Philanthropy and the Third Sector in Malaysia : Overview, Extent, Activities, and Impacts

This is a part of a major work undertaken by the Asia Pacific Philanthropy Information Network (APPIN. This segment on Pakistan is divided into three sections. The first section provides an overview of philanthropy (including zakat and sadaqa), the third sector (including waqf or Muslim foundation), historical growth, policy environment, and the laws related to incorporation and tax treatment of the third sector. The second section provides an overview of an activity-based classification, identifying various fields internationally where non-profit organizations are active. The Johns Hopkins Comparative Nonprofit Sector Project developed the International Classification of Non-Profit Organisations or ICNPO. We used this classification to explore the variety of third sector activity in each country, but we extended the ICNPO to include trading co-operatives. The third section provides an overview of the extent, focus, and impacts of ‘grant making foundations’ in the country. Philanthropy, in Malay language translates to ‘sukarela’ which combines two words, ‘suka’ and ‘rela’ denoting ‘love for sacrifice’ or sacrificing with love, and has been a part of the Malay people’s lives for a long time. Malaysians do sacrifice cash, kind, and time for others and help each other in happiness and misery. The advent of Islam in Malaysia is also said to be associated with activities of voluntary organisations with high levels of autonomy in spite of pervasive influence of the Malay sultanates, primarily because of the existence of moral and material backing of the Muslim communities and their awqaf (Muslim Law based foundations). The government encourages the self-sponsored non-government and non-profit organizations addressing the current economic and social issues. Interested people are allowed to form any forms of organization subject to approval and monitoring by the government through different agencies. The government has undertaken measures, among others, through tax laws, to promote philanthropy and the third sector activities. The government also has ensured a better collection of zakat funds by providing the responsibility of its collection to private professional organisations. The Malaysian tax act allows rebates to all zakat funds paid to the authorised private collection agencies. All religious groups also are provided supports for being involved in philanthropic and community service activities of their choice to receive tax exemptions, if approved by the government agencies