Islamic Philanthropy for Empowering the Community's Economy in the Era of Digital Transformation

Abstract

Islamic philanthropy is a practice of generosity based on Islamic teachings with the aim of achieving the welfare of the ummah. The concept of philanthropy in Islam derives from the Qur’an and Hadith, which emphasize social responsibility and economic justice. Islamic philanthropy has unique characteristics that distinguish it from philanthropic traditions in other cultures, particularly its strong connection to worship and spirituality. In Indonesia, as the country with the largest Muslim population in the world, the potential for Islamic philanthropy is enormous but has not been optimally managed. The gap between potential and realization indicates the need for innovation in the management of Islamic philanthropy to make it more effective in empowering the community’s economy. This study focuses on the impact of the digitalization of Islamic philanthropy on economic empowerment of the Muslim community, including changes in mechanisms of fundraising and distribution, the effectiveness of digital-based empowerment programs, and the real impacts experienced by beneficiaries (mustahik) in improving their economic well-being. The study also examines the challenges and opportunities in the development of digital Islamic philanthropy, including structural and technical barriers faced, as well as potentials that can be optimized for future development. Theoretically, this study is expected to enrich the discourse on Islamic philanthropy within the context of digital transformation and its contribution to economic empowerment, as well as enhance the development of contemporary Islamic economic theory that is responsive to technological advances. This research employs a descriptive-analytical method with a qualitative approach to explore in-depth understanding of the digitalization phenomenon of Islamic philanthropy and its implications for economic empowerment. The descriptive method is used to systematically and comprehensively describe the phenomenon of digital Islamic philanthropy in Indonesia—including the development of digital platforms, mechanisms of fundraising and distribution, and the empowerment programs conducted. Meanwhile, the analytical approach is used to examine the causal relationship between the digitalization of Islamic philanthropy and changes in the effectiveness of economic empowerment, identify factors influencing program success or failure, and evaluate challenges and opportunities in its digital development. The study concludes that digitalization has brought significant and multidimensional transformation. Digitalization has dramatically increased Islamic philanthropy fundraising—from only 28% conducted through digital channels in 2018 to 63% in 2023—indicating a clear shift in public preference. This increase occurred not only in percentage but also in absolute value, rising from IDR 3.2 trillion to IDR 14.3 trillion. Broader accessibility through digital platforms has expanded the donor base, including reaching Indonesian diaspora abroad who contribute 18% of total digital donations. Donation frequency has also risen significantly, with digital donors giving an average of 4.7 times per year compared to only 1.3 times for offline donors. Digitalization has improved the quality of empowerment programs through data-driven decision-making, real-time monitoring, program personalization, and peer-to-peer learning through digital platforms. Digital-based empowerment programs have proven to be far more effective, resulting in significantly higher levels of economic independence.