Financial Management Challenges Faced by Islamic NGOS in Malaysia

Abstract

Non-governmental organizations (NGOs) play an important role in carrying out aid missions to the community at the national and international levels. However, the reputation of these organizations is somewhat affected, especially when financial management scandals begin to emerge, particularly involving Islamic NGOs. This issue is a source of displeasure and concern, especially among donors and agencies that provide assistance to these NGOs. Failure to be transparent when providing information results in donors feeling less confident in the NGO’s credibility and this leads to prospective or even current donors withdrawing from participating in philanthropic contributions. Therefore, this study aims to examine the financial management challenges faced by NGOs in Malaysia and also provide a comprehensive literature on challenges and previous studies related to financial management issues faced by NGOs. Findings indicate that the legitimacy, accountability and transparency, as well as accountability practices and governance are some of the challenges faced by Islamic NGOs in Malaysia when managing their own finances and public funds.