does monetary policy have an affect on financial stability?

The proportion of people involved in charitable giving has increased despite the economic turmoil and recession in the recent past. The 2013 World Giving Index reported increased involvement in giving from the global community from 2011 to 2013. The giving behaviour is mainly classified into three categories, including volunteering, charitable donations and helping a stranger (Bekkers & Schuyt, 2008). Charitable donations have been a broad and frequently occurring form of pro-social behaviour explored by philanthropists, practitioners and academicians. The literature relevant to charitable giving originates from different disciplines including sociology, economics, social psychology and marketing (Davis, Millner & Reilly, 2005). Experts from different disciplines have explored this pro-social behaviour from different perspectives (Eckel, Grossman & Johnstong, 2005).

One of the most prominent aspects of the literature on philanthropy is the exploration of determinants or motives that stimulate charitable giving among different people. The determination of major factors affecting charitable giving behaviour helps not-for-profit organisations improve their strategies for efficient collection of charities and donations (Davis, Millner & Reilly, 2005).

Islam encourages its followers to participate in community welfare by making significant charitable donations. Waqf is one of the most significant forms of charity in Islam. It refers to an individual’s endowment of land and other property for the public good. The history of waqf goes back to the origin of Islam, but it was established as an institution by the Ottoman Empire (Osman, 2010). Moreover, waqf has been central to relevant philanthropic investigations. Waqf (i.e., endowment) is very significantto public welfare and prosperity as reported by Bekkers and Schuyt (2008). It is offered by donors as a sincere gift to an organisation, a person, a state or an authority for the welfare of the public (Osman, 2010). Waqf is often utilized to improve social and economic conditions of the people by conducting commercial projects such as business centres, and social projects such as orphanage management and rehabilitation centres (Masruki & Shafi, 2013).

Researchers have explored waqf from different perspectives via marketing, management, accounting, philanthropy and psychology. The emerging literature on waqf institutions indicates that accountability, management and transparency of waqf institutions have been the focus of previous research (Masruki & Shafi, 2013). The studies regarding the key determinants of charitable donations in waqf institutions are few. This gap in literature has also been identified by Htay, Osman and Muhammad (2012) who explored determinants of charitable cash waqf donations. This gap in literature emphasises that the key determinants of charitable donations for cash waqf are identified and explored. The determinants of charitable donations in waqf institutions require exploration because the previous studies on waqf have mostly focused on the accounting and management of waqf as reported by Andreoni and Payne (2003). Therefore, the proposed study would identify and analyse the determinants of charitable donations in waqf institutions.

The aim of the proposed study is to conduct an empirical investigation identifying the key determinants of charitable donations in waqf institutions. The objectives of the proposed research are:

· To review the literature pertinent to the determinants of charitable donations

· To identify and explore the key determinants of donations in waqf institutes

· To formulate recommendations, based on the results of this study, for the management of waqf institutes to improve the collection of charitable donations

Keeping in mind the aims and objectives, the study would seek to answer the following research question: What are the key determinants of charitable donations to waqf institutes?

Bekkers and Schuyt (2008) while describing the mechanism of charitable giving stated that individuals could act for public welfare in many ways. Charity could take the form of volunteering time, donating blood or organs of the body and giving money to charitable organizations. Most forms of the charitable donations have been explored by sociologists; the money donations remain uncovered until late 1990s (Eckel, Grossman and Johnstong, 2005). On the other hand, the psychologists and economists focused money donations to charity organizations and explored factors that motivated individuals to donate money to charities (Bekkers and Wiekpking, 2010). However, charitable giving was described as an essential form of social interaction. Therefore, it became the central focus of sociological studies. Although abundant literature is available regarding the determinants of donating money to charities yet there is a gap in the emerging literature relevant to the determinants of donations to waqf institutes (Masruki and Shafi, 2013). Therefore, the proposed study is justified and rationalized as it would help to breach the gap in the emerging literature on philanthropy.

Charitable donation is a worldwide phenomenon common in individuals belonging to all religions, ethnic groups and societies. The factors that motivate individuals to participate in charitable giving vary from different perspectives as reported by Bekkers and Schuyt (2008). Bekkers and Wiekpking (2010) reported different factors that determined the charitable giving behaviour of individuals for different charities. They conducted a detailed review of over five hundred studies regarding philanthropy and highlighted eight mechanisms that constituted the pro-social behaviour of individuals. The giving behaviour of an individual is affected by the awareness of the need for help and charity. Awareness is related tocharitable organisations asking for contributions. Asking for donations is also associated with increased individual giving as reported by Bekkers and Wiekpking (2010).

The question of “what causes individuals to contribute to charities and support projects of public welfare when they derive no benefits?”has long been debated by philanthropists. Crumpler and Grossman (2009) discussed two extremes that have been reported by studies on philanthropy. One extreme promotes the notion of pure altruists who are solely motivated by some kind of interest or benefit in the welfare of recipients of charity. For altruists, they are concerned with the welfare of the public and not with how the welfare projects are funded (Eckel, Grossman & Johnstong, 2005). The other extreme is the concept of “warm glow” where donors of charitable giving do not receive any worthfrom the welfare and projects of public good, rather they receive value solely from “the act of giving” (Davis, Millner & Reilly, 2005). Thus, these donors make donations for purely egoistic reasons and these types of donations are termed as “warm glow” donations. Bekkers and Wiekpking (2010) also highlighted altruism and reputation as the key determinants of charitable giving. They also reported that solicitation (request for charity) costs and benefits, psychological benefits, efficiency and social values also affected the charitable donations. Bekkers and Wiekpking (2011) believed demographic and personal factors sway individual philanthropic behaviour. Through review of relevant literature from economics, marketing, sociology and management of charitable donations, it is evident that individual characteristics including age, ethnicity, religion, education and the extent of socialization largely determine the amount as well as frequency of charitable giving. The correlation between charitable giving and age, education, religion and socialization is empirically supported.

Another factor that affects the charitable giving by donors is the requests made by charity organisations emphasizing the need for charity. Yoruk (2009) stated that “power of asking” was a well-known factor impacting an individual’s behaviour when making charitable donations. Therefore, the appeals made by the not-for-profit organisations play a significant role in making individuals donate. The author notes that emerging literature on philanthropy does not pay enough attention to the impact of donation requests on donor’s behaviour. The “power of asking” as the determinant of charitable donations was further explored by Andreoni and Payne (2010) who considered the causes for the reduction in individual giving to charity organisations that received grants from the government. It was found that the reduction in charitable donations was due to two factors: the classic crowd out and the fundraising crowd out.

In the classic crowd out, the donors think that the charity has received sufficient funds from the government (i.e., receiving government grants) and that they have contributed to the charitythrough their taxes. Another plausible explanation for reduced charitable donations is the fundraising crowd out, which is when charity organisations reduce their fundraising activities because they received sufficient grants from the government(Bekkers & Schuyt, 2008). The authors concluded that both types of crowding out reduced charitable donations up to 72% with most of the reduction due to fundraising crowding out. The study suggested that charitable organisations should adopt feasible policies to match the governmental requirements for acquiring grants whileavoiding the detrimental impacts of crowding out (Bekkers & Wiekpking, 2010). From this, it can be concluded that crowding out has a negative impact on charitable donations by individual donors.

The personal characteristics of individuals (e.g. income, age and education) were also examined for their impact on charitable donations by Yoruk (2009). It was found that nearly 20% increased the tendency to give among the donors of charities. Donor income has also been identified as a significant determinant of charitable giving as reported by Burger et al. (2004). Yoruk (2009) reported that individuals with higher household incomes were more likely to donate to charities as compared to individuals with lower incomes.

This review of literature also helped in understanding the concept of “warm glow” in philanthropy since the “warm glow” hypothesis is one of the fundamental hypotheses presented to explaindonor behaviour toward charities. In an experimental study, Crumpler and Grossman (2010) noted that most participants made charitable donations when they were asked to donate a portion of their own endowment. They also reported that, on average, each participant donated 20% of his/her endowment. During this experimental study, the participants were offered no incentive for making charitable donations. The review of literature confirmed that the act of giving itself was a significant factor that prompted the participants to donate to charities. Thus, the egoistic behaviour of a person was classified as the key determinant of charitable donations by Crumpler and Grossman (2010).

Multi-disciplinary studies have been conducted to identify and understand the key determinants of charitable donations. Wiepking and Mass (2009) explored this phenomenon from a sociological perspective and studied the impact of social resources and human resources (i.e. skills, education, experience etc) on charitable donations in the Netherlands. The study focused on education and socialisation as the key determinants of charitable giving, along with other variables including church attendance, financial resources, appeals for donations and personal characteristics such as age. The human and financial resources were positively linked with charitable donations (Eckel, Grossman & Johnstong, 2005). Moreover, human resources also showed a positive correlation with socialisation. For example, more socialised individuals had more extended social networks and the members of their networks approached and asked for donations (Ibrahim & Yaya, 2005). Therefore, people with extended social networks reported making more charitable donations as compared to other people with smaller social networks (Andreoni & Payne, 2003). People with higher church attendance were likely to have large social networks and experienced more appeals for donations as compared to individuals not attending church or other places of worship. The enhanced integration of individuals in religious and community networks also reported an association with higher charitable donations.

People with higher education reported donating large amounts to charities. Burger et al. (2004) explained the causal impact of education on charitable donations by stating that individuals having higher education were engaged in a higher level of socialisation and were solicited for donations by their social links. Thus, education enhanced the social networks of individuals resulting in higher donations for charities. It is reported that higher education, along with high financial and human resources, are associated with higher frequency of charitable donations (Davis, Millner & Reilly, 2005).

Crumpler and Grossman (2010) stated that charitable donations were classified into two main categories: time (e.g., volunteering) and money. Therefore, most of the emerging studies on charitable donations focus on the determinants of both categories. For instance, Cappellari, Ghinetti and Turati (2007) specifically focused on the determinants of time and money as charitable donations. However, this study explored the determinants of both types of charitable donations from the behavioural perspective. They applied a behavioural model that considered factors like domestic work hours and decision-making in markets. It was empirically proven that reputation and altruism both determined the charitable donations. Cappellari, Ghinetti and Turati (2007) believed that some unobservable factors,other than reputation and altruism, also influenced the charitable giving of individuals and were complimentary to the observable factors like income, human resources and altruism. They found the presence or absence of unobservable factors enhanced or reduced the impact of observable factors on charitable giving (Cappellari, Ghinetti & Turati, 2007).

The selection of charity organisations is also associated with charitable giving as is evident from the emerging literature relevant to philanthropy. It is important to understand the way donors select charity organisations for making donations. Iwaarden, Ton and Williams (2009) explored the association of charity selection and the information published and communicated by charities to attract donors. They conducted an online survey involving donors and case studies of private charity organisations. They concluded that donors selected charity organisations depending on the type and quality of accounting information and performance information provided by charity organisations. Moreover, the details of projects carried out by charities also influencea donor’s choice to contribute to certain charitable organisations. The donors are concerned with the efficiency and performance of charities when making charitable donations as stated by Iwaarden, Ton and Williams (2009). However, different type of charities provided different types of accounting and financial data to their potential donors due to lack of universal accounting standards for charity organisations. The lack of accounting information often results in reduction of charitable donations.

Other major factors identified as the determinants of charitable giving include religiosity, race, attitude towards charitable activities, understanding the need for charity through advertisements and tendency of individual donors to help others. Kumar and Walter (2008) suggested that charity organisations should communicate with potential donors through suitable messages. Moreover, religious beliefs of individuals also influence their attitude towards helping others and contributing to the welfare and public good (Kumar &Walter, 2008). Tinkleman and Mankaney (2007) consider accounting measures adapted by charity organisations as an important determinant for charitable donations. They found that donors reduced contributions to organisations with less administrative efficiency.

From the above discussion regarding the determinants of charitable donations, it can be summarised that age, education, religions, race, social and financial resources, social networks, solicitation, income, attitude towards helping others, attitude towards charities, accounting measures adapted by charity organisations, information provided by charities to their potential donors and performance of charity organisations are the major determinants of charitable giving.

Research methods refer to the activities carried out from selection of the research topic to the research philosophy, methodology, identification of target population, selection of appropriate sampling technique and sample, data collection methods, analysis of data and reporting the results of the investigation. Bryman and Bell (2007) reported that research methods are selected by the researcher in light of the topic under investigation, scope of the study and availability of resources. Since the title of the study is to investigate the major determinants of charitable giving in waqf institutes, primary data must be collected from the people involved in giving (i.e., waqf) to determine what motivates them to donate to waqf organisations. Therefore, the proposed study would follow the survey method to achieve its aims and objectives. The survey method has been reported as an effective, efficient and economical research method in social sciences research by Bryman and Bell (2007). It helps collect large amounts of data from the participants in considerably less time and assists in understanding the problems under investigation. Saunders et al. (2009) reported that the survey research method provides results that are projectable and can be generalized. In order to achieve this aim, the population donating to waqf would be utilized to select a suitable sample through random sampling techniques. The members included in this sample would participate in an online survey aimed at meeting the objectives of the proposed study.

According to Saunders et al. (2007), the two commonly implemented research approaches are qualitative and quantitative research methods. Qualitative research is linked with descriptive research and helps in providing in-depth answers to research questions. However, the results obtained through qualitative research cannot be generalised because they are not projectable to a large extent. Quantitative approach, in contrast, helps in the collection of projectable data that can be subjected to statistical analysis to obtain results that can be generalized to a large extent (Bryman & Bell, 2007). The proposed research not only requires understanding and identification of major determinants of charitable donations in waqf institutes, but it also requires results that can be generalized and recommendations formulated for enhanced accountability and transparency in other waqf organisations. Therefore, this research would utilise quantitative methods in order to collect quantitative data that can be statistically analysed to provide projectable results.

A questionnaire would be structured to conduct interviews with the participants of the online survey and collect primary data. The questionnaire would include close-ended questions to collect quantitative data that would be subjected to statistical data. An in-depth review of literature would be conducted to identify variables that affect the charitable donations to waqf institutions.

According to Bryman and Bell (2007), research in social sciences should consider the ethical issues that might arise during the research process. Informed consent would be acquired from all participants by introducing the purpose of the research. An introductory paragraph explaining the topic and purpose of the research would be incorporated into the questionnaire and participants would be requested to participate in the research on voluntary basis. Nobody would be forced to participate in the proposed research.

Since this study would involve collecting demographic characteristics of the participants, it would collect data such as name, gender, education and religion of the participants. The information such as name and any other piece of information that could lead to the identification of participants would not be included in the published report. The personal information of the participants would only be accessible by the researcher in order to ensure anonymity of the participants. It is also proposed that a copy of the research report may be provided to a participant if demanded.

The proposed research would require certain resources and may incur minor costs as well. The first requirement is the access to academic resources including books, printed journal articles, online journals, online books, magazine articles and research papers relevant to the topic of this research. These resources would be required to conduct a detailed and comprehensive review of the emerging literature regarding the determinants of charitable donations. Moreover, financial and time resources would be required to travel to structure the survey questionnaire and conduct online survey.

The proposed research would be an academic project consisting of different tasks and activities. After the submission and approval of proposal of this research, the first task is to conduct a detailed review of literature and collect the most relevant, current and up to date secondary data regarding major factors that affect charitable giving by individuals. The selected sources would be scrutinized to select the most appropriate and relevant literature. Based on the review of literature, the questionnaire would be developed and discussed with the supervisor in order to make any changes that could improve the process of data collection and results obtained through this research. The sampling would be done and interviews would be conducted. The data obtained through this process would be digitally recorded and analyzed to answer the research questions. The whole research process would be documented in the form of research report.

The dissertation will consist of six chapters including introduction, aims and objectives, literature review, methodology and data, results and conclusions. The first chapter will contain background on charitable donations in general, as well as an introduction to and background of waqf institutions and their importance in Islamic finance. The second chapter will present the aim and objectives of the proposed study in light of the background. The review of literature will present the overview of waqf, its various types and its significance for social welfare. Moreover, it will review the studies regarding the factors influencing charitable donations by individuals. The methodology adapted to conduct this research and collect primary data will be presented in fourth chapter. The rational for the selection of research methods, collection of data, sampling techniques and research process will also be discussed in this chapter. The results obtained from analysis of the data will be presented in the fifth chapter and will consist of graphical representation of the results and their descriptions. The last chapter will present the findings and conclusion of the research.

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