Philanthropy: An Alleged Shortcut for CSR to Complete the Task

The implementation of Corporate Social Responsibility (CSR) programs is often misunderstood as just a philanthropic activity, where companies provide donations or financial assistance for social purposes. In fact, CSR should be able to make programs more than that. Referring to ISO 26000, CSR is a company’s commitment to contribute to sustainable economic development by improving the quality of life of employees, their families, local communities, and society at large. If the focus of CSR is only on philanthropic activities, this will only obscure its true purpose, which is to create a long-term positive impact that is in line with business goals.

Indonesia’s Actual Facts

Indonesia is still facing challenges from various aspects, such as the increasing value of the rupiah, various acts of fraud in the world of education, and most recently the number of layoffs has skyrocketed. This condition requires more attention than just philanthropy. Among the many problems that confront us, one of the main issues that is crucial to the development of the nation is how education can become a primary need equally for all Indonesians.

Until now, Indonesian citizens in remote areas still have to face limited access to adequate education, resulting in low literacy levels among children in Indonesia. According to UNESCO, only 0.01 percent of Indonesian children like to read (Indonesian Author, 2016), and in 2015, data from the National Library revealed that only 10% of Indonesian children over ten years old were interested in reading (Kurniasih, 2016).

Access to literacy is also an important issue. The ability to read and write is the basis for improving the quality of life, but until now many people still do not have adequate access to reading materials and literacy education.

Who is the Main Executor of the Philanthropy Agenda?

In retrospect, the CSR agenda is in line with the philanthropic activities that have been carried out by the Amil Zakat Institution (LAZ), which manages public funds into philanthropic activities. Philanthropic activities are generally in the form of donations or one-time assistance given to the community or social institutions, including philanthropic activities for education. This is useful for meeting short-term needs but is not always sustainable.

Based on the function of LAZ listed in Government Regulation of the Republic of Indonesia Number 14 of 2014 concerning the Implementation of Law Number 23 of 2011 concerning Zakat Management. Zakat Management is an institution authorized to carry out planning, implementation, and coordination activities in the collection, distribution, and utilization of zakat. Zakat managers are categorized into two, namely, the National Amil Zakat Agency (BAZNAS) as an institution that manages zakat nationally and Lembaga Amil Zakat (LAZ) as an institution formed by the community that has the task of assisting the collection, distribution, and utilization of zakat.

Read Also: The Biggest Mistake of CSR Programs: Spending for Impression without Real Impact

Not only distributing zakat funds, zakat managers also collect Infaq, Sadaqah, Waqf (Ziswaf) and Other Social Religious Funds (DSKL) funds to run various empowerment programs aimed at improving the quality of life of mustahik (zakat recipients). Along with the development of knowledge on sustainability, LAZ programs are now also increasingly diverse such as skills training, business capital assistance, and educational support designed to empower recipients so that they can be independent and improve their lives significantly.

So, if companies are still oriented towards philanthropy, then what is the difference between CSR programs and LAZ in Indonesia?

In 2023, the Central BAZNAS has distributed zakat amounting to Rp675 billion where the growth rate reached 15.48% which was distributed to scholarships and education activities, humanitarian social assistance, to community economic development. On the other hand, the management of CSR funds is not specifically determined by law but the provisions of the obligation to conduct CSR programs have been regulated in Government Regulation (PP) No. 47 of 2012 concerning Social and Environmental Responsibility of Limited Liability Companies. However, quoting from East Kalimantan Regional Regulation 3/2013 Article 23 paragraph (1) explains that the allocation of financing for the implementation of Environmental Social Responsibility (CSR) is at least 3 percent of the company’s net profit each year.

Cross-Sector Collaboration

With this potential, to build a more strategic Indonesia, collaboration between various parties is needed. Let’s map out the goals based on the functions of each stakeholder.

• Government

The government as a strategic party can develop regulations and incentives for nation-building planning that involves every stakeholder from private companies, non-governmental organizations (NGOs) to local communities. This aims to map out strategic planning on the boundaries of areas that need to be intervened by related parties. This encourages the optimization of CSR activities so that they are not only focused on philanthropic programs but also encourage companies and organizations to invest in sustainable CSR programs as well as a more strategic development agenda for the nation and state.

• Ziswaf Fund Manager

As its function, Ziswaf fund manager can play a role in channeling funds from the community to social impact programs, such as economy, education, and health. As a step to alleviate short-term problems, and this is needed for certain conditions.

• Business Entity

With the resources owned by business entities, it can implement CSR programs that are not only focused on philanthropy, but also on the implementation of programs that have long-term impacts such as improving community welfare through economic empowerment, skills training, and infrastructure development that are in line with the organization’s vision and contain the goals of the SDGs. One of the innovations that can be done by business entities in alleviating education is to level up the provision of education funding assistance – which has been carried out by Ziswaf Managers and the government – through a sustainable scholarship program.

Read Also: Involving Many Stakeholders as the Main Strategy of CSR Program

Based on this discussion, it turns out that the presence of CSR is still trapped in improving the image, without ensuring the analysis of the problem conditions of the beneficiaries as a plan for preparing CSR programs that have a positive and sustainable impact. This condition invites us to be reflective and think strategically about the next CSR program plans by asking:

“Which contribution field will CSR step into to build a better nation?”

With this question, it is hoped that it can spark the presence of CSR programs that are more meaningful with a long-term approach and have a positive impact on related parties, so that collaboration with stakeholders is not a burden but rather an opportunity for potential strategic and systemic contributions.

Your organization wants to build impactful initiatives through CSR programs that are meaningful to the beneficiaries? Consult with Maxima Impact Consulting and discover various strategies to create an impactful transformation!