The Importance of Incentives to Sustain Voluntary Projects

• Main Author: Ariffin, Muhammad Irwan
• Other Authors: Abdul Razak, Dzuljastri
• Format: Book Chapter
• Language: English
• Published: Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia 2021
• Subjects: BPH Islamic Economics; BPH72 Economic development. Growth. Sustainable development. Sustainability; HB126.4 Islamic Economics; HC79 Special topics. Including air pollution, consumer demands,famines, flow of fund etc
• Online Access: http://irep.iium.edu.my/93388/1/93388_The%20Importance%20of%20Incentives%20to%20Sustain%20Voluntary%20Projects.pdf; http://irep.iium.edu.my/93388/

Many impactful projects started off on a voluntary basis. However, some of these projects were not sustainable due to lack of an incentive system to motivate new members to support the projects. The problem to realign the mindset and motivation between founding members and new members of a project can be viewed systematically from a principal-agent problem perspective. There are three conditions for an effective incentive mechanism: (1) the agent must be able to influence the outcome, (2) the principal must be able to monitor the behavior of the agent, and (3) the incentive offered must be valuable to the agent. The incorporation of an incentive system to a philanthropist project should not be seen as a negative element that pollute the originally noble goals of the project. Instead, it is a factor to propel the project to be more impactful and long lasting. The effective incentive mechanism also enhances the role of human as the khalifah of Allah on earth, and motivate them to fulfill their duties as the ‘abd of Allah.