Recent scandal involving one of the largest Islamic charities in Indonesia threatens to damage public trust if the authorities waste the chance to overhaul the poorly regulated sector.
ACT (Aksi Cepat Tanggap, or Fast Action Response), which is supposedly the largest philanthropic organisation in Indonesia, has been in the spotlight recently for its reported mismanagement of collected funds and donations. This has raised questions about how this would dampen Indonesians’ enthusiasm for giving to Islamic and other philanthropic causes.
Established in 2005, ACT focuses on social and humanitarian activities, including post-disaster recovery, community development, and empowerment activities. ACT also organises philanthropic activities based on religion, such as collecting Islamic alms, donations (sadaqah) and other funds. Since 2012, ACT has grown from a national to a global organisation. ACT’s activities expanded to reach beyond Indonesia to international Muslim communities including those in Palestine and Syria and victims of earthquakes in several Middle Eastern countries. In all, ACT has channelled donations to some 47 countries.
However, ACT has now attracted overwhelming negative publicity due to its reported mismanagement of collected public funds and donations. Following an exposé by Tempo magazine earlier this year, ACT is under serious investigation by the National Police of Indonesia (Polri) for alleged misconduct in organisational management. Media reports accuse the top executives of gaining individual benefit and practising corruption, including the serious misuse of public donations.
One egregious example is the alleged transfer of the use of “public facilities” (including prayer rooms and classrooms) meant for victims of the Lion Air JT-610 crash in 2018 (given by Boeing Corporation from its corporate social responsibility fund) worth some Rp100 billion (about US$6.7 million) to movements or groups linked to ACT executives, such as Koperasi Syariah 212 (KS212, or 212 Sharia Cooperative Organisation). KS212 allegedly received a donation from ACT worth around Rp10 billion (US$666,000), as acknowledged by its leader, Muhammad Syafei. KS212 has a website that is not functional but it is active on Facebook, with its page ‘followed’ by more than 50,000 accounts, and describes itself as a “community organisation”. There are other Facebook pages possibly managed by KS212 or its affiliates, including Komunitas Koperasi Syariah 212, Koperasi Syariah 212 Kuningan and Komunitas Bisnis Koperasi Syariah 212 Indonesia.
When interrogated by Polri in July 2022, ACT executive director Ahyudin seemed almost blasé about the investigation as he claimed he had a “smooth, relaxed” conversation with the police about how ACT managed Boeing’s donation.
The top leaders of ACT were also grossly overpaid; their basic monthly salaries seemed much higher than average ones for directors of philanthropic organisations in Indonesia.
Polri is now investigating four leaders of ACT including Ahyudin — who reportedly received Rp250-400 million (about US$16,700-26,800) per month while ACT-linked companies paid for furniture, three cars, and homes for Ahyudin and his family — and president Ibnu Khajar — who received Rp150 million (about US$10,000) per month. (Compared to average monthly salaries for philanthropic foundation employees of just Rp8 million on the low side and Rp18 million on average, these numbers are suspiciously high).
According to its own estimate, ACT allegedly misused 13.7 per cent (and possibly more) of public funds it collected to cover its own costs. This violates Government Regulation No. 29/1980 on the Implementation of Collection of Donations, which allows charitable organisations to spend up to 10 per cent of donated funds on their operating expenses. While Indonesia does not have an omnibus law governing charities, it appears that Polri is considering other charges based on the criminal code.
It remains to be seen how the ACT scandal will ultimately affect Indonesians’ donations to Islamic, humanitarian, and spiritual causes.
Many Indonesians are angry about the misconduct of ACT’s leaders because ACT’s main sources of funds were from religious donations and public fundraising. Ibnu Khajar has apologised to the public for the misconduct. The Central Headquarters of Nahdlatul Ulama (PBNU), Indonesia’s largest moderate Muslim mass organisation, supports Polri in investigating ACT’s case. Rakhmat Hidayat Pulungan, the vice-secretary general of PBNU, has called on the police to unveil the modus operandi of ACT.
The Council of Ulama Indonesia (MUI), through Solahuddin al-Ayyubi, called for an evaluation of ACT’s performance but did not ask for it to be dissolved. He believes that ACT is still needed to pull in donations from the Indonesian public. ACT’s past fast response to humanitarian causes and useful presence in disaster areas in and outside of Indonesia has earned it a wide network of donors, from individuals to corporations. In 2020, ACT collected around Rp500 billion (US$33.5 million) from the public, greater than donations to comparable charities like Dompet Dhuafa (a private institution supporting poor communities in Indonesia) and Rumah Zakat (a private institution established as a house of alms).
The ACT’s alleged corruption has led to more serious crimes being investigated. For instance, the chairman of Indonesia’s National Counter Terrorism Agency (BNPT) has stated that the ACT allegedly sent financial aid to foreign terrorist organisations. This allegation is related to ACT’s donations to Syria.
Other philanthropic organisations have come under suspicion following the exposure of ACT’s case. Some 176 philanthropic organisations are apparently on Polri’s list for further investigation. They are allegedly also collecting public donations by using religion as the point of attraction, but then misusing or misappropriating the funds. Only three of these 176 organisations have official permission to collect public donations in cash or kind. It means that potentially, as many as 173 organisations are operating without legal foundation or regulatory supervision.
Based on this, the Coordinating Ministry of Human Development and Culture (PMK, or Kemenko) has asked all charitable organisations to re-evaluate and improve their internal management systems, to become more trustworthy and transparent.
It remains to be seen how the ACT scandal will ultimately affect Indonesians’ donations to Islamic, humanitarian, and spiritual causes. Increasing public distrust following more revelations about the mismanagement at ACT and possibly other charities will dampen overall giving. However, if the authorities can clean up the sector using ACT as an example and restore public trust, generous Indonesians will undoubtedly continue to give to good and urgent causes. The case of ACT has adversely affected the credibility of Indonesia’s philanthropic organisations in general and Islamic philanthropic organisations in particular. The most glaring problem is ACT’s violation of the Islamic religious and ethical injunctions against corruption and dishonesty. This case should drive both secular Indonesian authorities and religious leaders to tighten their oversight of the operation of all philanthropic organisations.
Syafiq Hasyim is a Lecturer of UIN Syarif Hidayatullah Jakarta and a Visiting Fellow at the Indonesia Studies Programme, ISEAS – Yusof Ishak Institute.