necessary to design an instrument which is able to control the cash waqf management.
Based on the survey’s result, using exclusively designed computer program then
simulated with system dynamics methodology, some scenarios of cash waqf implemention to
formulate some policy concepts applicable in Indonesia. The computer program was designed
to help the policy makers 1 estimate cash waqf potential in alleviating poverty in Indonesia, 2
supervise performance of nadzir or waqf fund management institution, and 3 identify
appropriate policies conducive to poverty alleviation programs. Since there was no similar
study preceding the research, some assumptions were applied. The ability of three national TV
corporations RCTI, SCTV, and Indosiar to collect donation amounting 2 billions Rupiah in
two nights in 2000 and the other charity programs to collect donation in 2001-2005 were used as an
assumption basis of amount of fund could be gathered by cash waqf management institution
9
. This research also used data supplied by Biro
Pusat Statistik Republik of Indonesia National Beaurau for Statistics, BKKBN Republic of
Indonesia National Coordinating Agency for Family Planning and Islamic
Financial Institution.
5.1
Limitation of Research
This research put more emphasived on financial management especially raising and
investing of cash waqf funds. The duties of Nazir, as a cash waqf fund manager, are to increase the
cash waqf funds and invest those funds in profitable portfolios. As we know, the poverty
alleviation problems are complicated. However, they need multidiscipline knowledge to formulate
and figure out the solutions. With this research we want to try to make an early design of poverty
alleviation in the financial viewpoint using system dynamics modeling.
6. General Description of System
Conceptualization The system conceptualization involves
establishing model boundary, identifying causal relationships and policy framework
10
. In this research the model boundary includes all relevant
factors that are considered important in the problem context. The model comprises six
interrelated components in the cash waqf management as shown as Figure 1.
9
PIRAC Public Interest Research and Advocacy Center, “Rate of giving of Indonesian Community”.. Based on survey
from Agustus 2000 to Agustus 2001.
10
Sushil 1993, System Dynamics “A Practical Approach for Managerial Problems”,Wiley Eastern Limited.
THE POOR THE RICH
CASH WAQF FUNDS
INVESTMENT PORTFOLIOS
+ INVESTMENT
PROFITS AVAILABLE FUNDS
FOR THE POVERTY PROGRAMS
+ +
- +
+ - loop 1
+ loop 2 +
+ loop 3 - loop 4
- -
Figure 1. A Macro-view of Model A general system of cash waqf model,
derived from a macro-view of model above, consists of six sectors i.e:
1. The cash waqf fund raising sectors
Cash Waqf Funds Raising Sector
Principal_32 Total_Return
growth_rate Cash_Waqf
Min_Req_Return Cash_Inflow
Return_of_Global_Fund Investment_periode
CW_normal Principal_4
Current_price_of_gold Collecting_period
Principal_3 Principal_1
Principal_11 Principal_12
Principal_14 Principal_13
Principal_33 Principal_31
Ratio Global_Fund_Inv
Invest_to_Islamic_Fin Convert_to_Gold_standard
Cash_Waqf_Mgt Mikrofinance
Global_Fund_Mgt
Return_of_Global_Fund Total_Return
Invest_to_Direct_Investment Invest_to_microfinance
Ratio Return_of_Microfinancing
rate_of_cash_inflow Profit_of_Glb_Fund_Mgt
Return_of_Global_Fund Microfinace_Period
Min_Rtrn_MK Principal_2
Total_Return Stop_Microfinance
Average_Return_of_Islamic_Finance Microfinance_Policy
Average_Return_Direct_Inv Average_Return_of_Islamic_Finance
2 The Islamic financial portfolios sectors,
Islamic Financial Portfolio Sector
Investment_periode Return_Islamic_Finance
Invest_to_Islamic_Fin
Principal_14 Invest_to_Islamic_Fin
Principal_12 Islamic_Mutual_Funds
Invest_to_Mutual_Funds Min_Req_Return
Return_Islamic_Mutual_Fund Profit_of_Islamic_Bonds
Return_of_Islamic_Bonds Invest_to_Islamic_Bond
Islamic_Bonds Principal_13
urn_Islamic_Finance Min_Req_Return
Invest_to_JII Islamic_Capital_Market
Profit_of_Islamic_Cap_Mrkt Invest_to_Mudharabah_Deposits
Principal_11 Return_Islamic_Finance
Profit_of_Islamic_Mutual_Funds Investment_periode
Invest_to_Islamic_Fin
Return_of_Deposit Profit_of_Islamic_Deposits
Profit_of_Islamic_Bonds Mudarabah_Deposits
Profit_of_Islamic_Finance Investment_periode
Average_Return_of_Islamic_Finance Profit_of_Islamic_Deposits
Return_of_Islamic_Stocks Return_Islamic_Finance
Return_of_Islamic_Bonds Profit_of_Islamic_Mutual_Funds
Return_of_Islamic_Bonds Return_Islamic_Mutual_Fund
Return_of_Deposit Return_of_Islamic_Stocks
Min_Req_Return
3
Figure 2. The Interrelationship Among Variables in the General System
Islamic Financial Portfolio
Microfinance Portfolio
The Profits of Microfinance
The risk of microfinance
Microfinance Policy Scheme
Bad debts of microfinance
Unemployment rate
Technical Assistances for the poor
+ -
- -
-
+ -
+ -
- Indonesian
Population birth rate
+ the rich
the poor death rate
cash waqf growth cash inflow of
cash waqf Cash Waqf Funds are
collected by Nazir Average Period to
Collect Funds Investment
Funds -
- +
+ +
+ +
Direct Investment
Portfolios +
+
The Profits of cash waqf investment
Management Fees for the Nazir
The funds for the poverty alleviation
programs -
+ +
+ +
+ -
+ Islamic Capital
Market Islamic Banking
Islamic Mutual Funds
Dividens capital gains
Mudharabah Deposits
NAVs Mutual Funds
+ +
+ +
+ +
+ Islamic Bond
+
rate of return +
Profits of Islamic Financial Investment
+ +
+ +
+ Risk of Islamic
Financial Investment -
+ +
+
+ Invest to company
To maintain the existing waqf assets
To make a new waqf assets
+ +
+
Dividen or Capital Gains
+ Waqf land
productivity To maintain new
assets
Agriculture Real Estate
+ +
+ +
Business Risk Social
Projects Commercial
Projects
Free Education Free-charge Health
Services Waqf Land
Rental +
+ +
+ +
The Profits of Direct Investment
+ +
+ +
+ +
+ +
+ -
+
+ The poverty
allevation programs
-
+ +
Global Fund Mgt
+ Foreign
Waqif
+
+ +
+
Multiplier Effects of Microfinance towards
Familys Welfare -
+ +
+ To meet the
poor needs Living Cost
Healthy Cost Education Cost
The Family Rehabilitation Cost
Natural Disaster Victims Costs
Infrastructure Recovery Cost
Quality of Life
+
4
3 The global fund management sectors,
Global Fund Management Sector
Total_Return Principal_4
Investment_periode CW_normal
Convert_to_Gold_standard Global_Fund_Mgt
Ratio rate_of_cash_inflow
Collecting_period Cash_Inflow
Profit_of_Glb_Fund_Mgt growth_rate
Current_price_of_gold Min_Req_Return
Return_of_Global_Fund Return_of_Global_Fund
Return_of_Microfinancin Cash_Waqf
4 The microfinance sectors.
Microfinance Portofolio Sectors
Mikrofinance microcredit
Profit_of_Microfinance Indonesian_population
Stop_Microfinance Microfinace_Period
Return_of_Microfinancing Pra_welfare_people
Microfinance_Policy Policy_ratios
The survey concluded that most people did not trust any existing government institutions
to manage cash waqf fund and control cash waqf investment activities, especially because cash
waqf management will involve large amount of endowment funds. Most of them also recommend
that if a special purpose institution is established to manage cash waqf fund, it has to be highly
capable of detecting any potential dishonesty and assessing performance of cash waqf fund
manager, i.e. nadzir. Therefore, it’s necessary to design an instrument which is able to control the
cash waqf management. This model tries to design a control tools which is able to detect the
human error in decision making either mismanagement or dishonesty quickly see figure
3e 3d.
5 The direct investment in large and medium scale enterprises,
6 The distribution sectors of the profits of cash waqf investment see figure 4b. Investment
profits link to the poor through the poverty programs.
The Interrelationship among variables can be seen in Figure 2.
7. The Cash Waqf Management Control