Abstract

The paper evaluates the social return on investment for a zakat institution (i.e. Dompet Dhuafa) working with mountain farmers impacted by 2014 Mt. Sinabung eruption at the village of Gung Pinto, District of Naman Teran, Tanah Karo Regency, the Province of Sumatera Utara. In particular, the study analysed the return on investment (and/ or benefits) of the economic recovery program after the disaster struck the region. Dompet Dhuafa (DD) is one of National Zakat Institutions that confirmed by the Indonesian Minister of Religious Affairs Decree No. 439/2001 as an approved zakat collector in Indonesia. The program consists of zakat fund utilisation in the form of financial aid to poor farmers as the efforts to normalise the farming activities after the eruption; procurement of hand tractors; and capacity building activities in upgrading the farmers knowledge in terms of agricultural technology (healthy and appropriate technology farming, the making of composting and the use of plant-based pesticides). This study employs the concept of measuring the return on investment which incorporates the social component integrated into the analysis called the social return on investment or SROI. The calculation reveals that the return on investment for DD within the program is 1.94, means that it is socially feasible, where for investment (cost) of the program is IDR 1 will produce benefit IDR 1.94.

Keywords: Social Return on Investment; zakat; impact on program

JEL Classification: E62, H21,P51