Optimising zakat institutions for poverty alleviation and sustainable development: A framework for efficiency and accountability

Abstract

This conceptual paper explores the critical role of efficiency and accountability in Zakat institutions, with a focus on addressing poverty and fostering sustainable development through collaboration between governments, non-governmental organisations (NGOs), and businesses. The study highlights the increasing trend in zakat collection and distribution across Malaysia, particularly in regions such as Wilayah Persekutuan and Selangor. Despite the rise in zakat distribution, the Ministry of Economy's report reveals a simultaneous increase in the incidence of absolute poverty in Malaysia, emphasising the need for a comprehensive approach to poverty alleviation. The paper discusses the efficacy of Zakat institutions, particularly the use of Data Envelopment Analysis (DEA) to measure efficiency. It also addresses the limitations of traditional efficiency measurement and advocates for the incorporation of accountability measures into evaluations to provide a more comprehensive assessment of Zakat institutions' overall performance. The absence of standardised measures of accountability is identified as a significant challenge, hindering the comparison of performance across different Zakat management institutions and impeding efforts to promote transparency and trust in the management of Zakat funds. The paper concludes by highlighting the importance of a holistic approach to evaluating Zakat institutions, considering both operational and financial dimensions and the need for standardised measures of accountability to enhance the quality of Zakat management practices and promote transparency in fund management.