%0 Conference Proceedings %T The Role of Islamic Social Finance on Community Welfare in Indonesia %A Aldiansyah Rahman %A Syafira Nur Asyifaa %E Aldrin Herwany %E Erie Febrian %E Ardi Gunardi %E Deru R. Indika %P - %I Redwhite Press %C Jakarta %D 2020 %X Every individual needs prosperous conditions, both prosperous in material and non- material terms so that a harmonious atmosphere can be created in society. According to Law Number 6 of 1974, welfare is an order of life both in the form of material and spiritual which is covered with a sense of safety, decency, and peace, which makes it possible for every citizen to make efforts to fulfill their physical, spiritual and social needs as best as possible for themselves. , family and society by upholding human rights and human obligations by Pancasila. This welfare can be measured by health, economic condition, happiness, and quality of life. (Seals and Bruzy, 1998: 8). However, at this time Indonesia cannot be said to have a good level of welfare because the level of poverty experienced by the Indonesian people is still high, it is known that in March 2020 the poverty rate in Indonesia reached 9.78% (www.bps.go.id). Also, the large gap between the level of wealth and poverty of the Indonesian population indicates a problem in the distribution of income in Indonesia, this is indicated by the Gini coefficient which is a parameter indicating the level of wealth inequality which reaches 0.381. Therefore we need a method and instrument that can empower the community and make it easy for the community to get access to capital so that people can make a business that can make their lives more prosperous. One solution and instrument that can be done is to implement an Islamic financial system or Islamic social finance. According to (Tabash and Dhankar, 2014) Islamic finance is referred to as a financial instrument based on Islamic principles and structures, these rules and practices are derived from Islamic law which contains a consensus of thought that comes from the Al-Quran and Hadith, namely prohibiting the use of interest and prohibiting the financing of activities that are considered dangerous for a particular community or society. (Kassim, 2016) also explained that an advanced Islamic financial system will mobilize more investment funds and allocate the same funds for corporations, thereby increasing investment and growth in the real sector. A healthy and profitable real sector will generate more income for Islamic banks, thereby stimulating economic growth. The purpose of this study is to determine the extent of the contribution, role, and impact of Islamic finance on the creation of the welfare of the Indonesian people. The research method used by the author this time is library research where researchers collect data from various books, notes, and various reports and journals related to the topic being researched (Mardalis, 2010). The results obtained from this study are the development of Islamic finance in Indonesia can have a positive influence on the welfare of the people in Indonesia, but in its implementation, there are still several things that need to be optimized in various aspects. The better its function and implementation, the greater its contribution to poverty eradication and increasing the welfare value of the people in Indonesia. In realizing the Islamic social finance ecosystem, it certainly requires assistance from many parties, especially the government as a policymaker. Management of zakat, waqf, and sharia banking will increase the effectiveness and efficiency of management services. In this case, distribution becomes something that needs to be considered because with it the provision of consumptive assistance can encourage productive economic activities for the community who receive zakat. Also, the distribution of aid in the form of zakat and waqf will help reduce the income gap between groups of people, thereby creating an equal economic condition between one community and another. Waqf asset management is as important as the distribution of zakat assistance. With existing waqf assets, the government in this case the Indonesian Waqf Agency (BWI) can regulate and allocate these assets for the benefit of the people. The establishment of schools, houses of worship, and knowledge assemblies needs to be a priority so that progress is not only obtained from economic assistance but also intellectual assistance which can have a greater impact on people's lives. The variety of instruments in Islamic social finance can be a strong foundation in building a strong Islamic economic ecosystem. Assisting by the needs of the community will have a greater impact according to its relevance. So that this assistance can be used optimally and increase the value of the benefits of the assistance. %R https://doi.org/10.32698/ICRED.0476