Despite continued economic pressures on households, Indonesians have maintained a positive trend in charitable giving. The World Giving Report (WGR) 2026 found that Indonesians donate an average of 1.55 percent of their income, the highest rate in Southeast Asia. This trend is particularly noteworthy as the middle class, the primary driver of philanthropy, continues to face mounting economic challenges.
Responding to the findings, Professor Mudrajad Kuncoro, Professor of Economics in the Regional Economic Development Program at the UGM Vocational College (SV UGM), described the persistence of religious giving amid economic hardship as a paradox. The relationship between faith and material wealth is inexplicable through economic logic. He said religious values remain the primary driving force behind infak (voluntary almsgiving), zakat (obligatory almsgiving), and sedekah (charitable giving).
“These forms of religious philanthropy have become an integral part of Indonesia’s culture and social traditions,” he said on Monday (Jul. 13).
Professor Kuncoro added that, particularly in Islam, there is a widely held belief that no one becomes poor because of giving infak or sedekah. Beyond religious motivations, he believes economic and social factors also play an important role.
“When economic uncertainty increases, social solidarity tends to grow even stronger,” he explained.
An SV UGM lecturer cited the Jumat Berkah (Blessed Friday) initiative, organized by Indonesian students in London, as an example. The program provides free meals to people in need. According to Professor Kuncoro, the initiative has attracted attention because it revives values of social compassion that have become less common in many developed countries.
Professor Kuncoro also highlighted the role of digital technology in expanding philanthropic fundraising. Technological advances have significantly reduced the cost of making donations while making it easier for people to contribute to communities across the country.
“The accumulation of millions of small digital donations has significantly increased philanthropic fundraising in Indonesia. This is one of the most interesting contributions of Industry 4.0 digital technology,” he said.
In addition, Professor Kuncoro believes growing public awareness of poverty, disasters, education, and healthcare has encouraged more people to help others. These challenges are not solely the government’s responsibility but require society as a whole. Religious practices, such as fasting, also teach people to experience life under limited circumstances.
“That experience nurtures empathy and social awareness,” he said.
He further argued that this phenomenon reflects the strength of Indonesia’s social capital. When the state and the market face limitations, communities retain the ability to support one another through the long-standing tradition of gotong royong, or mutual cooperation.
Professor Kuncoro noted that rising donations during difficult economic times indicate the need for social assistance at the grassroots level. Religious philanthropy should be viewed more as an indicator of social resilience than of economic resilience. While social cohesion remains strong, this should not become an excuse for the government to overlook slow economic growth or weak household purchasing power.
He emphasized that declining purchasing power is supported by available data. The greatest benefits of economic development are currently enjoyed by the wealthiest 20 percent of the population, while lower-income groups receive far less. This counters the traditional Western theory of the trickle-down effect, which assumes that economic growth eventually benefits lower-income groups.
“In Indonesia, we are seeing the opposite, a trickle-up effect. The greatest gains are concentrated among the wealthiest 20 percent, while the remaining 80 percent receive much less,” he said.
Discussing the protection of the middle class, Professor Kuncoro described this group as the backbone of the national economy. It supports household consumption, tax revenues, and philanthropic activities. The government should maintain stable food and energy prices to protect people’s real incomes from inflation. At the same time, creating high-quality jobs remains an urgent priority.
According to Professor Kuncoro, Indonesia is currently experiencing what he described in his paper, “The Anatomy of Jobless Growth”. Refers to economic growth that is not accompanied by proportional job creation. Layoffs continue to increase, and many workers are shifting into the informal sector.
“Our economy continues to grow, but employment is not increasing at the same pace,” he said.
During the discussion, Professor Kuncoro also addressed the future direction of philanthropy in Indonesia. He argued that charitable assistance should gradually shift from a purely charitable approach toward more productive and transformative economic empowerment. While consumptive assistance, such as social aid, remains necessary for people living in extreme poverty and communities affected by disasters, he said it is insufficient to achieve long-term economic independence.
Professor Kuncoro suggested that philanthropic initiatives should instead support skills training, business mentoring, access to financing, cooperative development, and the revitalization of Village-Owned Enterprises (BUMDes). He believes the greatest challenge in empowerment programs lies not in funding but in institutional capacity.
“We should not stop at encouraging charitable giving. We should teach people how to fish, how to own their own boats, and ultimately how to support themselves,” he said.
He encouraged universities to play a greater role in poverty alleviation through research, community engagement, and region-based empowerment programs. At the same time, he reminded that philanthropy should never be viewed as a substitute for the state’s responsibility to promote inclusive economic growth and create quality employment opportunities.
According to Professor Kuncoro, productive economic development remains the key to permanently reducing poverty. Achieving this goal requires close collaboration among the government, businesses, universities, and philanthropic organizations so that assistance not only addresses short-term needs but also enables communities to become economically self-reliant.
“Philanthropy is not simply about giving. It is about helping people gain skills, access opportunities, and build sustainable livelihoods,” he concluded.
Author: Hanifah
Editor: Gusti Grehenson
Post-Editor: Jasmine Ferdian
Photo: Magnific