Formulating A Performance Measurement System using Balanced Score Card in Islamic Philanthropy Institutions

Abstract

The introduction of Balanced Score Card (BSC) as one of the management accounting tool to measure the performance of companies in both aspect of financial and non-financial position has been predominantly used since 1992 and had resulted positive energies for the profit making companies. Hence, the extension of the BSC is also required to help the social business organisation in delivering their multiple bottom lines in the most effective ways and provide organisations a mechanism to track their performance holistically through both quantitative and qualitative information. The growing of Islamic Philanthropy Institutions (IPI) especially in Malaysia with the objective to promote social development based on the charitable activities has been acknowledged by the society. Therefore, in order to ensure the sustainability of these institutions, a proper measurement system is required to ensure the final goal of the institutions is achievable and successful. Thus, the objective of this paper is to formulate the main indicators and variables that are suitable to measure the IPIs based on BSC system in four main perspectives which are financial perspective, stakeholder's perspective, internal process perspective and learning and growth perspective. The uniqueness of the establishment of IPIs would require different indicators and variables which are more appropriate as compared with the profit sector organisations. The outcome of this study could provide clear picture and guidelines in designing a proper performance measurement system to be implemented by current IPIs in Malaysia in order to maintain the sustainability and competitiveness of this institutions in future.

Balanced Scorecard Performance Evaluation Model for Waqf Institution

“…The proposed framework for the Balanced Scorecard compatible with other Islamic Philanthropy Institutions or Waqf Institutions is similar to the one adopted by nonprofit organizations and social enterprises (Rahman, 2019) and (Sani et al, 2017). These four perspectives could be described as follows: First, the financial perspective is based on the organization's financial performance and the utilization of financial resources.…”

“…Therefore, the Balanced Scorecard approach determines financial performance by driving customers, internal processes, as well as learning and growth. Previous studies used the Balanced Scorecard to measure the performance of waqf institutions (Ramli et al, 2018), (Rahman, 2019), (Sani et al, 2017), Islamic banking (Huda et al, 2013), amil zakat institutions (Prasetyoningrum, 2015), cooperatives (Surya, 2014), and universities (Retnani, 2009).…”

“…However, it is a strategic management tool for public university waqf institutions (Rahman, 2019). Therefore, this study aimed to propose the basic framework of the Balanced Scorecard applicable to Islamic Philanthropy Institutions (Sani et al, 2017).…”