Finance & Banking

ISLAMIC SOCIAL ENTREPRENEURSHIP: AN APPROACH TO CREATE A CONCEPTUAL MODEL OF SOCIAL WELFARE SYSTEM DR. HENDRATI DWI MULYANINGSIH SENIOR LECTURER AT UNIVERSITAS ISLAM BANDUNG

The term Islamic social entrepreneurship is relatively new
within the social entrepreneurship and social enterprise
literature as studies in these fields have long been dominated
by Western scholars and perspectives. The term ‘Islamic’ here
is adopted from specified unit analysis of social enterprise
that contextually have the norms of Islam, i.e. Shari’a-based.
In the domain of Islamic economics, entrepreneurship itself
is a prominent part, blended between entrepreneurial
activities and religion.

The basic concept of entrepreneurship in Islam stands on a
mutual relationship (partnership and participation), altruism
and goodwill.2 Its concept is grounded on the objectives
of Islam, such as unity (tauhid), trusteeship (khilafah) and
worship (ibadah). Considered as Allah’s khalifah or person
on duty, it is the duty of human beings to create prosperity
and worth on this earth. Their role in the economy is to
achieve economic prosperity together. They work not only
for personal gains or self-interests but also for the common
good so that it gives rise to mutual independence in the
community. Islam is not a religion that denies the human
desire for prosperity and wealth. Nevertheless, Islam also
calls upon the people to manage their wealth prudentially
in accordance to what has been subscribed in the Qur’an
and Hadiths. Hence, entrepreneurs should seek to achieve a
balance between profit motive and social motive at the same time.

Conceptual Framework of Islamic Social Entrepreneurship
Entrepreneurship in Islam is a prominent part of Islamic
economics. There is an integration between entrepreneurial
liveliness and religion. Islam encourages Muslims to be
entrepreneurs, and this is established in several verses of
the Qur’an and the sayings of our Prophet Muhammad. Abu
Sa’id narrates that the Prophet said: “an honest and sincere
businessman will be placed with the prophets, siddiqin and alshuhada” (Hadith Al-Tirmidhi 1987, no.1209, p.515). Based on this hadith, the highest recognition is given to sincere and honest entrepreneurs.

Entrepreneurship from the Islamic perspective closely relies on principles of thought that are affirmed to the followings:
• Islam encourages entrepreneurial development and entrepreneurship as an integral part of its religious practices.
• In the view of the ownership of resources and treasure, Muslims are khalifah (agents of trust) of Allah and therefore responsible for generating prosperity and should consider doing business as part of ibadah (worship) or good deeds.
• While being successful in business, an important consideration of an entrepreneur is the usefulness of the person for the society (cooperation for existence) and ethical living that fits with the philosophy of belief in Allah the Almighty.

As Muslim entrepreneurs, their activities should be centred
around people development and spiritual development. Under people development or habluminannas,
Muslim entrepreneurs have to accentuate dual-construct motives, i.e. profit motive and social motive. In other words,
they must be motivated to venture into profitable, creative and innovative economic activities that address social and
economic needs.

Second is the spiritual development or habluminallah. Humans were created by Allah to serve and worship only Him. It is imperative for human beings to carry out Allah’s command and have good relations with Him. In other words, habluminannas is for habluminallah as both are in line and should not be disputed. People who ignore habluminannas will not only face the wrath of Allah and the consequences in the hereafter, but will also suffer from the bad treatment from other human beings or punishment according to the laws or norms of the society.

In Islam, working or doing business is not just considered as an economic activity but rather a reflection of the activities of faith, a manifestation of monotheism and evidence of the height of morals and barometer of piety to Allah. Business in Islam is valuable when it is intended to gain the pleasure of Allah (QS 62:11).

For an Islamic social entrepreneur, the purpose of doing business is twofold. Firstly, it is part of a religious obligation. Islam creates a direct relationship between work and one’s obedience to Allah so that work and doing business is also deemed as an act of worship (QS. 3:136). Hence, in Islam, entrepreneurship is regarded as a form of worship that brings Muslims closer to fulfilling their faith.

Secondly, doing business is a means to serve the daily needs of the community. Islam views Muslim communities as an essential economic and social entity, having economic interdependence so that working and sharing can create economic value for themselves and their communities. Getting richer should be more beneficial and the noblest human being is the most useful person for their community. Therefore, every activity related to creating prosperity (profit motives) should also be balanced with usefulness and value to others (social motive).

Islamic Social Entrepreneurship and Emergence of Social Welfare System Conceptual Model
There are 3 basic principles of Islamic social entrepreneurship related to social justice and social welfare:

  1. Fard al-Kifayah – commitment

Muslim entrepreneurs have a fard al-kifayah commitment, i.e.
a responsibility towards their society to create social welfare
with great solicitude. This concern for others is an intrinsic
motivation based on religiosity (social motive upon profit motive).

  1. Almsgiving model on zakat, infaq, sadaqah, and waqf
    (ZisWaf) – voluntary sector Zakat, infaq, sadaqah and waqf are the almsgiving model of
    Islamic social entrepreneurship that has an important role in
    providing unmet needs of the society and as a tool in solving
    social and economic problems. Public ownership or waqf is also one of the social
    entrepreneurship models in Islam. As a public treasure that
    is owned by society legally, waqf is one of the economic
    resources that have proven to play a significant role in the
    economy. It has been earmarked for social welfare and social
    community development in many sectors such as economics,
    education, health, social and religious sectors. There are a
    lot of remarkable examples of waqf contribution for social
    value creation, such as Al-Azhar Islamic University in Egypt
    as a successful waqf model in education development, and
    other charity models like Oxford University (US) and charity
    foundations on property benefits in North America and
    around the world.

Islamic Charitable Funds
Islamic charity funds such as zakat, infaq, sadaqah and waqf
(ZISWAF) are the cornerstone of Islamic economy. These are
the main mechanisms for fair distribution and circulation of
wealth in the Islamic society. All these Islamic charity funds
are encouraged to be performed by Muslims in order to
gain reward from Allah. However, the status of zakat differs
from that of infaq, sadaqah and waqf. Zakat is an obligatory
almsgiving and is the third pillar of Islam. It has the objective
of achieving socio-economic justice in society and its
distribution should be managed by one of the asnaf (amilin)
that plays the role of a social worker.
Infaq, sadaqah and waqf are, on the other hand, sunnah
(voluntary) and are acts of righteousness done to help the
poor and needy to please Allah. It can be nominal or infinite
and must be managed by people who understand their
potential. This is why they are more suitable to be managed
by a social entrepreneur.

By looking at the charity potentials of ZISWAF and social
problems such as poverty, income distribution, inequality,
and the challenge in managing voluntary sectors; Islamic
social enterprise faces challenges in creating value for the
society through its almsgiving model.
Islamic social enterprise as an intermediary institution plays
two main roles; as a social worker and social enterprise.
Islamic social enterprise empowers people by using voluntary
funds such as zakat, infaq, sadaqah and waqf.

There are two main types of distributions of this voluntary fund – charity fund distribution and empowerment fund distribution.Charity fund distribution from zakat to the poor or asnaf is aimed for the fulfilment of their basic needs such as food, clothes, education, and health care. At this point, Islamic social enterprise plays the role of a social worker (amilin).

Empowerment fund distribution from infaq, sadaqah and waqf for the beneficiaries is aimed at the empowerment of social community. Here, the Islamic social enterprise plays the role of a social entrepreneur that should manage their business to sustain their organisation and support their social motive programmes.

Through voluntary funds, Islamic social enterprise can create social value for the beneficiaries (individual or community) through social innovation as an effective strategy to achieve social impact and financial sustainability. Given the important role that social entrepreneurs can play in the economy, it is therefore necessary to develop a conducive ecosystem for Islamic social entrepreneurship to thrive in. The essential parts of the ecosystem would require proper tools for nurturing Islamic social entrepreneurs.

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