Reputation, governance and competitive advantage on financial performance of infaq: the case of private Islamic schools.

Sufficient financial resources are important to ensure non-profit organisation able to achieve the defined goals and objectives as well as to ensure that the organization remains competitive and relevant. Islamic private schools are non-profit organizations founded by individuals, non-governmental organizations and Islamic organizations established to meet the Muslim society needs who look for a balanced academic and religious education. However, most of the Islamic private schools in Malaysia are facing with financial difficulties that have prevented them from carrying out their activities and development as planned. The main financial resources of these Islamic private schools are student fees, but the fees alone are insufficient to cover the overall cost of the planned operation and development. As such, Islamic private schools in Malaysia rely heavily on infaq from individuals and corporate bodies. The purpose of this study was to explore the factors of reputation, governance and competitive advantage in influencing the sufficiency of infaq received among Islamic private schools in Malaysia. The conceptual framework for this study was developed from Resource Base Theory and Stakeholder Theory. This study used cross-sectional survey design where questionnaire was developed and being distributed to respondents through online application such as electronic mail and whatsapp application. To ensure the high response rates, data collection was also made through personal visits to respondent schools. Prior to data collection, a pilot study involving questionnaire development was conducted. Only 146 valid samples were received from a total of 200 distributed survey forms. By employing the SmartPLS (v. 3.2.9) software to run the Structural Equation Modeling (SEM) techniques, the results of the study found that the sufficiency of the infaq received among Islamic private schools in Malaysia is influenced by good reputation and governance practices. However, the competitive advantage of a school does not provide a significant relationship to the sufficiency of infaq received. By realizing many factors that may influence the sufficiency of the infaq received, this study focuses only on reputation, governance and competitive advantage. This study is expected to fill the knowledge gaps in financial performance models that focus on donation received especially among non-profit organizations. From a technical perspective, it is expected that the Islamic private school management will be able to improve and achieve sufficiency of infaq if the management continue to focus on improving school‘s reputation and good governance practices while at the same time taking into account other factors such as school location, effective communication, the role of Parents and Teachers Association (PTA) and the tuition fees charged on each student. Finally, as studies on financial performance among Islamic private schools are particularly low, it is hoped that more such studies will be carried out in the future and focus can be given to conducting separate studies among private schools, tahfiz as well as Private Islamic Primary Schools (SRI) and Private Islamic Secondary School (SMI) to get more detail results.