Giving behaviors in Indonesia: motives and marketing implications for Islamic charities

Unknown

Edukatif

Monday, November 3, 2014

Belum ada komentar

Author(s):

Rahmatina Awaliah Kasri (Faculty of Economics and Business, University of Indonesia,Jawa Barat, Indonesia)

Citation:

Rahmatina Awaliah Kasri , (2013) "Giving behaviors in Indonesia: motives and marketing implications for Islamic charities", Journal of Islamic Marketing, Vol. 4 Iss: 3, pp.306 - 324

DOI

http://dx.doi.org/10.1108/JIMA-05-2011-0044

Downloads:

The fulltext of this document has been downloaded 795 times since 2013

Abstract:

Purpose

– The purpose of this paper is to examine the motives and giving behaviours of donors towards Islamic charities in Indonesia by using various demographic, socio-economic, psychographic and motivational/situational characteristics. Based on these analyses, relevant marketing implications are also discussed. The study hopes to enrich Islamic marketing literature and contribute further to the understanding of marketing within the context of the Islamic voluntary sector.

Design/methodology/approach

– This empirical paper primarily employs a quantitative approach in analysing the giving behaviours. The primary data is gathered through a survey conducted in January 2011 involving 300 Indonesian Muslim donors. The results are analysed with descriptive and correlation statistics.

Findings

– First, the analysis highlights that the main causes for charitable giving are to help the poor/needy and support religious causes. Second, most of the donors provide funds through “informal” Islamic charities. Third, most of the individual donors are young, educated and possess strong humanitarian concerns. Interestingly, although there is a positive correlation between income and donation, individuals who donate more are not the rich but the middle-income earners. Finally, there is evidence to indicate that donors may increase donations even during economic crisis.

Practical implications

– Understanding donor's characteristics and behaviours are essential in designing and implementing an effective marketing framework, which is expected to retain and manage long-term supportive relationships with the donors. Relationship marketing framework and branding strategy are also worth considered for this purpose.

Originality/value

– Few studies analyse Islamic charities in the modern marketing perspective, especially in Indonesia. This study, therefore, fills the gap in the research area.

Keywords:

Giving behaviours, Islamic charities, Marketing, Relationship marketing, Islamic voluntary sector, Indonesia

Publisher:

Emerald Group Publishing Limited

Article

1 Introduction

Section:

The question of how the current economic downturns and global financial recession have affected the Islamic financial sector has received immense discussion both in the Western and Islamic world. There is a strong message that the crises have provided Islamic finance opportunities for growing and becoming a future mainstream finance in the world[1]. Nevertheless, while Islamic finance presumably enjoys the benefits, such opportunities seem to be unclear for other financial sectors and institutions.
If one look at the impacts of the current economic crisis on the Western voluntary sector, it is evident that it has suffered from the economic downturn. While revenues of the philanthropic organisations have dropped significantly in many countries[2], requests for their services have increased during the hard times (Breeze and Morgan, 2009; Mohan and Wilding, 2009; Wilding, 2010). In other words, since demand for the voluntary sector's services increases at the time the donor's supply of funds potentially falls, some kind of “double whammy” is said to occur during the crisis (Pharoah and Harrow, 2009).
In Muslim countries and societies, however, such observations and precise statistics are hardly found. Yet from global figure such as the World Giving Index[3], it is obvious that the Muslim societies are pretty much generous. The South East Asia region, where most Muslims live[4], is ranked fourth in the 2010 World Giving Index. The Middle East and North Africa regions are well-known for their generosity in helping strangers beyond volunteering time and donating money[5]. Thus, the tradition of voluntary giving strongly exists in Muslim societies. Indeed, this behaviour is a fundamental part of Islamic teaching as reflected in many verses of the Qur'an and the Prophet's tradition explaining the nobility and importance of almsgiving in Muslim societies (Al Qardawi, 2000).
In such circumstances, it is increasingly important to understand the characteristics and behaviours of Muslim philanthropists. In this respect, marketing aspect is of a particular importance, not only because it has assumed greater relevance for the current landscape of charitable organisations (Anheier, 2005, p. 277), but also because effective marketing is vital in retaining donors and increasing fundraising results for such institutions (Sargeant, 1999, 2001). The contribution of marketing, especially marketing by segmentation, in improving the operations of fundraising activities has also been documented for decades (Schlegelmilch and Tynan, 1989; Harvey, 1990, p. 1, Rooney, 2001, in Bennett and Sargeant (2005). Nevertheless, very few studies attempt to analyse Islamic charities in the modern marketing perspective, especially in the context of Indonesia.
In view of the above, this paper primarily aims to identify characteristics associated with an increased propensity to donate by understanding the motivations, characteristics and behaviours of individual Muslim donors. In particular, it explores whether giving behaviours and characteristics of the donors could be identified by using various demographic, socio-economic, psychographic and motivations/situational characteristics suggested by existing literature. It also elaborates on the marketing consequences of such patterns based on literature and findings of the study. A specific case of Indonesia, the world's largest Muslim country, is taken to enable a thorough analysis which might be difficult if all Muslim countries are considered.
To arrive at conclusive results, analysis of this descriptive and exploratory study is mainly based on a simple quantitative method. The primary data is gathered through a two-month survey accomplished in January 2011 which covered around 300 Indonesian Muslim donors. Results of the descriptive and correlation analyses of the survey are discussed and contextualized in view of the current state of altruism in Indonesia.

To begin the discussion, the paper is structured as follow. Subsequent to this introduction, Section 2 reviews the existing literature on voluntary giving behaviours as well as some general perspective on the role of marketing for non-profit institutions. Section 3 briefly explains the method and data used, while section 4 explains the empirical results as well as discusses the relevant implications and marketing consequences. The final section concludes the study.

2 Theories of voluntary giving behaviours

Section:

Giving is a voluntary action favoring someone else or a public cause at a cost for oneself without requiring a counterpart. It occurs when the giver's desire for giving over-compensates the (potential) cost (Kolm and Ythier, 2006, p. 87). Although giving behaviours have been discussed since the sixteenth century by numerous great economists such as A. Smith, J. S. Mill and V. Pareto, the studies experienced an upsurge only in the last third of the twentieth century. Studies on charitable giving emerge, most notably with analyses of “interdependent utilities” which assume “social men” instead of “economic men” and involve “social” motives such as affection, compassion or a sense of justice (Kolm and Ythier, 2006)[6].
The altruism “spirit” is in line with Islamic teachings. Islam encourages the believers to help the unfortunate amongst them through sadaqah (general charity). This is clearly stated in the Qur'an, “In their wealth and properties (there) is the right of the poor, he who asks, and he who is deprived” (Quran 51:19, translated by Ali, 2000). Prophet Muhammad (pbuh) also emphasized that, “[…] sadaqah (charity) is taken from the rich among them and rendered to the poor among them” (Salih, 1999). Not only that, it has also made the community and state responsible for reducing hardship and poverty from their societies through the institutionalisation of Zakah. Zakah, an annual levy on wealth above some threshold (revenue) whose proceeds must be distributed to the needy (Jehle, 1994), is indeed the third pillar of Islam. These suggest the importance of Islamic charitable institutions as a social welfare support mechanism in Islamic societies (Ahmad, 1991; Al Qardawi, 2000; Sadeq, 2002; Ahmed, 2004).
In general, literature suggests that the variables affecting giving behaviours of individuals could be classified into extrinsic and intrinsic factors. The former includes the demographic and socio-economic variables such as age (Mindak and Bybee, 1971; Halfpenny and Saxon-Hamold, 1990; Nichols, 1992; Pharoah and Tanner, 1997), gender (Halfpenny and Saxon-Hamold, 1990; Piliavin and Charng, 1990), income level (Jones and Posnett, 1991; Bryant et al., 2003; Lloyd, 2004; Mcclelland and Brooks, 2004) and education level (Jencks, 1987; Schlegelmilch and Tynan, 1989; Harvey, 1990; Jones and Posnett, 1991; Schlegelmilch et al., 1997).
Most of the variables above affect the behaviours positively. Higher age, income and education levels are positively correlated with higher level of giving. Nevertheless, some studies suggest that donation tends to fall off after the age of 65 due to work retirement in most countries (Danko and Stanley, 1986; Edmundson, 1986; Halfpenny, 1991). The positive effect of income on an individual's level of charitable giving is also identified by a number of studies (Jencks, 1987; Kitchen and Dalton, 1990), although most of the studies agree that income is not the main factor affecting the behaviours (Jones and Posnett, 1991; Lloyd, 2004). Similar finding applies to education, where relatively higher-educated individuals tend to donate more to charity (Jencks, 1987; Schlegelmilch and Tynan, 1989; Harvey, 1990; Jones and Posnett, 1991; Schlegelmilch et al., 1997). Meanwhile, with respect to gender, although some studies suggest that women tend to be more generous than men (Jones and Posnett, 1991; Caf, 2010) other studies provide ambiguous results and find no significant differences in the altruistic behaviour between men and women (Piliavin and Charng, 1990; Guy and Patton, 1993).
As for the intrinsic factors, it is believed that the main determinants of charitable behaviours are the underlying/psychological motives for giving and electing to support a non-profit institution (Sargeant, 1999). Significant indicators for altruism include the feeling of duty and responsibility to help the needy (Sokolowski, 1996; Lloyd, 2004), desire to make a change (Lloyd, 2004; Breeze and Morgan, 2009), religious concerns (Pharoah and Tanner, 1997; Schlegelmilch et al., 1997; Jackson, 2001), self actualization (Sokolowski, 1996; Lloyd, 2004) and peer pressure (Andreoni et al., 1996; Glazer and Konrad, 1996).
While most of the intrinsic variables above are self-explanatory, a few elaborations might be helpful at this point. It is very intuitive that individuals are motivated to make charitable giving when they have the feeling of duty and responsibility to help the poor and needy (Sokolowski, 1996). Impact and the donor's “gifts” resulting in “something that otherwise wouldn't have happened” (Lloyd, 2004, p. 81) is also found to be a strong motivator for giving. The gift could be directed to other people, directly or indirectly[7], or other causes such as environment and culture/art. Similarly, it is very common that individuals are encouraged to support activities related to their religion, as part of their support and concern for their faith (Jackson, 2001; Kochuyt, 2009).
Self-actualisation, defined as “realisation of individual's personality and development of some/all of its aspects”, is also found to be a significant driver of giving especially among rich individuals (Lloyd, 2004, p. 83). Another motive found among individuals with a high social status is the peer-pressure (status) motive. In this case, individuals are motivated to make charitable donations because their “peer-groups” (friends, colleagues, etc.) also do so. This motive is also a good signal to people who belong to a peer-group but cannot see “the big house or luxury cars of another member”and thus more prevalent among the high net-worth individuals (Glazer and Konrad, 1996).
In addition to the above factors, some studies consider perception on financial security (Edmundson, 1986; Halfpenny, 1991; Schlegelmilch et al., 1997), generosity (Schlegelmilch and Tynan, 1989; Harvey, 1990; Schlegelmilch et al., 1997) and perceived-importance of religion (Edmundson, 1986; Halfpenny, 1991; Pharoah and Tanner, 1997; Schlegelmilch et al., 1997; Jackson, 2001; Kochuyt, 2009) as good indicators for intrinsic variables affecting the giving behaviours. While these variables have some overlapping elements with the factors discussed earlier, they could be used to “confirm” the previous motives. Perceptions on financial security and generosity, for instance, could complement the relationship between income level and charitable giving since in many cases individuals with higher income do not necessarily donate more money to charities (Lloyd, 2004; Breeze and Morgan, 2009; Breeze, 2010).
To summarize, the literature suggests that altruism is influenced by extrinsic and intrinsic variables. The former includes demographic and socio-economic indicators such as gender, age, income and education. Meanwhile, the intrinsic variables (giving motives) include the feeling of duty and responsibility, desire to make a change, religious concerns, self-actualization, peer-group pressure, perceived financial security, perceived generosity and perceived-importance of religion. Most of the variables above affect the giving behaviours positively, although the influence of some variables such as gender tends to be ambiguous.
In relation to the theories of giving above, it is worth mentioning that understanding the donors' characteristics have been found to positively contribute in increasing charitable revenues especially when these information are used effectively in marketing (Sargeant and Wymer, 2008). The significant contribution of marketing, particularly marketing by segmentation, in improving the operations of fundraising activities have been documented for decades especially in developed countries (Harvey, 1990, p. 1). For example, early attempts to include marketing in fundraising strategy in the US reportedly increased both awareness and revenues by 33 per cent (Mindak and Bybee, 1971). More recent evidence has also noted significant increase in charitable proceeds, following the implementation of various modern marketing techniques (Rooney, 2001; Bennett and Sargeant, 2005).

There is also ample evidence that marketing tools have been strategically used to further the goals and objectives of religious organisations especially when religious institutions such as churches have experienced declining attendance, such as in the UK and the USA (Mottner, 2008). Studies on other religious organisations, however, are rarely found in literature. Overall, the existing literature suggest that charitable institutions increasingly take the benefit of understanding their donors' profile in designing and implementing effective marketing, which eventually contributes in enhancing their performance.

3 Methodology and data

Section:

This study primarily employs a simple quantitative approach to explain and analyse the patterns of voluntary giving among Indonesian Muslim donors. Specifically, it explores whether the individual donor's behaviours and characteristics could be identified and analysed by using various demographic, socio-economic, psychographic and motivational/situational characteristics suggested by the existing literature. The variables incorporated in this study and the likely directions of their impact are summarised in Table I.
The variables are incorporated in a two-section structured questionnaire consisting of questions related to the extrinsic and intrinsic factors[8]. In particular, following some of the aforementioned studies (especially Schlegelmilch et al., 1997; Sargeant and Lee, 2004; Sargeant et al., 2006), the intrinsic variables are investigated by analysing the donor's perceptions towards their giving attitudes in different situational contexts including their perception during a typical economic crisis situation marked by financial insecurity as discussed earlier. In this respect, the commonly used five-level Likert scale (from strongly agree to strongly disagree) is used in the construction of the questionnaire (Saunders et al., 2009).
In order to provide more insights for the case study, general causes of giving (education, health/medical, environment, etc.) and amounts of regular donations, as commonly listed in regular charity surveys (Caf, 2010), are also asked. Moreover, recognising that there are several types of formal Islamic charitable organisations (government-linked[9], civil-society[10], corporate and private Islamic charities) as well as “informal” Islamic institutions for voluntary giving (mosques and family/relatives) in Indonesia (Wibisono et al., 2010), the donors' preferred charities are also investigated. Thus, the questionnaire essentially asks who the donors are, why they give/donate funds, where or to which institutions they provide the funds to and how much do they give.
The primary data is collected through an online survey conducted over a two-month period and completed in January 2011. The target respondents are Indonesian Muslim donors. They are selected by using a simple random sampling method which takes advantage of the “snowball effect” in distributing the questionnaire. The samples generated this way are likely to be random samples and therefore valid statistical inferences could be made (Bryman and Bell, 2007; Field, 2009; Saunders et al., 2009)[11].

Initially, more than 300 responses were received. However, some of the responses were dropped as the respondents were not Indonesian Muslims. Eventually, the study ended up with 294 valid responses. Descriptive statistics and simple correlation tests among the variables of interest[12] are conducted by using SPSS 17 software. The results are presented and discussed in the next section.

4 Results, discussions and implications

Section:

In presenting the results, this section begins by illustrating the general findings regarding the common causes for giving, preferred Islamic charitable institutions, amounts of regular donations made by the donors and eventually characteristics and behaviours of the donors. Afterward, the second part of the section analyses and contextualises the findings as well as draws relevance on the marketing strategies for Islamic charities.

4.1 Results and discussions The survey finds that the general causes for charitable giving are helping the poor/needy or poverty cause (37.1 per cent) and supporting religious activities (29.9 per cent), as shown in Figure 1. Other popular causes are education and disaster relief, chosen by 10.5 and 7.1 per cent respondents, respectively. Meanwhile, supporting environment and cultural development are the least popular reasons for giving. These results are not surprising and consistent with the findings of previous studies (Sokolowski, 1996; Pharoah and Tanner, 1997; Lloyd, 2004; Kochuyt, 2009). Nevertheless, in other few cases, some respondents mention very specific reasons for giving[13].
These patterns are intuitive in the context of a developing country such as Indonesia, where poverty is widespread. Around 31 million (13.3 per cent) of the Indonesian population are poor (Bps, 2011) and almost half of them live with a daily income less than USD 2 (The World Bank, 2006). Religious concerns could also be explained from the fact that around 85 per cent of its population are Muslims[14], making it the largest Muslim country in the world, and most of them adhere to the Islamic principles encouraging charitable giving to help the unfortunate member of the society (Bamualim and Abubakar, 2005).
The donation for education is presumably a reflection of support to increase the education level in the country where only more than 50 per cent of the population could enjoy secondary level of education[15] (Kasri and Wibowo, 2010). Similarly, support for disaster relief is likely due to frequent disasters, especially natural disasters, which occur in the country[16]. The recently worst natural disasters occurred in the country is probably the Aceh tsunami in December 2005, which resulted in more than 220,000 deaths and millions of homeless and unemployed people. This tragedy led to massive supports from Muslim societies, which contributed large amount of donations through various Islamic charities[17].
The donors regularly give in many ways and through various types of Islamic charities. As shown in Figure 2(a), around two-third of the donors contributes through “informal” charitable institutions including mosque (27.2 per cent), family (8.5 per cent) and direct donation to the needy (25.2 per cent). Only around 33.7 per cent of them provide donations through the formal channel. Interestingly, although some of them make regular donations through the informal channel, most of them (87.8 per cent) also have an experience of donating through the formal agencies (Figure 2(b)). The most preferred formal charities are private charities (55.8 per cent) and government charities (16.7 per cent). Some others, however, prefer to donate through international NGOs such as Green Peace and UNICEF fund. These results somewhat suggest that despite preference to the informal charities, there is some kind of “portfolio” of giving through institutions observed amongst the donors.
How much money have they donated regularly? Most respondents (68 per cent) donate up to Rp. 250.000 or around USD 28[18] per month (Figure 3). However, a small percentage (9.2 per cent) contributes more than Rp. 1 million per month. While this might be strongly correlated with their income and other factors, which will be elaborated later, these results are quite intuitive considering that Indonesia is a relatively lower middle income country with GDP/capita of USD 2,952 or an individual monthly income of around USD 246 in 2010[19].
With respect to the characteristics of donors, the main results of the study, Table II depicts the descriptive statistics based on the profiles of 294 respondents. In general, the survey findings reveal that most of the individual Muslim donors are men, aged 25-54 and educated with income levels ranging between Rp. 1 and 5 million.
Table III highlights the results of the correlation tests between the level of donations and the socio-economic characteristics of the donors. Income, education and age are found to be positively and significantly correlated to the regular amounts of charitable donations made by the donors. Meanwhile, gender is not significantly related to the giving behaviours.
Looking at the gender of the donors (Table II), men apparently contribute more to charities than women with proportions of 62 and 38 per cent, respectively. Although this result seems to contradict the literature noted earlier which mostly suggests the generosity of women (Jones and Posnett, 1991; Caf, 2010), the relative proportion of men making the “typical” charitable donation up to Rp. 250.000 per month (69 per cent) is only slightly higher than that of the women (66 per cent). Interestingly, if the “extremes” (lowest and highest) amounts of donation are considered, men are found to be absolutely more generous than women (Figure 4(a)). Thus, women do not appear to be necessarily more generous than men as also found in some studies (Piliavin and Charng, 1990; Guy and Patton, 1993). Combined with the correlation result shown above (p-value=0.217), the overall results tend to be ambiguous and indicate that there is no statistically significant difference between men and women in their voluntary giving behaviours.
The survey also finds that almost 90 per cent of the donors are individuals aged 25-54 years, the productive working age group in Indonesia[20]. For all levels of donation, especially the lower amount, this age group constitutes the majority of donors. The results appear to highlight that being relatively older is correlated with higher amounts of charitable giving, although the correlation is slightly weak (p-value=0.08). Nevertheless, after the age of 54 the trend reverses. As can be inferred from Figure 4(b), almost one-third of donors in the second age group makes regular donations between Rp. 250,000 and Rp. 500,000; meanwhile almost half of the respondents aged 45-54 donates Rp. 1 million or more. This trend is consistent with previous findings suggesting that charitable donation tends to fall off after the retirement age (Danko and Stanley, 1986; Edmundson, 1986; Halfpenny, 1991).
Figure 5 shows the distributions of donors' charitable amounts based on education and income levels. Previously, the descriptive statistic results showed that most respondents are educated with 33 and 57.8 per cent possess undergraduate and postgraduate education, respectively. Therefore, there is an indication that the majority of donors are highly educated. Indeed, this tendency is supported by the result of correlation test showing a strong positive correlation between education level and amounts of regular donation made (p-value=0.03). Therefore, this study concurs with the results of previous studies suggesting that higher educated individuals tend to donate more to charity (Jencks, 1987; Schlegelmilch and Tynan, 1989; Harvey, 1990; Jones and Posnett, 1991; Schlegelmilch et al., 1997).
With respect to the income levels and amounts of donation, it is found that almost half of the donors (48.95 per cent) admit that their monthly income is around Rp. 1-5 million which is only slightly higher than the national average income. Thus, it appears that most of the donors are middle-income earners. Furthermore, the result of the χ2 test finds that there is a very strong positive correlation between income and level of donations made which is consistent with the findings of previous studies (Jencks, 1987; Kitchen and Dalton, 1990). However, an interesting pattern is also noticeable here. Although most of the donors under the lowest income groups (group one and two) provide the least contribution to charities, individuals who donate more are presumably not the richest group but those with median income levels. Around one-third of the middle-income group donate more than Rp. 500,000 to Islamic charities, compared to only 11 per cent of the richest group. These lead to a general understanding that being rich does not seem to guarantee a higher level of charitable donation, at least not amongst the sample under study.
Finally, by using motivational/situational characteristics, the survey finds that the charitable giving behaviours are also significantly influenced by perception of financial security, perceived importance of religion, feeling of duty and responsibility to help the needy, desire to make change, religious concerns and self-satisfactions from making the charitable donations (Table IV). These evidence are consistent with the results of earlier studies (Edmundson, 1986; Sokolowski, 1996; Schlegelmilch et al., 1997; Lloyd, 2004; Breeze and Morgan, 2009). However, only less than half of the individual Muslim donors regard themselves as generous or influenced by others (peer-pressure) in making the rational giving decision suggesting that these motives are not the main motives for voluntary giving in Indonesia.
Table IV also shows that religion is perceived as the strongest motivator for charitable giving. In fact, most donors believe that helping other in all situations is a religious (Islamic) obligation. Around 87.8 per cent confess that they will increase their donation to support Islamic purposes when the need arise. Moreover, the majority of them (87.1 per cent) have confidence that they will give more money to the needy because they feel responsible to help others in need. Similarly, around 87.4 per cent sense a desire to make a change in their society through their donations. Further, 87.1 per cent feel that giving to others provides them a sense of self-satisfaction. The strong influence of these intrinsic variables also implies that the majority of Muslim donors are likely to increase their donations during an economic recession typically followed by increasing socio-economic problems that subsequently leads to more requests for the services of charitable organisations.

To summarise, the survey notes several interesting findings. First, it is revealed that the main reason for charitable giving is helping the poor/needy. Second, despite a preference on the informal channel, a “portfolio” of giving through various types of Islamic charities is observed amongst Muslim donors who mostly donate up to around USD 28 on a monthly basis. Third, while most of the donors are young, educated and earn a relatively decent income, individuals that donate more are presumably not the rich but those with average incomes. Fourth, the Muslim donors are significantly influenced by the intrinsic motives such as feeling of duty and responsibility to help the needy, desire to make change, religious concerns and self-satisfactions in giving to charities. Finally, there is an indication that the donors will increase donations even during economic crisis.

4.2 Exploring the marketing implications The findings discussed above imply several practical implications. First, Islamic charities in Indonesia should focus on programmes that attempt to increase economic conditions and reduce poverty as this is the main reason the donors contribute to the charities. Although this seems to be a challenging task in Indonesia (Muhtada, 2007), it is possible that the charities make “innovations” and design programmes which meet both the consumption and productive needs of the poor. In this regard, from a marketing perspective, these programmes should be well-planned and well-communicated to all stakeholders through an effective marketing framework. In addition to regular advocacy and educational communications intended to increase awareness of the potential donors, all important aspects of the programmes should be disclosed to the donors. The significant contribution of such marketing efforts has been found to increase fundraising results of non-profit institutions (Bennett and Sargeant, 2005), which could also be implemented for Islamic charities.
The finding that the donors prefer to donate though the informal Islamic charities, second, suggests that there are inherent problems with the marketing and management of the formal Islamic charities. One possibility is that the organisations lack the credibility needed in managing such institutions. A thorough study by Sargeant (2001, p. 8) finds that donors' commitments to support charity institutions in the UK is primarily determined by their trust towards the organisations and confidence that their monies will be used appropriately and have impacts on society. Accordingly, it is important to enhance accountability practices of Islamic charities through proper accountability mechanisms. Appropriate disclosure and performance assessment especially in poverty-focused programmes, arguably, are important accountability mechanisms that need to be regularly practiced. These have not been well-practised in Indonesia (Antlov et al., 2006).
Another possibility is that the charities have not implemented the appropriate marketing framework to maintain the commitment and trust of the donors. In this context, some theorists argue that an appropriate marketing framework for maintaining the “commitment-trust” association in the non-profit sector is the so-called “relationship marketing” (Money et al., 2008). The relationship marketing concept emphasises the importance of developing long-term relationships with existing donors (Grönroos, 1999) and posits that energy and resources are better spent on this group (Sargeant, 2001; Burnett, 2002). This is especially true for high-earning donors who are mostly concerned with good relationships with the charities (Lloyd, 2004). Indeed, the lack of donations from the high-income group found in this study could be an indication that the charities are relatively unsuccessful in marketing their programmes to the specific group of philanthropists. As such, a long-term supportive relationship and an appropriate marketing framework need to be designed and implemented for the donors.
The relationship marketing framework is also deemed appropriate for donors who are young, educated and sensitive to social-religious motives, as indicated in this study. At the practical level, this implies that effective marketing strategies employing numerous marketing techniques/tools to retain such donors must be strengthened. In addition to utilizing various marketing techniques ranging from “traditional” media such as speeches, letters, pamphlets in public places and advertisements in newspaper/radio/television (print and electronic media of communication) to “modern” and new electronic media such as the internet and marketing through social networks (Sargeant and Shang, 2010), the promotional message should also stress the contribution of even a small gift to alleviate the pain and suffering of the poor which are likely to be effective for these group of donors (Sargeant and Wymer, 2008, p. 132).
Third, to acquire more and higher-income donors, it is necessary to further understand their behaviour. As mentioned earlier, the higher socio-economic groups usually provide donations not only for the amelioration of suffering but also for a long-term change in the condition of beneficiaries. They are also less sensitive to (external) changes, such as economic crisis, in making regular donations. Moreover, profession of the donors itself may be associated with the giving behaviour. In a study of high-earning male professionals, Kottasz (2004) finds that lawyers tend to donate larger amounts of money to charity and on a more regular basis than respondents working in financial services because the former are more empathetic than the latter. This is where the “traditional” marketing by segmentation strategy should be maximized (Schlegelmilch and Tynan, 1989; Harvey, 1990).
Another marketing strategy worth considered is branding strategy (Conrad, 2008). Although it is initially used extensively with great success in the commercial domain (Hatch and Schultz, 2008), it has been adopted by many non-profit institutions, with some modifications, and the results were promising (Hudson, 2008). Indeed, many literature suggest that that branding could actually enhance the donor's choice as well as the unique sets of values owned by the non-profit organisations, while emphasizing the organizations' strengths and achievement alongside its missions (Hankinson, 2002; Sargeant and Jay, 2004).

Overall, the findings suggest the importance of recognising and understanding the behaviours of individual Muslim donors. Subsequently, the appropriate and effective marketing framework should be designed and implemented. Relationship marketing, which emphasises the importance of trust, credibility and accountability towards all stakeholders, is a framework worth considering in retaining and managing a long-term supportive relationship with donors. Meanwhile, in addition to the “traditional” marketing by segmentation, branding could be considered as an alternative marketing strategy, which has successfully contributed to increase the revenues of charitable organisations in many countries.

5 Conclusions

Section:

The study is an empirical case study exploring connections between charitable giving behaviours and characteristics of Indonesian Muslim donors by using various demographic, socio-economic, psychographic and motivational/situational characteristics. Several interesting findings are noted. First, the main reason for charitable giving is to help the poor. Second, despite preference of giving through informal channels, a “portfolio” of giving through various Islamic charities is also observed amongst the Muslim donors. Third, while most of the donors are young and educated, those donating more are not the rich but the middle-income earners. Fourth, the donors are significantly influenced by intrinsic motives such as feeling of duty and responsibility to help the needy, desire to make a change and self-satisfaction in giving to charities. Finally, there is a strong indication that the donors will increase donations even during economic crisis.
The findings suggest the importance of recognising and understanding the donor's behaviours and accordingly design an effective marketing framework to better manage relationships with donors. Relationship marketing, which emphasises the importance of trust, credibility and accountability towards all stakeholders, is deemed suitable for retaining and managing a long-term supportive relationship with the donors. Segmented marketing and branding strategies are also recommended for the charities. The framework and strategies are expected to contribute further in enhancing the long-term performance of Islamic charities.

Finally, it should be noted that this study is a descriptive and general study aimed at providing a global picture and insights into giving behaviours of Indonesian Muslim donors. Thus, it must be interpreted within the appropriate context and limitations. Further studies could be done to investigate more specific issues such as giving behaviours of specific donors (high-income donors, etc.), giving behaviours in specific areas/sector/occupations (urban and rural areas, public and private sector jobs, etc.) or case studies of specific Islamic charitable organisations. Similar studies which employ more data, variables and improve models specifications and methodologies are also possible. Such studies would contribute towards a further understanding of marketing and management practices of Islamic organisations.

References

1.

Ahmad, Z. (1991), Islam, Poverty and Income Distribution: A Discussion of the Distinctive Islamic Approach to Eradication of Poverty and Achievement of an Equitable Distribution of Income and Wealth, The Islamic Foundation, Leicester.

2.

Ahmed, H. (2004), Role of Zakah and Awqaf in Poverty Alleviation, Islamic Development Bank, Islamic Research and Training Institute, Jeddah.

3.

Ali, A.Y. (2000), The Holy Qur'an, Wordsworth Editions Ltd, Hertfordshire.

4.

Al Qardawi, Y. (2000), Fiqh Al Zakah: A Comparative Study of Zakah, Regulations and Philosophy in the Light of Qur an and Sunnah, King Abdulaziz University, Jeddah.

5.

Andreoni, J. , Gale, W. , Scholz, J. and Straub, J. (1996), “Charitable contributions of time and money”, working paper, University of Wisconsin-Madison, Madison, WI.

6.

Anheier, H. (2005), Nonprofit Organizations: Theory, Management, Policy, Psychology Press, Abingdon.

7.

Antlov, H. , Ibrahim, R. and Van Tuijl, p. (2006), “NGO governance and accountability in indonesia: challenges in a newly democratizing country”, NGO Accountability: Politics, Principles and Innovations, Earthscan, London, pp. 147-163.

8.

Bamualim, C.S. and Abubakar, I. (2005), Revitalisasi Filantropi Islam: Studi Kasus Lembaga Zakat Dan Wakaf Di Indonesia, Pusat Bahasa dan Budaya, Universitas Islam Negeri Syarif Hidayatullah Jakarta dan Ford Foundation, Jakarta.

9.

Bennett, R. and Sargeant, A. (2005), “The nonprofit marketing landscape: guest editors' introduction to a special section”, Journal of Business Research, Vol. 58, pp. 797-805. [CrossRef] [ISI]

10.

Bps (2011), Statistik Indonesia 2010, Biro Pusat Statistik, Jakarta.

11.

Breeze, B. (2010), How Donors Choose Charities: Findings of a Study of Donor Perceptions of the Nature and Distribution of Charitable Benefit, Centre for Charitable Giving and Philanthropy, London.

12.

Breeze, B. and Morgan, G. (2009), Philanthropy in a recession: an analysis of Uk media representations and implications for charitable giving.

13.

Bryant, W. , Jeon-Slaughter, H. , Kang, H. and Tax, A. (2003), “Participation in philanthropic activities: donating money and time”, Journal of Consumer Policy, Vol. 26, pp. 43-73. [CrossRef]

14.

Bryman, A. and Bell, E. (2007), Business Research Methods, Oxford University Press, New York, NY.

15.

Burnett, K. (2002), Relationship Fundraising: A Donor-Based Approach to the Business of Raising Money, Jossey-Bass, San Francisco, CA.

16.

Caf (2010), “An overview of charitable giving in the UK 2009/10”, UK Giving 2010, Charity Aid Foundation, Kings Hill.

17.

Clotfelter, C. (1985), Federal Tax Policy and Charitable Giving, University of Chicago Press, Chicago, IL.

18.

Conrad, B.L. (2008), “Church marketing: promoting the church using modern methods”, Senior Honors Papers, Vol. 62.

19.

Danko, W.D. and Stanley, T.J. (1986), “Identifying and reaching the donation prone individual: a nationwide assessment”, Journal of Professional Services Marketing, Vol. 2, pp. 117-122. [CrossRef]

20.

Diamantopoulos, A. , Schlegelmilch, B. and Love, A. (1993), “Giving to charity: determinants of cash donations through prompted giving”, in Varadarajan, R. and Jaworski, B. (Eds), Marketing Theory and Application, Vol. 4, American Marketing Association, Chicago, IL, pp. 133-142.

21.

Edmundson, B. (1986), “Who gives to charity?”, American Demographics, pp. 45-49.

22.

Field, A.P. (2009), Discovering Statistics Using SPSS, Sage, London.

23.

Glazer, A. and Konrad, K. (1996), “A signaling explanation for charity”, The American Economic Review, Vol. 86, pp. 1019-1028. [ISI]

24.

Grönroos, C. (1999), “Relationship marketing: challenges for the organization”, Journal of Business Research, Vol. 46, pp. 327-335. [CrossRef] [ISI]

25.

Guy, B.S. and Patton, W.E. (1993), “The marketing of altruistic causes: understanding why people help”, Journal of Consumer Marketing, Vol. 6, pp. 19-30. [Abstract]

26.

Halfpenny, P. (1991), “The 1988/89 charity household survey”, in Mcquillan, J. (Ed.), Charity Trends, 13 ed., Charities Aid Foundation, Kings Hill.

27.

Halfpenny, P. and Saxon-Hamold, S. (1990), Charity Household Survey 1988/89, Charities Aid Foundation, Tonbridge.

28.

Hankinson, P. (2002), “The impact of brand orientation on managerial practice: a quantitative study of the UK's top 500 fundraising managers”, International Journal of Nonprofit and Voluntary Sector Marketing, Vol. 7, pp. 30-44. [CrossRef]

29.

Harvey, J. (1990), “Benefit segmentation for fund raisers”, Journal of the Academy of Marketing Science, Vol. 18, pp. 77-86. [CrossRef]

30.

Hatch, M.J. and Schultz, M. (2008), Taking Brand Initiative: How Companies Can Align Strategy, Culture, and Identity Through Corporate Branding, Jossey-Bass, San Francisco, CA.

31.

Hudson, J. (2008), “The branding of charities”, The Routledge Companion to Nonprofit Marketing, Psychology Press, Abingdon.

32.

Jackson, T.D. (2001), “Young African Americans: a new generation of giving behavior”, International Journal of Nonprofit and Voluntary Sector Marketing, Vol. 6, pp. 243-254. [CrossRef]

33.

Jehle, G. (1994), “Zakat and inequality: some evidence from Pakistan”, Review of Income and Wealth, Vol. 40, pp. 205-216. [CrossRef]

34.

Jencks, C. (1987), Who Gives to What?, Yale University Press, New Haven, CT.

35.

Jones, A. and Posnett, J. (1991), “Charitable donations by UK households: evidence from the family expenditure survey”, Applied Economics, Vol. 23, pp. 343-351. [CrossRef] [ISI]

36.

Kasri, R. and Wibowo, F. (2010), “Muhammadiyah dan pengentasan kemiskinan: sebuah proposal”, in Wibowo, R. (Ed.), Kado Muktamar 1 Abad Muhammadiyah: Bunga Rampai Pemikiran Anak Didik Muhammadiyah, JejakKataKita, Yogyakarta.

37.

Kitchen, H. and Dalton, R. (1990), “Determinants of charitable donations by families in Canada: a regional analysis”, Applied Economics, Vol. 22, pp. 285-299. [CrossRef] [ISI]

38.

Kochuyt, T. (2009), “God, gifts and poor people: on charity in Islam”, Social Compass, Vol. 56, p. -. [ISI]

39.

Kolm, S.C. and Ythier, J.M. (2006), Handbook of the Economics of Giving, Altruism and reciprocity: foundations, Amsterdam.

40.

Kottasz, R. (2004), “How should charitable organizations motivate young professionals to give philanthropically?”, International Journal of Nonprofit and Voluntary Sector Marketing, Vol. 9, pp. 9-27. [CrossRef]

41.

Krebs, D.L. (1970), “Altruism – an examination of the concept and a review of the literature”, Psychological Bulletin, Vol. 74 No. 4, pp. 258-302. [CrossRef] [ISI] [Infotrieve]

42.

Lind, D.A. , Marchal, W.G. and Wathen, S.A. (2008), Statistical Techniques in Business & Economics, McGraw-Hill, New York, NY.

43.

Lloyd, T. (2004), Why Rich People Give, Association of Charitable Foundations, London.

44.

Mcclelland, R. and Brooks, A. (2004), “What Is the real relationship between income and charitable giving?”, Public Finance Review, Vol. 32.

45.

Mindak, W.A. and Bybee, H.M. (1971), “Marketing's application to fund raising”, The Journal of Marketing, Vol. 35, pp. 13-18. [CrossRef] [ISI]

46.

Mohan, J. and Wilding, K. (2009), “Economic downturns and the voluntary sector: what can we learn from historical evidence?”, History and Policy, Vol. 85.

47.

Money, K. , Money, A. , Downing, S. and Hillenbrand, C. (2008), Relationship Marketing and the Not-for-Profit Sector, Psychology Press, London.

48.

Mottner, S. (2008), “Marketing and religion”, in Sargeant, A. and Wymer, W. (Eds), The Routledge Companion to Nonprofit Marketing, Psychology Press, London.

49.

Muhtada, D. (2007), “The role of Zakah organization in empowering the peasantry: a case study of the Rumah Zakat Indonesia Yogyakarta”, in Obaidullah, M.A.L. and Latiff, H.S.H.A. (Eds), Islamic Finance for Micro and Medium Enterprises, Brunei Darussalam.

50.

Nichols, J. (1992), “Targeting older America”, Fund Raising Management, Vol. 23, pp. 38-41.

51.

PEBS-FEUI and CID (2009), Indonesia Zakat and Development Report 2010, CID Publication, Jakarta Indonesia.

52.

Pharoah, C. and Harrow, J. (2009), Charitable Legacies in an Environment of Change. Smith Institute Monograph, The Smith Institute, London.

53.

Pharoah, C. and Tanner, S. (1997), “Trends in charitable giving”, Fiscal Studies, Vol. 18, pp. 427-443. [CrossRef]

54.

Piliavin, J. and Charng, H. (1990), “Altruism: a review of recent theory and research”, Annual Review of Sociology, Vol. 16, pp. 27-65. [CrossRef]

55.

Sadeq, A. (2002), A Survey of the Institution of Zakah: Issues, Theories and Administration, Islamic Research and Training Institute, Islamic Development Bank, Jeddah.

56.

Salih, S.A. (1999), The Challenges of Poverty Alleviation in Idb Member Countries, IRTI IDB, Jeddah.

57.

Sargeant, A. (1999), Marketing Management for Nonprofit Organizations, Oxford University Press, London.

58.

Sargeant, A. (2001), “Relationship fundraising: how to keep donors loyal”, Nonprofit Management and Leadership, Vol. 12, pp. 177-192. [CrossRef]

59.

Sargeant, A. and Jay, E. (2004), Fundraising Management: Analysis, Planning and Practice, Psychology Press, Abingdon.

60.

Sargeant, A. and Lee, S. (2004), “Trust and relationship commitment in the United Kingdom voluntary sector: determinants of donor behavior”, Psychology & Marketing, Vol. 21, pp. 613-635. [CrossRef] [ISI]

61.

Sargeant, A. and Shang, J. (2010), Fundraising Principles and Practice, Jossey-Bass, San Francisco, CA.

62.

Sargeant, A. and Wymer, W. (Eds) (2008), The Routledge Companion to Nonprofit Marketing, Sage, Thousand Oaks, CA.

63.

Sargeant, A. , Ford, J. and West, D. (2006), “Perceptual determinants of nonprofit giving behavior”, Journal of Business Research, Vol. 59, pp. 155-165. [CrossRef] [ISI]

64.

Saunders, M. , Lewis, P. and Thornhill, A. (2009), Research Methods for Business Students, Prentice-Hall, London.

65.

Schlegelmilch, B. (1988), “Targeting and fund-raising appeals – how to identify donors”, European Journal of Marketing, Vol. 22 No. 1, pp. 33-41. [Abstract] [ISI] [Infotrieve]

66.

Schlegelmilch, B. and Tynan, A. (1989), “The scope for market segmentation within the charity market: an empirical analysis”, Managerial and Decision Economics, Vol. 10, pp. 127-134. [CrossRef]

67.

Schlegelmilch, B. , Diamantopoulos, A. and Love, A. (1997), “Characteristics affecting charitable donations: empirical evidence from Britain”, Journal of Marketing Practice: Applied Marketing Science, Vol. 3, pp. 14-28. [Abstract]

68.

Smith, S.M. and Beik, L.L. (1982), “Market segmentation for fund raisers”, Journal of the Academy of Marketing Science, Vol. 10 No. 3, pp. 208-216. [CrossRef] [Infotrieve]

69.

Sokolowski, S. (1996), “Show me the way to the next worthy deed: towards a microstructural theory of volunteering and giving”, Voluntas: International Journal of Voluntary and Nonprofit Organizations, Vol. 7, pp. 259-278. [CrossRef]

70.

van Bemmelen, R.W. (1970), The Geology of Indonesia: General Geology of Indonesia and Adjacent Archipelagos, US Government Printing Office, Washington, DC.

71.

Wibisono, Y. , Haidir, B.M. , Kasri, R.A. , Dewi, M.K. , Rosmanita, F. and Adi, B. (2010), “Indonesia Zakat and development report 2010”, in Wibisono, Y. (Ed.), PEBS-FEUI and IMZ, Jakarta.

72.

Wilding, K. (2010), “Voluntary organisations and the recession”, Voluntary Sector Review, Vol. 1, pp. 97-101. [CrossRef]

73.

(The) World Bank (2006), Making the New Indonesia Work for the Poor, The World Bank, Washington, DC.

74.

Yavas, U. , Riecken, G. and Parameswaran, R. (1980), “Using psychographics to profile potential donors”, Business Atlanta, Vol. 30, pp. 41-45.

Notes

• International media, such as Bloomberg Business Week (15 October 2008) and Financial Times UK (13 May 2010), believe that Islamic finance is less affected by the crisis and has a huge potential market in the future. While noting the risk of Islamic financing, The Economist (15 April 200) also acknowledges that Islamic finance indeed has ample opportunity during the crisis. Meanwhile, in more “academic” frameworks, many seminars/conferences especially in Europe discussed the issue of Islamic finance and financial crisis from various perspectives. Most of the participants have confidence that the crisis sent many conventional finance institutions into turmoil and therefore provides Islamic finance with some form of “blessing in disguise”, provided that it is able to take the opportunities to develop various aspects of the emerging sector.
• In the USA, for example, total charitable giving fell by 3.6 per cent from 2008 to 2009, which is the steepest drop since 1956. Although individual giving only declined by less than 1 per cent, it is found that almost two-thirds of the charities experienced a decline in their revenue during the period (CSHCO, 2010). The same trend occurred in the UK, where almsgiving is reported to drop from £11.3 billion (2007/2008) to £10.6 billion (2009/2010), a drop of almost 7 per cent during the crisis period (Caf, 2010).
• The index is constructed by asking people in 153 countries regarding their charitable acts (donating money, volunteering time for social activities, and helping strangers). For more information about the index, see The World Giving Index, 2010 Report, Charity Aid Foundation, http://www.cafonline.org/pdf/0882A_WorldGivingReport_Interactive_070910.pdf
• Mapping the Global Muslim Population, Pew Research Center, October 2009, http://pewforum.org/newassets/images/reports/Muslimpopulation/Muslimpopulation.pdf
• Op cit.
• For further discussion on the theories of giving from multi disciplinary perspectives (such as economic, sociology, psychology, anthropology and political economics), Kolm and Ythier (2006).
• Indirectly implies that the gift or support is channeled through charitable institutions. For example, helping cancer patients could be done through giving to cancer foundations.
• The questionnaire is in Bahasa Indonesia (Indonesian Language) and is available upon request.
• Government-linked Islamic charitable organisations refer to Islamic charities established and managed by the government or semi-government organisations.
• Civil-society based Islamic charitable organisations refer to Islamic charities established and managed by public or mass-organisation (organisasi massa) and other public-and-religious interest groups.
• The questionnaire was initially sent to ten mailing lists joined by the author, with a note to the recipients to forward it to their friends. This is intended to get larger and random samples while enjoying the benefit of the so-called “snowball effect”.
• The correlation statistic used is the standard Pearson correlation statistic which is widely used in any statistical analysis. Therefore, a detailed discussion on this statistic is not included. For more discussion on this, refer to Lind et al. (2008) and Field (2009).
• For example, some respondents mention that their main reasons for giving are to support Palestine and anti-corruption programmes in Indonesia.
• Latest official estimation (2005), available at: http://indonesia.go.id/id/index.php?option=com_content&task=view&id=112&Itemid=1722
• Secondary education here refers to Junior high school (SMP) or level 7-9 of (common) elementary education.
• Most Indonesians retire after 55, except for some positions (businessmen, politician, etc.) and/or for highly skilled individuals (senior government officers, academics, etc).
• Geologically, Indonesia is located in a volcano ring and earthquake zone which makes it highly exposed to numerous natural disasters such as volcanic eruptions and earthquakes (Van Bemmelen, 1970). Floods are also regular in Indonesia, which presumably related to the increasing environmental damage done to the landscape.
• It is reported that the amount of zakah and other Islamic charitable funds, known as ZIS funds, collected through formal Islamic charities in Indonesia nearly doubled from Rp. 271 billion to 414 billion during the 2005-2006 period, a period when the tsunami disaster occurred (PEBS-FEUI and CID, 2009).
• Assumption: 1 USD =Rp. 9,090.4. This is the official exchange rate in 2010, as cited from the World Bank data.
• Data from the World Bank web site: http://data.worldbank.org/country/indonesia

About the author

Section:

Rahmatina Awaliah Kasri specialises in Islamic economics, banking and finance as well as international and development economics, with experience both in academic and practical fields. Currently, she is a PhD research student in Durham Islamic Finance Program (DIFP) at Durham University United Kingdom. Previously she was the Academic Manager and researcher at the Center for Islamic Economic and Business (PEBS) University of Indonesia as well as a lecturer at the Department of Economics in the same university. She gained her BA in Economics from University of Indonesia; MA in International and Development Economics from Australian National University, and MBA in Islamic Banking and Finance from International Islamic University of Malaysia. Her works has been published in various international conferences and several reputable journals including International Journal of Islamic and Middle Eastern Finance and Management, journal of King Azis University: Islamic Econ and Journal of Islamic Economic, Banking and Finance. Rahmatina Awaliah Kasri can be contacted at: unirahma@yahoo.com