Indonesia

Overview

Traditionally, philanthropy takes place within family and neighborhoods. Individuals involved in family philanthropic activities are usually self-organized while village philanthropy, usually aimed at creating or protecting public goods, are more organized. Besides these culture-based philanthropic activities, religion-based philanthropy (i.e. zakat for Muslims, about 85% of Indonesia’s population) is also widely practiced in Indonesia.

In 2000, a survey of a sample of Indonesians occupying social strata classes A, B and C and living in a number of major cities revealed a strong preference for giving to other individuals (i.e. those begging for alms, to a relative/friend/colleague in need, etc.). A very high proportion of the population surveyed also gave to religious organisations and voluntary organisations.

Corporate giving in Indonesia is undertaken through four main strategies: 1) Direct involvement; 2) Setting-up corporate-foundation; 3) Making partnerships with other parties; 4) Involvement in a consortium.

History

Millions of people were spontaneously involved in philanthropic activities during Indonesia’s war for independence (1940-1945), providing food, temporary shelter and medicine to soldiers and war victims.
Post-independence era. Several religious organizations were established in the period following Indonesia’s declaration of independence. Two significant ones are the Nahdatil Ulama and the Muhammadiyah, which organized the collection of zakat.

Other organizations that were established during this time are the Lembaga Daya Dharma (LDD) in Jakarta, which managed the funds collected by the all Catholic churches in Indonesia. Similarly, the Yadna Puniakerti in Surabaya collected funds from Hindu temples while the Nichiren Syosu Indonesia (NSI) organized the collection of funds from Buddhist temples.

The government has been involved in managing and collecting obligatory annual wealth and poll taxes (Zakat), non-obligatory taxes such as ad hoc contribution in cash or service (Sadaqua), and permanent endowment of property (Wakaf) through a government set body known as Badan Amil Zakat Infak dan Sedekah (BAZ) since 1960. The government has also allowed community and non-profit organizations to self-organize similar tax collecting bodies known as Lembaga Amil Zaka, Infaq, Sedekah (LAZ).

“New Order” era. Former Indonesian President Suharto used the term “new order” or orde baru to contrast his rule with that of his predecessor, Sukarno, which he dismissively referred to as “old order” or orde lama.
This period saw the expansion of philanthropic practices channeled through religious and social organizations as the government began the practice of allowing tax exemptions for non-profit foundations in the fields of education, religion, health, and culture.

Major social and religious foundations and organizations founded during this era are: Christian Foundation for Public Welfare or Yayasan Kristen Untuk Kesejahteraan Umum (YAKKUM) founded in Surakarta in 1964; Bina Swadaya Foundation founded in Jakarta in 1967; Tengko Situru Foundation founded in Tana Toraja, South Sulawesi in 1974; Maha Bhoga Marga Foundation founded in Denpasar, Bali in 1982; Gebu Minang Foundation founded in1982; and Dana Mitra Lingkungan (DML) founded in Jakarta in 1983.

Reformation era. Since the re-establishment of democracy in 1998, corporate and religious donations have been increasingly popular as philanthropic activities in Indonesia. Besides these, electronic and print media companies also actively collect funds and give coverage to their own philanthropic activities. Aside from raising public awareness on philanthropic activities, media involvement also provides transparency to the process, playing an increasingly important role in the development of philanthropy in the region.

The Asian tsunami in December 2004 saw unprecedented philanthropic responses from around the world and from within affected countries and communities. In Indonesia, aid came in the form of cash and goods, as well as a moratorium on debt from G7 countries. Local organizations, through informal disaster response networks like Indonesia Peduli, an alliance of NGOs, media groups, corporations and government agencies, also contributed to the relief effort by collecting and distributing private sector donations as well as coordinating volunteer support.

The Indonesian media played an exceptional role in mobilizing and helping to efficiently use funds in the tsunami aftermath. As they covered the unfolding of events, they also encouraged the public to contribute to the relief and rehabilitation fund, mobilized volunteers and helped to reunite families. In addition to collecting funds, media outfits also distributed these funds to charitable organizations involved in relief and rehabilitation work

The Public Interest Research and Advocacy Center (PIRAC), a local NGO dedicated to philanthropy and capacity-building, recently published a case study on the media’s role in the 2004 tsunami. For more information on PIRAC and its publications, visit www.pirac.or.id.

Policy environment

The Indonesian legal system is a convergence of Dutch-inherited laws and Indonesia’s modern law. However, post-independence governments have worked towards replacing outdated Dutch laws with those enacted by the Indonesian legislative body.

Most significant changes in policies governing NPO-government relations took place during Suharto’s regime. In the beginning, NGOs were relatively free to launch independent activities, during which time they began to increase their involvement in social and economic activities. They ultimately hoped to establish institutions for community self-reliance. However, the government slowly sought to control the movement of NGOs.

In 1971, the Department of Home Affairs established the Pembangunan Desa (BANGDES), a government department charged with overseeing all community development activities in the rural areas.

The mid-80s saw the government take policy decisions aimed predominantly at restricting NGO activities. For example, the government would threaten with suspension the executive or central board of any social organization that it claimed did any of the following: a) undertake activities that “disrupted” public order and security; b) received foreign aid without government approval; and c) provided assistance to any foreign party, as this was contrary to the interests of the state and nation.

In 1985, the Directorate General of Socio-Politics in the Department of Home Affairs enacted the Law on Social Organizations. This law required NGOs to seek approval from the government before they could receive funds from foreign sources. It also granted government the authority to freeze the activities of NPOs that did not comply with existing regulations.

These policies caused many NGOs to be careful in defining their activities as “developmental” rather than “political”. However, the end of Suharto’s regime also marked a general trend towards less restrictive laws.

Taxation

Today, restrictions on Indonesian NPOs are mostly tax-related. All NPOs are generally subject to income tax, though donations and grants are exempt.

Tax deductions for charitable contributions are currently available only for Zakat (Islamic-obligated charitable giving). Additional tax incentives have been created on an ad hoc basis – in response to natural disasters, for example. Indonesia subjects the sale of most goods and services to a Value Added Tax (VAT), with some exemptions pertinent to NPOs. Certain relevant goods are exempt from customs duties as well.

No specific rule sets forth the process by which domestic NPOs can receive foreign grants. At present, the Secretary of State through the Overseas Technical Cooperation Bureau tries to coordinate the process. However, procedures vary widely from one donation to another.
More detailed information is available on The Indonesia House of Representatives website (www.dpr.go.id ) and the United States International Grantmaking website (www.usig.org).

Data and resources

Individual giving. In 2000, PIRAC conducted a survey to estimate the level of giving among Indonesians using a sample of people who lived in major cities and were within the social strata classes A, B and C. The study excluded zakat, or obligated charitable giving among Muslims, who make up more than 80% of the country’s population. The study was part of a series commissioned by APPC for its publication Investing in Ourselves: Giving and Fundraising in Asia.
Almost everyone surveyed said that they had engaged in charitable giving to individuals within the last 12 months. Eighty-four percent reported giving to religious organizations and 80% reported giving to other voluntary organizations.
The table below lists the giving rate and the average amount given by those givers to nonprofit organizations in different fields, in US $ per annum.

To download the entire study, click here.

Corporate giving and volunteering. Corporations have played an important role in the development of philanthropy in Indonesia. However, during the New Order regime, funds allocated for corporations’ social obligation activities were exclusively managed by the foundations owned by Suharto’s families. The fall of Suharto’s regime in 1998 allowed corporate philanthropy efforts to benefit a broader range of legitimate social foundations and religious organizations.

Since the Asian economic crises, corporate philanthropy has significantly increased in Indonesia. Today, corporate philanthropy in Indonesia is undertaken through six main strategies:

The first is through direct involvement, which usually means that it is the company itself that conducts social events and social activities. Second is by establishing a corporate foundation, through which most, if not all, philanthropic activities are channeled. Examples of corporate foundations in Indonesia are the Dharma Bhakti Astra Foundation, Rio Tinto Foundation and Friends of Aqua Foundation.

Third, companies sometimes may team up with other organizations such as NGOs, government agencies, universities or media companies to perform philanthropic activities. Fourth, companies may help to set up, or choose to support a consortium of organizations for philanthropic or social purposes. An example of this is Indonesia Peduli, which conducted relief and rehabilitation operations in the wake of the Asian tsunami in 2004 and again after the Yogyakarta earthquake in 2006. A fifth strategy is employee volunteerism, where companies involve their employees in its social and philanthropic activities. An example of this is Citibank’s Peka Community Center program, which supports programs to help street children access education and learning facilities.

A final emerging strategy among corporations in Indonesia is the multi-purpose foundation model. One good example of this is The Habibie Center, which organizes six companies owned by the Habibie families and supports their philanthropic and social activities. In addition, The Habibie Center also supports a diverse set of advocacies including human rights, democracy, media development, technology, information, and human resource development.

n 2002, PIRAC conducted a survey of corporate giving in Indonesia, surveying some 226 companies in 10 big cities across the country.

The survey questionnaire tackled issues such as corporate policies on giving; management and forms of donation; beneficiary sectors; factors influencing desire to donate and perceptions on the definition of CSR. Ultimately, the survey hoped to reveal the extent to which corporate donations were geared towards social investments.

Briefly, the study found that of all the companies surveyed:

· 93% engaged in charitable giving within the last three years

· 18% have a written policy on donations

· 13% have a special division assigned to handling donations

· 60% donate in an incidental manner

· 21% determine a target for the amount of donation they aim to give by the end of the year. 62% say they have no such target.

For more information on PIRAC and how to access the entire Corporate Giving in Indonesia study, go to www.pirac.org or send email to piracy@cbn.net.id.

Volunteerism

The following organizations are currently coordinating volunteer work in Indonesia:

The government’s Departemen Sosial (Social Department) has a partnership with 282,719 social workers all over the country who render volunteer work on various occasions

Contact : Pusdatin Kesos Depsos
E-mail : pusdatin@depsos.go.id

The Badan Urusan Tenaga Kerja Sukarela Indonesia (Indonesian Voluntary Work Organization), under the government’s Manpower Department, is one of the few organizations specifically focused on the promotion and support of volunteerism. Aside from individual local volunteers, BUTSI also works with foreign volunteer organizations like the International Red Cross, UN Volunteers, Volunteers in Asia (VIA), Voluntary Service Overseas (VSO) and the Canadian University Service Overseas (CUSO). Funding for BUTSI’s activities comes from government allocations, individual and private donations, and foreign funding organizations.

Contact: Mia Sinaga
Email: pusbang_indonesia@yahoo.com
Phone: 62-21-527-9466
Website: www.volunteer.or.id

Philanthropy intermediaries.

Fundraising. The number of non-profit organizations working on fund raising activities has been increasing since 1998, when the country was hit by economic crisis. These organizations collect individual giving as well as corporate donations. The funds collected are used to help the welfare of the poor and victims of natural disasters.

Badan Amil Zakat, Infaq dan Sedekah (BAZIS or Zakat Colleection Board) collects money from Muslims in Jakarta and distributes these to poor communities, widows, and orphans.

Website: www.basisdki.go.id
Phone: +62 21 3144579/3901367
Fax: +62 21 3144579

Dana Sejahtera Mandiri Foundation

Website: www.danamandiri.or.id

Citizen participation. There are several organizations working to promote public participation to resolve development problems under a coordinating organization known as Civil Society Human Resource Organization or Organisasi Sumber Daya Manusia Madani (OSDMM). Members of the OSDMM offer various consultations and services such as management training programs, community education and community development. The following organizations are members of the OSDMM:

Balai Latihan dan Pengembangan Masyarakat Ujung Pandang

Contact: Jamaluddin Ibrahim
Phone: +62-411-443136

Dian Desa

Contact : Anton Sudjarwo
Phone: +62-274-563423/561247

Lembaga Penelitian, Pendidikan dan Penerangan Ekonomi dan Sosial

Contact: Rustam Ibrahim
Phone: +62-21-5674211
Email: lp3es@lp3es.or.id
Website: www.lp3es.or.id

Perkumpulan Pengembangan Pesantren dan Masyarakat (P3M)

Contact: Masdar F Mas'udi
E-mail: p3mnet@idola.ne.id, hnh@p3m.or.id

Remdecotama Swaprakarsa (Remdec)

Contact : Handoko Sutomo
E-mail: gss@remdec.co.id, wilarsa@remdec.co.id

Grantmaking Foundations

Yayasan Mitra Mandiri or the Mitra Mandiri Foundation is an umbrella organization which provides funding and technical assistance to other non-profit organizations involved in philanthropic activities in the areas of health, education, social welfare.

Contact: Gino Latief
Email: mitraman@indosat.net.id
Phone: 62-21-5220806/5220804
Fax: 62-21-5220806

Forum Zakat (FOZ) is an umbrella organization of 182 government and non-governmental organizations which collect and manage obligatory charitable tax and other contributions from the Muslims in Indonesia. FOZ distributes funds to other voluntary organizations and activities for needy people.

Contact Person: Naharus Surul
Phone: +62 21 70902731
Website: www.forumzakat.or.id

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