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Five Pillars

STAGE OF EMPOWERMENT
FIVE PILLARS OF SHARIAH BASED FINANCING

CHARITY
The first pillar is to give charity or a form of contribution to the poor without expecting any return. The charity is delivered to those who are eligible with good manners and education.

SOFT LOAN (QARD)
The second pillar is to give loan. It has better value than charity because when people are borrowing, it means they are in need. Besides, if the loan is well designed, there will be transaction which will create individual responsibility to repay; therefore there must be a commitment to repay on time and in full.

FINANCING
The third pillar is to extend financing that is to educate society to develop their wealth through productive business.

SAVING
The fourth pillar is in form of saving intended to educate society to plan their future, by setting aside part of their income to anticipate future needs.

SHARING RISK
The fifth pillar is risk sharing, especially financial risk that occurs due to death, sickness, property loss, house fire, retirement etc.

Based on existing experiences, five pillars can be put under umbrella of the following three institutions :

BAYTUL MAAL
Baytul Maal can accommodate the first 2 (two) pillars of charity (shadaqah) and soft loan (qard). However, charity for the poor cannot be simply distributed or the poor should not be simply facilitated that way. This mechanism will not educate them to become better persons.
The charity also cannot be designated to only certain of people. The existence of Baytul Maal will neglect this traditional mechanism. Baytul Maal will act as an institution that receives and distributes Ziswah Fund (Zakat, Infaq/Shadaqah, Waqaf, and Hibah).

BAYTUT TAMWIL
Baitut Tamwil acts as an institution that develop wealth to assist poor society, this can accommodate 3 (three) pillars of empowerment for combating poverty. With the presence of Baitut Tamwil, the society will learn how to obtain something through borrowing, and also how to fulfill future needs.
These can be planned through saving mechanism that is facilitated by Baitut-Tamwil. Baitut Tamwil also teaches them to increase their wealth through financing mechanism. In general, Baitut-Tamwil will function as an institution that manages revolving fund for commercial/charity and society savings purposes.

BAYTUT TA'MIN
Baitut-Ta'min functions to compliment Baitul-Maal & Baitut-Tamwil through insurance scheme for low income households under sharing of risks mechanism. TAKMIN can play a role as bridge to facilitate the poor households, Islamic micro finance institutions and insurance company.Therefore, TAKMIN is expected to offer social protection with simple, fast and affordable services. Baitut-Ta'min is managing the micro insurance "sale & service" under "partner-agent model"
These three institutions, especially Baitut-Tamwil will play important role in Shariah Micro Finance. Together they will strengthen organization / institution as well as people with continuous education as part of empowerment process for low income households and micro entrepreneurs.