PENGAJIAN ISLAM / ISLAMIC

SUBJECT
STUDIES/MPU3313

CREDIT HOUR 3
LECTURER Amalina Azmi

Mini Research
NAME 1. Rifat Mia (2024.1. ICT06.0003)
MATRIX ID 2.Abu Turab (2024.1. ICT01.0002)
3.Abdullah al Arman (2024.1. ICT06.0007)
4.Sharmin khatun (2024.1. ICT06.0004)

Title: Zakat Institutions: Roles, Challenges, and Impact

1. Introduction
Research Question: What are the roles, challenges, and impact of Zakat institutions in
contemporary society?

Research Objectives:
To examine the historical background and significance of Zakat institutions. To identify the
roles and functions of Zakat institutions in the distribution of wealth and poverty alleviation.
To explore the challenges faced by Zakat institutions in fulfilling their objectives. To assess
the impact of Zakat institutions on socio-economic development.

Background of the Study:

Zakat, one of the five pillars of Islam, is an obligatory charitable contribution made by
Muslims to support various social welfare initiatives. Zakat institutions play a vital role in
collecting, managing, and distributing Zakat funds to eligible recipients. These institutions
have been established globally to address socio-economic disparities and alleviate poverty
within Muslim communities. Understanding the roles, challenges, and impact of Zakat
institutions is essential for enhancing their effectiveness and promoting socio-economic
development.

2. Literature Review

1. Historical Background and Significance of Zakat:

Historically, the concept of Zakat was seen as a financial system among Muslims that ensured
every single member of the Muslim community was looked after. It was established in 2
A.H., shortly after the Prophet ‫ ﷺ‬migrated to Madinah. Before this, charity had only
been highly recommended.
Khan (2017) provides a comprehensive overview of the historical development and
significance of Zakat in Islam, highlighting its role as a mechanism for wealth redistribution
and social justice.

2. Roles and Functions of Zakat Institutions:

Zakat institutions carry out the following responsibilities; promoting, collecting, and handling
the distribution of zakat, along with the organization of assistance to the poor and needy and
inclusion of other asnaf in accordance with guidelines prescribed by the Syariah.
Siddiqi (2019) discusses the various roles and functions of Zakat institutions, including Zakat
collection, distribution, and utilization for social welfare programs such as healthcare,
education, and poverty alleviation.

3. Challenges Faced by Zakat Institutions:

Ahmad and Rahman (2020) examine the challenges encountered by Zakat institutions,
including issues related to transparency, accountability, governance, and effective distribution
of Zakat funds to deserving beneficiaries.

3.1. Methodologies
Research Design: This study adopts a qualitative research design incorporating document
analysis and semi-structured interviews with key stakeholders involved in Zakat
administration and distribution.

3.2. Sampling:
Purposive sampling will be employed to select participants representing Zakat institutions,
scholars, government officials, and recipients of Zakat funds.

3.3. Data Collection:

Data will be collected through document analysis of reports, policies, and literature related to
Zakat institutions, as well as semi-structured interviews conducted with selected stakeholders.
3.4. Data Analysis:
Thematic analysis will be employed to identify recurring themes and patterns within the
collected data, enabling a comprehensive understanding of the roles, challenges, and impact
of Zakat institutions.

4. Findings
Preliminary findings indicate that Zakat institutions play a crucial role in poverty alleviation,
social welfare provision, and community development. However, challenges such as lack of
transparency, inadequate governance structures, and ineffective distribution mechanisms
hinder their effectiveness.

5. Conclusion

In conclusion, the examination of Zakat institutions has illuminated their pivotal roles,
significant challenges, and profound impact within the context of Islamic finance and social
welfare. Throughout history, Zakat institutions have served as the cornerstone of
redistributive justice, ensuring the equitable distribution of wealth to those in need as
mandated by Islamic teachings. Their roles extend beyond mere collection and distribution of
Zakat funds; they play a crucial role in fostering socio-economic development, poverty
alleviation, and community empowerment.
However, these institutions face multifaceted challenges ranging from administrative
inefficiencies, lack of transparency, to issues of corruption and mismanagement. Addressing
these challenges requires a comprehensive approach involving reforms in governance
structures, enhanced accountability mechanisms, and leveraging technology for efficient
Zakat collection and distribution.
Despite these challenges, the impact of Zakat institutions cannot be understated. They serve
as catalysts for social cohesion, poverty reduction, and sustainable development within
Muslim communities worldwide. By channelling Zakat funds towards education, healthcare,
entrepreneurship, and social welfare programs, these institutions contribute significantly to
improving the livelihoods of the underprivileged and fostering inclusive growth.

Moving forward, it is imperative for Zakat institutions to embrace innovation, adopt best
practices, and collaborate with stakeholders to maximize their impact and reach. Through
collective efforts and commitment to the principles of justice and compassion, Zakat
institutions can continue to uphold their sacred mandate of serving humanity and building a
more equitable society.
6. Recommendations
Based on the study findings, recommendations include:
Strengthening governance mechanisms and transparency within Zakat institutions. Enhancing
collaboration between Zakat institutions, government agencies, and civil society
organizations to optimize resource allocation and distribution. Promoting awareness and
education on the importance of Zakat and its potential impact on poverty alleviation and
community development.

7. References

 Ahmad, S., & Rahman, A. (2020). Challenges of Zakat Institutions in Bangladesh: An

Empirical Study. Journal of Islamic Economics, Banking, and Finance, 16(4), 95-110.
 Khan, M. A. (2017). Zakat: Concept, Role, and Significance in Islamic Finance and
Economics. Islamic Economic Studies, 25(2), 1-20.
 Siddiqi, M. N. (2019). Zakat Institutions and Their Roles in Muslim Societies: A
Comparative Analysis. Journal of Islamic Business and Management, 9(1), 78-92.
 Qaradawi, Y. (1999). Fiqh al zakah (Volume 1): A comparative study of zakah,
regulations and philosophy in the light of Quran and Sunnah. Saudi Arabia: King
Abdul Aziz University. Sadeq, A. H. (1997). Poverty Alleviation: An Islamic
Perspective. Human omics, 13 (3), pp.110 – 134.
 Razak, M. I. M., Ismail, M., & Hamzah, A. S. A. (2013) Overview of Zakat
Collection in Malaysia: Regional Analysis. American International Journal of
Contemporary Research Vol. 3 No. 8 pp.140-148 Rahman, R. A., & Awang, R.
(2003). Assessing business zakat at Pusat Zakat Selangor: between theory and
practice. Journal of Financial Reporting and Accounting, 1(1), pp.33-48.