Abstract:

Islamic organizations are expected to fulfill both the economic and social objectives and to be accountable to God and to their stakeholders. Social responsibility towards the community is one aspect of social obligations that an Islamic organization is expected to fulfill. The aim of this study is to examine the social responsibility towards the community of Islamic financial institutions. A content analysis of the annual and sustainability reports of thirty-seven (37) Islamic financial institutions in Malaysia for the year 2012 was undertaken to examine the CSR disclosure relating to the community dimension. The CSR disclosure was prioritized into vital and recommended items based on an Islamic CSR (i-CSR) index that was developed. The vital items denote fundamental activities that were identified as essential and should be undertaken by Islamic financial institutions while the recommended items refer to discretionary activities that may be undertaken to secure additional rewards and betterment. The results revealed that the Islamic financial institutions in Malaysia were focusing their CSR activities towards the social development of the community and are concerned about improving the level of education of the community. The focus towards eradication of poverty by donating to the hardcore poor is consistent with the requirements of Shariah.