As a kid, I just knew: my parents loved it when I was honest and truthful. As I grew up, I learnt from them that Allah swt loves the honest, the kind, the benevolent and the righteous. And that I should seek Allah’s pleasure in this life and in the hereafter by engaging in such acts. The early lessons were reinforced as I went to school. My teachers at school expected me to be honest and truthful. Honesty pays. I was taught the famous Indian mantra — Satyam Eva Jayate — truth alone wins. This was my belief and conviction. I never bothered about exploring any cause-effect relationship in matters of ethics and morality.
I never bothered about exploring any cause-effect relationship in matters of ethics and morality.
I was initiated into the world of business and financial ethics quite early in my teaching and research career at a few Business Schools. A particular hypothesis and the associated empirical evidence on organizational ethical behaviour clashed with my long-held beliefs. Why do corporates or organizations behave ethically? Why does a profit-maximizing firm engage in benevolent actions that may directly cut into its bottom line? And what motivates a non-profit-organization to spend its resources — financial and non-financial — in being kind to the poor and the needy?
Why does a profit-maximizing firm engage in benevolent actions that may directly cut into its bottom line?
On the first question, the empirical evidence seemed to suggest that profit-seeking firms seek to maximize the wealth of their shareholders by engaging in charitable and socially responsible behaviour that directly adds to their “reputational capital”. On the second question, there were references to multiple bottom lines, hypotheses rooted in hubris, in power and politics and less in economics. I was never fully satisfied about the plausibility of these hypotheses. I was also convinced of a need to look at for-profit and not-for-profit entities differently.
Diverse goals of Islamic organizations
I must say, my early childhood understanding of why I should behave honestly and ethically served me well in the later part of my academic life. I could extrapolate this knowledge to understand ethical (Islamic) behaviour of corporates and non-profits, as I moved on to explore the paradigm of Islamic economics and finance. I found no contradiction here. The ethical and moral behaviour of organizations would naturally be strongly aligned with the belief system of the people behind these entities — the shareholders, the promoters and all other stakeholders — seeking the pleasure of the Creator for success in this life and in the hereafter. One would however, expect higher levels of benevolence and charitable behaviour in case of organizations that articulated, shared with the world their missions and would be governed by the relevant regulatory and legal frameworks.
Notwithstanding the normative nature of the theoretical constructs, my early experience with a particular breed of Islamic entities was counter-intuitive, to say the least. These were the Islamic banks and financial institutions whose managers for some inexplicable reason, have been too keen to underline the “shareholder-wealth-maximization” goal of their respective organizations. My initial frustration gave way to cold acceptance of the realities. For me, the adjective “Islamic” with these financial institutions was both unnecessary and misleading. In a few earlier blogs, I have described in some more detail, my observations about this sector that eventually pushed me towards the Islamic non-profits. And the same realization pushed me to consider Indonesia as my place of work, given its formidable presence in this sector.
Motivators underlying institutional orphan care
Anecdotal evidence from my own interaction with the Islamic voluntary sector suggested that its programs and activities are governed primarily by faith. The Islamic orphanage projects seem to be motivated by the overwhelming emphasis of the holy Quran and the Sunnah on taking care of orphans. However, as I am about to begin serious research into the area (under a very ambitious project on creating an on-chain network of orphanages in Indonesia), I find some serious contradictions.
Available research evidence is indicative of a different set of hypotheses about the economic, financial, behavioral, social and religious factors underlying the institutional child care. The evidence from these research studies have sought a paradigm shift in the area of social protection of orphans and vulnerable children.
· Many Muslim Indonesians offer their benevolence to orphanages without realizing that their poor-due may be sustaining and also giving rise to growth in an exploitative orphanage trade (Beazley 2015; Lyneham and Facchini 2019).
· Some orphanage operators recruit children for their own profit-making from the gift, there is also a financial incentive system that remunerates employees for recruiting children to orphanages, and others may profit from orphanages that are sites of transition for traffickers in child labor, child marriage and sexual exploitation (Lyneham and Facchini 2019; Jabeen and Jabeen 2018; Benthall 2019; Van Doore 2016).
· In a country where extensive poverty exists (Isdijoso et al. 2013), receipt of the gift or other financial rewards opens opportunities for dishonesty
· Some parents may engage in negative poverty coping, such as failure to educate, domestication of the girl child, child labour and trafficking (Lee and Hwang 2016; Roelen 2014).
· There is long-standing evidence of associations between orphanages and harm (Bryson 2015; Choate and Engstrom 2014; Scott 2009; Beazley 2015).
Is the use of narratives like “trade”, “recruitment” and “financial incentive” in the context of orphan care an accurate description of the ground realities? Or, is it reflective of any methodological biases or prejudices against mission-based organizations that are so different from the corporations in the mainstream?
Is the use of narratives like “trade”, “recruitment” and “financial incentive” in the context of orphan care an accurate description of the ground realities? Or, is it reflective of any methodological biases or prejudices against mission-based organizations that are so different from the corporations in the mainstream? The above hypotheses are once again counter-intuitive to me, given my own understanding of Islamic societies and organizations. It may be counter-intuitive, also because the Indonesian society has been consistently ranked at the top, year after year, by independent agencies in the field of benevolence, voluntarism and altruistic behaviour. According to the World Giving Index Report (2022) compiled by Charities Aid Foundation Indonesia tops the list for the fifth consecutive year with the highest rate of donating and volunteering in the world. Are we judging and labelling an institution like an orphanage — so deep-rooted in the cultural milieu of Indonesia — as “harmful” without accurate and adequate evidence?
Indonesia tops the list for the fifth consecutive year with the highest rate of donating and volunteering in the world. Are we judging and labelling an institution like an orphanage — so deep-rooted in the cultural milieu of Indonesia — as “harmful” without accurate and adequate evidence?
I am back to the original question. What motivates you to be benevolent and contribute to the welfare of others? Is it the possibility of “monetizing” your enhanced “reputational capital”, of “controlling” an ever-increasing volume of assets and number of humans and their voices, of maximizing wealth of shareholders and/or trustees? Or, is it to seek the pleasure of your Creator or simply to “feel good” or respond to an obligation of “giving back to the society”?
I seek to find some answers and their policy implications in the blogs to follow. A logical starting point would be to revisit the available empirical evidence in this regard.