The financial management of non-shariah compliant assets at Baitulmal

Abstract

Effective financial management is essential for an institution to achieve its set objectives. Given its significant role in the socio-economic welfare of the Muslim community, the State Islamic Religious Council (MAIN) must ensure that Baitulmal operates with both effective and efficient financial management. Baitulmal should be entrusted with a larger role and its right to receive and manage resources, including non-Shariah compliant assets, should not be denied. This study seeks to examine the challenges associated with financial management in the handling of non-Shariah compliant asset funds at Baitulmal under MAIN. The financial management at MAIN's Baitulmal still exhibits shortcomings, such as the lack of an audit report for the receipt and expenditure of its funds, including those involving non-Shariah compliant assets. This qualitative study adopts a literature-based approach, drawing on both primary and secondary sources, including the Qur'an, the Sunnah, journal articles, books, official MAIN websites, and the Non-Shariah Compliant Asset Management Manual from the Department of Waqf, Zakat, and Hajj (JAWHAR). The study’s findings reveal that several states still lack appropriate systems and financial reports regarding the receipt and expenditure of non-Shariah compliant assets. To improve the efficiency of Baitulmal in Malaysia, greater attention must be given to enhancing its financial management, particularly in the collection and distribution of Baitulmal funds.