Governance Framework for Philanthropic Organizations Directed Towards Taqyid Al-Mutlaq

Philanthropic organizations (POs) have grown substantially in number and size, indicating a significant role towards the advancement of society. Concurrently, there is also increasingly adverse publicity surrounding a number of high-profile scandals of fund misappropriation and organizational inefficiency in these organizations. In mitigating these issues, or to achieve taqyid al-mutlaq, there is a need to strengthen the governance of these organizations. Good governance allows POs to manage their risks more effectively, build public trusts, legitimacy, and long-term survivability. Hence, this study aims to examine the types and extent of governance practices of POs in Malaysia. In achieving these objectives, this study developed a governance framework system that allows regulators, POs, or other relevant stakeholders to assess the types and extent of governance practices. The governance practices are based on four themes: strategic, procedural, fiduciary, and financial. The data used in this system are based on POs registered with the Companies Commission of Malaysia. The system contributes the following benefits to the regulators: profiling of the POs based on the extent of their governance practices, and systematic monitoring based on the profiles and capability building in enhancing their good governance practices. Concurrently, the individual PO can also focus on areas of governance framework that could be developed further to achieve best practice. Overall, this study fills the gap in the literature on the governance of POs, and in practice, the proposed good governance framework system can facilitate practical implementation of taqyid al-mutlaq in enhancing the philanthropy sector. Future research may extend the framework to disclosures of good governance practices for the POs. More transparent good governance practices encourage trust in an organization, both from within and outside.