Can Islamic Boarding Schools (Pesantren) Obtain Funding Through Securities Crowdfunding?

Securities Crowdfunding has emerged as a popular and effective method of financing in recent years. By utilising crowdfunding platforms, various projects and initiatives can secure funds from a broad audience. Islamic boarding schools, known as pesantren, can also leverage this method to support their programmes and development. However, to utilise securities crowdfunding, pesantren must comply with Indonesia Financial Services Authority Regulation No. 57 of 2020, which requires issuers to be structured as companies. This article discusses how pesantren can meet this regulation and obtain financing through crowdfunding. 

Also Read: What are the differences between Securities Crowdfunding (SCF) and Stock Exchanges? 

Why Pesantren Need Financing

Pesantren require financing for several critical reasons essential to their sustainability and development: 

–Infrastructure Development: Many pesantren need to construct or renovate buildings such as dormitories, classrooms, mosques, and other supporting facilities. Adequate infrastructure is crucial for creating a comfortable and conducive learning environment. 

–Educational Programme Development: To improve education quality, teachers need to develop curricula, add teaching materials, and enhance teacher capacity. Financing is also necessary for teacher training programmes and competency enhancement. 

–Extracurricular Activities: Extracurricular activities such as arts, sports, and other skill-building activities require financial support. These activities are essential for the holistic development of students. 

-Logistics Needs: Daily needs such as food, clothing, and learning equipment for students must be met. Daily operational costs require stable financial support. 

–Social and Da’wah Programs: Pesantren often run social and da’wah programmes that require funding, such as community assistance, religious studies, and other social activities. 

Also Read: The Future of Crowdfunding with Artificial Intelligence (AI) 

Ways Pesantren can Get Funding with Securities Crowdfunding

1. Using Pesantren’s Business Units for Issuance 

One way pesantren can meet OJK requirements is by using their business units as issuers. However, it is important to note that these business units must have a separate legal entity from the Pesantren Foundation. Here are the steps to be taken: 

Establishing a Separate Business Unit: Pesantren must establish a separate business unit with its own legal entity, such as a PT (limited liability company) or CV (limited partnership). This business unit should stand independently and not mix finances with the Pesantren Foundation. The business unit can focus on areas relevant to the pesantren’s needs, such as agriculture, cooperatives, or retail businesses. 

Preparing Legal Documents: All legal documents, such as the deed of establishment, tax identification number, and business licenses, must be prepared and comply with applicable regulations. This includes registration with the Ministry of Law, Human Rights, and other relevant agencies. 

Registration on Crowdfunding Platforms: Once the separate business unit is established, the next step is to register the business unit on a crowdfunding platform registered with OJK. Ensure the platform complies with regulations and has a good reputation. 

Creating a Business Plan: The business unit must create a clear and attractive business plan to present to potential investors. This plan should include objectives, strategies, and profit projections. Include risk analysis and mitigation strategies to reassure investors about the safety of their investment. 

2. Requesting Pesantren’s Vendors and Suppliers to Act as Issuers 

Another approach is to ask the pesantren’s vendors or suppliers to act as issuers. This approach is particularly beneficial for financing construction or logistics needs. Here are the steps to follow: 

Identifying Willing Vendors: Pesantren must identify vendors or suppliers willing and able to act as issuers in the crowdfunding project. These vendors typically already have a legal entity that meets OJK requirements. Choose vendors with a good track record and strong working relationships with the pesantren. 

Negotiating and Agreement: Negotiate with vendors regarding the terms and conditions of cooperation. Ensure that both parties understand their roles and responsibilities. This agreement should be documented in a legally binding contract. 

Preparing a Cooperation Proposal: Prepare a cooperation proposal detailing the project, the required funds, and how the funds will be used. This proposal should also outline how profits will be shared between the pesantren and the vendor. Explain the positive impact of the project on the pesantren community and the surrounding society. 

Registration on Crowdfunding Platforms: The vendor can then register the project on a crowdfunding platform. Ensure all documents and administrative requirements are met in accordance with applicable regulations. The vendor must manage the crowdfunding campaign transparently and professionally. 

Complying with Indonesia Financial Services Authority Regulation No. 57 of 2020 is crucial for pesantren who want to obtain financing through crowdfunding. By using Pesantren business units with separate legal entities or asking vendors or suppliers to act as issuers, Pesantren can meet these requirements. These steps not only help pesantren secure the necessary funds but also ensure transparency and accountability in the fundraising process. 

Also Read: Islamic Crowdfunding-Based Agrarian Financing: Concept, Akad, and Benefits

With the right strategy and careful planning, pesantren can leverage the potential of crowdfunding to support various programmes and initiatives, providing significant benefits to the entire community. Thus, pesantren can continue to grow and make substantial contributions to education and societal welfare. 

Also Read: How Islamic Securities Crowdfunding (SCF) Contributes to Environmental, Social, and Governance (ESG)

References

Indonesia Financial Services Authority. (2020). Peraturan Otoritas Jasa Keuangan Nomor 57/POJK.04/2020 tentang Penawaran Efek melalui Layanan Urun Dana Berbasis Teknologi Informasi. Retrieved from https://www.ojk.go.id 

Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study, Journal of Business Venturing, 29(1), 1–16. https://doi.org/10.1016/j.jbusvent.2013.06.005 

Belleflamme, P., Lambert, T., & Schwienbacher, A. (2014). Crowdfunding: Tapping the Right Crowd. *Journal of Business Venturing, 29*(5), 585–609. https://doi.org/10.1016/j.jbusvent.2013.07.003