Is Zakat Capable of Alleviating Poverty and Reducing Income Inequality?

This chapter aims to discuss the role of zakat in alleviating poverty and reducing income inequality, specifically in Malaysia. To achieve its objective, this chapter elaborates on the interlinkages between the institution of zakat and Maqasid-al-Shari'ah, deliberate Malaysian zakat institution as well as discuss the strategies and policies implemented by the Malaysia government in poverty eradication and income inequality reduction. Further, this chapter also discusses the role of Malaysian zakat institutions in supporting government poverty eradication and income inequality reduction initiatives. This chapter offers practical help to practitioners in providing a direction for zakat institutions in supporting the daily living of the poor. In addition, this chapter suggests an agenda for the future direction of the zakat institutions.

Developing a Conceptual Framework for Zakat Collection and Distribution Impact on Social Welfare Through Implications of SDGs

Although Islamic social finance including zakat has witnessed an upsurge in development in quantum, which reached US$2 trillion in 2015 and is projected to exceed US$3 trillion by 2020, due to a lack of transparency, trust, and timely disclosure to public has resulted in inefficient of zakat collection and ineffective disbursement for the wellbeing of recipients. The reason for this could be neglecting adoption of financial technology specifically blockchain and artificial intelligence system in zakat management to enhance proper collection and efficient distributions timely and effectively reporting to public. Therefore, this research proposes an ‘Islamic Social Welfare Financial Technology' (ISW FinTech) as an innovative framework that assesses zakat institutions operational efficiency of zakat collection, transparency, and effective distribution that would lead to wellbeing of zakat recipients. This framework is based on new six clusters according to their needs and priority, which convert them from being zakat recipients into zakat payers.

Zakat Accounting Review for Takaful Operators in Malaysia

Many would say that most Quranic verses related to zakat were on the compulsory of zakat and its function as a pillar of Islam. Is it the only function of the said Shariah evidences? The author corrects the understanding of majority. That is because most reading materials pertaining to zakat were on the origin of zakat and its nature of business only. Not many found reading materials showing that the provision of zakat in Shariah evidences were also talking on zakat accounting and its matrices and calculations. However, research teams have found that inconsistent calculations and outputs came from various respondents, especially zakat authorities, zakat agents, and Shariah advisors (lectures stand as Shariah Advisory Committee in Takaful Operators). Hence, this research has proved that there is a need to come out with a reviewable version of Zakat Accounting for Takaful Operators due to different nature of business models used therein among the Takaful Operators.

Establishment of Zakat Bank

When the Islamic bank was first established in 1963, they realised leveraging on the conventional platform was an easy way out to create an Islamic banking system. Despite of financial outcry, multiplications, and lack of welfare on the customers, the bank continues championing the financial system. Behaving as an alternative to the conventional financing, Islamic banking is no different. With all the conventional guidelines and controlled regulations of IMF and the World Bank, the Islamic bank's hands are tied. Nothing much has been done to ensure a complete move out to assist customers in getting ‘good financing facility,' which is humane in nature. This chapter is an attempt to explore Zakat Bank out of banking furore using a Zakat platform. The finding suggests that the establishment of Zakat Bank is crucial to ensure the true financing based on Shariah principles and guidelines. This chapter adopts library research including reports and guidelines from the financial regulators. The chapter concludes with a proposed model for a Zakat Bank for authority's consideration.

Zakat, SDGs, and Poverty Alleviation of Muslims in India

Muslims are the largest minority in India, yet the federal government has, in place, just a single Muslim-specific poverty alleviation scheme, which is utterly insufficient to meet their financial needs. Hence, in the face of governmental apathy and indifferent attitude, Muslims are left to fend for themselves. In this scenario, Zakāt turns out to be a more-than-handy tool to alleviate poverty among Muslims in India. Zakāt, over the years, has manifested itself as a successful means to meet out the financial needs of the developmental activities across the level including the non-Muslim countries. Zakāt possesses a robust potential to play a critical role to implement the Sustainable Development Goals (SDGs) to alleviate the poverty of Muslims in a Hindu-majority country like India.

Zakat Collection From Foreign Workers in Malaysia

Foreign labor in Malaysia has been recently estimated to range between 1 to 2 million. Recent figures show that there are about 1.8 million registered or regular foreign workers, and the rest are unregistered (undocumented or irregular) workers. To understand the potential, we need to take consideration that zakat payment should be made by those who gained income above a specific nisab. In order to obtain the number of foreign workers under this category, the authors refer to the percentage of foreign workers (expatriates) who work under category I and II of employment passes (monthly salary above RM5,000 per month). The religiosity factor has to be addressed carefully to at least change Muslim foreign workers' outlook in life to become potential zakat payers. The mosque is recognized as an important Islamic institution to act as a catalyst in the evolution of zakat management in Malaysia. Nonetheless, the target of potential zakat collection should be more on higher educated foreign workers by giving special incentives to them if they are paying zakat in Malaysia.

Determinants of Zakat Payment to Zakat Institution

The Zakat, one of the five pillars of Islam, is a financial resource for Islamic states in addition to taxes. Given the importance of Zakat funds for the economy and society, Zakat collection and distribution institutions have been established. This chapter was interested in the behavior of individuals in setting up a Zakat institution in the Tunisian context. The authors have studied the factors that affect the intention to pay Zakat to Zakat institutions. To do this, a questionnaire was administered to 100 people. The authors obtain three types of information: attitude towards Zakat, attitude towards institutions, and information related to the intention to pay Zakat to Zakat institutions. The authors have estimated by the binary logit model the relationship between the intention to pay Zakat to Zakat institutions and four factors: trust, quality of service, proximity, and the level of understanding of the Zakat principles. Three of them are significant.

The Impact of Zakat to the Economy, Organization, and Moral and Social

Zakat is one of the pillars of Islam that every Muslim must obey. Zakat is not only meant as a spiritual command but it gives impacts widely to the society, brings benefits to all the needy where they need help in order to survive. Using a descriptive analysis, the chapter consists of a literature review of previous studies and a short survey of questionnaire (n=54). This chapter revealed the positive impacts of zakat to economy, organization, moral, and social. The results of this chapter can be used as a reference for stakeholders and the muzakki (zakat contributor) on the multiplier effects of zakat to the society, thus particularly for government to make necessary policies and actions to encourage the collection and distribution of zakat effectively.

Zakat Management and Economic Sustainability

The chapter is an attempt to correlate the subject of zakat as an Islamic duty with sustainable development in all aspects such as economic, social, and other types of sustainability. The chapter deals with a set of interrelated topics to form an integrated knowledge theme on the subject of zakat. Clear distinctions are provided between the idiomatic meaning of zakat and other terms that suggest that it is similar. These terms include zakat, charity, donations, taxes, and other terms. The explanations in this chapter are addressed based on the categories of Islamic law. The information contained in this chapter has been documented according to the principles of Sharia as well as the scientific sources that have approved in the Sharia databases. The chapter also dealt with the latest experiences and practical practices of zakat and its management, represented by the smart and advanced experience in the UAE. It is worth mentioning that the UAE experience has integrated the latest smart and electronic methods in the management of zakat funds.

The Current Practice and Expected Transformation of Zakah Institution in Yemen in Light of the Current Crisis

Yemen is among the poorest countries in the region. It has become apparent during the current political crisis in which the majority of population is classified as poor so the poverty line's group has been widened. As far as Zakah is concerned, it is a duty on wealthy people to pay their alms to the poor and hence a redistribution of the wealth among the society would be achieved. Zakah rests under the responsibility of the government to supervise, govern, and apply the rules prescribed in the Islamic legislation (Shari'ah rules) to ensure that its role in the society is attained. For the last three decades, since the formation of the new country, the “Republic of Yemen” that emerged from two previously separated countries, Zakah institution has been governed and managed by the government, and its administration is formed under the responsibility of the Zakah Agency, and later on under the local counsel of each locality. Such management and administration has been criticized of being less transparent on Zakah resources on both collections or distributions issues. Therefore, Zakah efficient collections have suffered due to the low level of confidence in the governmental agencies assigned to collect Zakah funds, and this encourages Zakah payers to always seek an alternative way to channel Zakah funds, which has been found in many voluntary organizations to carry the same role the government should have made in collection of Zakah funds. This chapter is theoretical in nature. It aims and focuses on the discussion of administration and legislation of Zakah and its importance to the society in Yemen. It also highlights the current status of Zakah in Yemen. More than that, the discussion elaborates that Zakah in Yemen lacks its role in the society in reducing poverty, which has become more apparent recently. Analyzing the way Zakah is carried out revealed that Zakah administration needs a rethink on how to organize and restructure it in a way to serve its underlying purposes. Government may not be the proper Zakah administer at this point of time due to the rise of corruption in the government agencies. Since the Zakah fund is commingled with the other public budget resources, it is more likely to be misused as the other resources (i.e., oil and gas and tax) and no possible differentiation to be expected. Expected transformation of Zakah is needed and the role can be carried out by the non-government bodies supervised by scholars and experts who can be held accountable under certain governance system. This chapter originally is of importance to all stakeholders as it serves as the building block for initiating a proper system or framework of Zakah administration, a system that provides its contemporary guidelines on Zakah, taken into the consideration the original wisdom and objective of Shari'ah on Zakah enforcement by the Almighty.