waqf Beneficiary Model (e.g., Lee et al., 2022) – those are not only benefitting to underprivileged community but also to donors as well. .
  • To pave the way for social innovation, for example, in France, the economic social came to prominence as part of the government's strategy to decentralize public administration and social service -- New Public Management (NPM) , e.g., France (McLaughlin et al., 2005).
  • Third Sector from Pearce (2003) that serves as a foundation for Benefidonor to defy institutional logic. The need to challenge the institutional logic associate with conventional player rationalities to create space for experiment, which are often tied to other dominant social and government structures (Nicholls, 2010).

Third Sector

  • Decentralization influences the culture of innovation, and has a positive impact on innovative behavior (Darvishmotevali, 2019).
  • Mintzberg and McHugh (1985) describe in detail how vertical and horizontal decentralization offer insight into the different approaches to the distribution of the organic decision-making authority within organizations, with the latter referred to as adhocracy.
  • Decentralization is breaking down traditional silos among strategic business units, shifting roles, encourage cross-pollination and creating possibilities for new syntheses.

Decentralization

CENTRALIZATION

DECENTRALIZATION

  • Flywheel Effect of volunteering actors, i.e., Benefidonor and Venture Philanthropy.
  • The Flywheel Effect is a concept developed by Jim Collins (2001) -- a self-enforcing virtuous cycle.

Flywheel Effect

  • Collins provides a model that helps organization navigate through change to build effective and influential centers. This framework empowers researchers to develop a successful center in spite of periods of transition and uncertainty, to take it to the next level. Amazon is an example using of this framework (see Huang et al., 2022)

Innovative Waqf Business Model: Conceptualized from ProSumerism to BenefiDonor

Conclusion

> CONCLUSION

Community Development Programs

Malaysia's

in Crisis

Social Welfare

  • Amira Jamil (2021) has highlighted that there are emerging research trends in examination of functional ontology of Waqf instruments in fulfilling socio-economic gap, particularly after unanticipated devastating effects of global outbreak of COVID-19 that have had entrenched across various levels of industries at unprecedented scale.
  • All of these signifying further the importance of this research.
  • Malaysia Federal Constitution enshrines that social welfare is the duty to be shared by the federal and state governments. However, the study concluded that the existing structure and system have not been fully entrenched in a fluid manner to cultivate the role of government in social welfare (Farrah Shameen, 2018).
  • Moreover, contemporary philanthropic theory remains heavily influenced by archetypes formulated during the early 20th century, while other sectors have changed dramatically (Harrow et al., 2021).
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