Shariah governance and financial management framework for Islamic donation-based crowdfunding (IDCF)

Purpose: Islamic donation-based crowdfunding (IDCF) is one of the mechanisms that purportedly fulfils the philanthropic virtues of Islam and has been modernised to reach a mass audience through digital platforms. However, IDCF faces criticism for several reasons, including potential fraud and mismanagement, lack of regulations and monitoring and unstandardised Shariah contractual arrangements and Shariah governance practices. Despite the need to ensure that IDCFs are transparent and well-governed to avoid mismanagement, there is a lack of studies that focus on these issues. Therefore, this study aims to develop a Shariah governance and financial management framework for IDCF that preserves the rights of the involved parties according to their contractual arrangements. Design/methodology/approach: This study is qualitative in nature and uses interviews for data collection. Eleven series of structured interviews have been conducted with several parties, including representatives of IDCF platforms and Shariah experts related to Islamic crowdfunding. Findings: The study proposes a Shariah governance and financial management framework for IDCF that covers several dimensions, including legal establishment, Shariah governance, Shariah contracts and financial management aspects. Research limitations/implications: The implementation of the Shariah governance and financial management framework provides assurance of IDCF platforms’ compliance with Shariah principles. Besides, related authorities such as Bank Negara Malaysia (BNM), the Securities Commission (SC) and the Registry of Societies (ROS) may refer to the IDCF Shariah framework for supervision and monitoring purposes. Moreover, the details of this framework could also be considered when developing guidelines or standards related to Islamic crowdfunding in the future. Originality/value: The development of the IDCF Shariah governance and financial management framework contributes to the improvement of internal processes and structured monitoring mechanisms, especially for IDCF platforms from a Shariah perspective.

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