International Journal of Zakat Vol. 4(2) 2019 page 1-12 Investigating the Impact of Zakat on Poverty Alleviation: A Case from West Sumatra, Indonesia

Dian Fitriarni Sari, Irfan Syauqi Beik and Wiwiek Rindayati IPB University

ABSTRACT

Muslim population in West Sumatra is vast, thus, it has significant potential of zakat. In the province, the regulation of compulsory zakat which is directly deducted from the local State Civil Apparatus (ASN) salaries has been practiced. This regulation has a positive impact on the collection of zakat funds in West Sumatra, yet the position of zakat in reducing poverty in the province demands a discussion in scholarly work. This study appointed 200 respondents and employed poverty indicators to investigate the impact of Zakat on poverty alleviation in the province. The results indicated that zakat promotes poverty reduction. This research also proves concisely the poor can exit the poverty line with Zakat. This work implies the role of government in supporting Zakat as monetary tool in poverty alleviation.

Keyword: Zakat, West Sumatera, Exit Poverty, BAZNAS

INTRODUCTION to be significant enough to achieve the target in reducing poverty (Kahf, 1997). Poverty is an individual situation, not Zakat is included as the third pillar of individual characteristics or behavioural Islam. Zakat in Islam is not just worship patterns (Watt, 1968). This point of view and virtue but also an important role in leads to the definition of poverty as a economic growth that has an impact on situation where individual consumption the people welfare. is minimal, while prosperity is defined as Indonesia as the fourth-largest a situation where there is a slight population in the world with 87.21 narrowing of consumption. Poverty is percent is Muslim (Ministry of Religion, most often classified as something 2016). Of the percentage of Indonesian chronic and temporary (Murdoch, 1994). poor population is 9.41 per cent. In Poverty is still an interesting topic general, this indicates that the discussed in the field of research. One Indonesian Muslim population with way to calculate the depth of poverty is poverty levels can be balanced with the by measuring the poverty gap, existence of zakat. measuring how far the average poor Based on research by Firdaus et. person or poor family is below poverty al. (2012), the potential of national zakat thresholds. Islam has Zakat as an in 2011 reached 3.4 percent of total gross instrument to reduce poverty. domestic product, or in other words the Hassan and Khan (2007) said that potential of zakat in Indonesia was Zakat is one of the most powerful tool in estimated at Rp.16.6 billion. The poverty alleviation. Zakat yield is potential of zakat in Indonesia described enough to cover needs. That is, the is not yet supported by the collection of assumption of zakat must be based on zakat fund (Puskas BAZNAS 2019). The Shariah opinion which allows the results latest data shows that there is a gap 2 International Journal of Zakat Vol. 4(2) 2019

between the potential of zakat and its 2016),with a percentage of poverty of collection. This can be seen from the data 6.42 per cent. This certainly supports the on the collection of national zakat, by the existence of a large potential of zakat of official zakat management organization Rp.120.7 million UD West Sumatra in 2015 which reached Rp. 252.8 million (Firdaus et. al. 2012). The zakat fund in or less than 1.3 percent of its potential Indonesia is managed by the national (Puskas BAZNAS, 2016). board of zakat, Republic of Indonesia One of the provinces in Indonesia (BAZNAS). This institution is operated which has considerable potential is West in the nationwide of Indonesia. Sumatra with a population of more than BAZNAS West Sumatra is one of the 5 million people where 97.42 per cent is institutions that has been collecting the Muslim (Ministry of Religion, highest amount of zakat funds.

Table 1. Total Collection and Distribution of Zakat Funds in BAZNAS West Sumatra 2013-2018

Percentage Percentage Collected Zakat Distributed Zakat Years difference difference Funds (Rupiah) Funds (Rupiah) (%) (%) 2013 5 698 039 385 - 4 313 818 278 - 2014 6 826 525 113 0.19 5 069 317 746 0.17 2015 7 463 013 735 0.09 5 966 826 320 0.17 2016 11 149 385 130 0.49 6 845 752 500 0.14 2017 8 519 615 809 -0.23 8 838 308 200 0.29 2018 12 815 438 981 0.50 8 134 607 000 -0.07

Source: BAZNAS Province of West Sumatra 2018

Table 1 informs that there is an institutions from Zakat, almsgiving and increase in zakat funds collected from endowments to fight poverty. Therefore, 2013 to 2017 in BAZNAS West this study aims to investigate the impact Sumatra. In the previous research on of zakat on poverty alleviation, with a zakat as a reduction in poverty by Hassan special case from West Sumatra, and Khan (2007), it is mentioned that; Indonesia. 1) Zakat can alleviate the targeted budget category for poverty alleviation for other budget LITERATURE REVIEW needs. 2) Zakat can increase the potential Zaim (1989) and Powell (2010) for taxation through increased explained that Zakat can be literally productivity, employment and translated as “purity” or, in verbal form results. “to be pure”. In the context of English, zakat is usually translated as Various policies and strategies “almsgiving”, meanwhile in al-Qur’an, it have been adopted to reduce poverty, but refers to as ease the burden of the poor, the fact remains that poverty still exists. as money, food, or clothing; charity gift Muslim countries inherit powerful (Powell, 2010; Bukowski, 2014). Investigating the Impact of Zakat on Poverty Alleviation:…… 3

In a simplified context, zakat is a mandatory zakat deduction on the an obligation imposed on a Muslim who income of all Muslims. In the country, has attained Nisab and must pay 2.5 Zakat management is under the authority percent of the income he gets for one of the state government. year. The Payment of zakat can be in the The concept of zakat itself is a form of property owned. The 2.5 percent fundamental basis for Islamic economics is not a fixed amount and may be to bring a balance between rich and poor modified depending on the property people and also to strengthen the subject to zakat. nation’s entire economy and a large Zakat has a positive effect on worldview (Al-Mamun & Haque, 2015). economic growth. Paying Zakat However, like a strategy to reduce promotes the growth of faith and poverty, the capacity of the poor must be economic growth. As a redistribution of developed through health, education, income and wealth and reducing the vocational training facilities, and others. phenomenon of inflation and poverty, So that poor people can get out of trap other social and economic problems. poverty. In addition, business Miah (1992), Sarea (2012), entrepreneurship must also be developed Bukowski (2014), Bakar & Rahman based on priority. (2007) elaborated that zakat serves as a The entrepreneurship unique mechanism for mandatory development program has the possibility transfers of income and wealth to bridge to not only eliminate poverty but also the gap between the rich and the poor in create employment opportunities for society. Zakat can gradually increase poor people. Proper payment of zakat employment and income in the amount with the right method to economy, thereby increasing people’s eliminate poverty from Muslim living standards and ultimately communities will ultimately help bring increasing the aggregate volume of zakat peace, harmony and prosperity to the collections. On this point, zakat has a Muslim world (Hoque, et al., 2015). positive impact on the rate of economic In the study done by Shirazi growth in terms of poverty alleviation (2014), it was highlighted the critical and reduction of unemployment role of zakat in poverty alleviation in (Ahmad, 1989). Bangladeshi context. In that, zakat funds Study in Bangladesh by Hassan is believed to replace government budget and Khan (2007) found that the good expenditures in the range of 21 percent management of zakat can reduce of the Annual Development Plan (ADP). international monetary assistance (debt), Furthermore, zakat can increase which significantly reduce the national productivity, employment, and output debt (Hassan & Khan, 2007). Some which consequently will increase the economists project that in 2004 to 2005, government’s tax potential. the potential of zakat funds could Unfortunately, the government and the contribute in reaching 43 percent of global stakeholders seem to be less Bangladesh’s annual development plan aware to include zakat as an instrument (Shirazi & Amin, 2009). of poverty alleviation. The following study in Malaysia Regarding zakat distribution, it illustrates the approach to strengthening has a significant and positive influence the existence of the zakat system in on increasing income distribution for the Malaysia’s socio-economic developent. poor and needy (Ali et. al., 2013). In a It is similar to a tax deduction on salaries, study with the Human Development 4 International Journal of Zakat Vol. 4(2) 2019

Index (HDI), it can be concluded that household. Based on secondary data, the there was indeed an increase in the HDI amount of data used is 200 respondents of Mustahiks (zakat recipients) taken from all cities and regencies in households in the period being observed. West Sumatra, Indonesia. There are several possible reasons why This study uses the method of Mustahiks who received productive calculating the Poverty Indicator and zakat assistance are improved their Average Time Taken to Exit Poverty. welfare status. In this regard, it is due to The analysis of this study assesses how the investments in productive capital, in the positive impact of zakat on poverty addition to having microfinance which and also calculates how many years the can encourage growth in income and community estimates can get out of the fulfill basic needs. Further, an cycle of poverty. appropriate training and empowerment programs can also be essential factors to Analysis of Poverty Indicators strengthen household awareness in having good education (Nurzaman, According to Foster, Greer and 2016). Thorbecke (1984), there are several Furthermore, Kasri (2017) studies of poverty defined by ethnicity, discussed the Determinants of Poverty geography, or other lines. Such an among zakat recipients in Indonesia approach to poverty analysis places using household level analysis. The requirements on poverty measures in results show that the lower the age, the addition to those proposed by Sen lower the education, the less formal (1979). In particular, the question of how employment, the smaller the size of the to measure the linking of subgroup household, are related to the higher poverty with extreme poverty is very probability of being poor. The results important for its application in the form show that such group of people should be of analysis. At the very least, one would the main target of zakat distribution, expect that a reduction in the poverty rate notably in Indonesia’s context. of a ceteris paribus subgroup must As explained in the above texts, reduce poverty for the population as a it is evident that zakat has been found to whole. positively impact on transforming its There are many analysis recipients into the group of people with calculations for poverty but using financially stable. This study aims to poverty indicators we can also explain extend the evidence from West Sumatra, how many households are still Indonesia in that regard. categorized as poverty and depth of poverty. The Central Statistics Agency (BPS) uses several general indicators to RESEARCH METHODOLOGY measure poverty and inequality, namely the ‘headcount ratio’, the ‘poverty gap The main data used in this study are index’, and ‘the sen index’ and the ‘FGT primary data from community surveys Index’. Meanwhile, according to Beik with respondents who have income and Arsyianti (2016), to measure the below the poverty line and receive level of poverty in a region, some assistance from zakat funds. Primary differences need to be taken into data is taken using a questionnaire that account, for instance, the distance provides information about the between the average poor household and characteristics of the respondent’s the poverty line. In terms of measuring poverty levels also need to be considered Investigating the Impact of Zakat on Poverty Alleviation:…… 5

between poor households. Poverty with income below the poverty line. In alleviation programs have been well other words, the smaller the headcount distributed to accumulate in certain ratio of the index, the fewer the number groups. The following general poverty of poor people. indicators are as follows: Poverty Gap Index (P1) and Income Gap Headcount ratio (H) Index (I) Headcount Ratio Index is a poverty The poverty gap index (poverty indicator that measures the number of reduction) and income gap index poor people below the poverty line. The (income) are gauges used to identify and way to assess the level of poverty in any measure poverty levels. the poverty gap community is to obtain a modest number index is used to measure the difference of poor people. Poor people are those between the average income of poor whose income falls low of the specified households below the poverty line and poverty line (UNDP 2009). In this study, the poverty line. Beik and Arsyianti the poor category was based on the (2016) cite this program is needed to poverty line standard issued by the determine the amount of funds needed Indonesian Central Bureau of Statistics. by a program or cash transfer policy or This indicator is used to calculate the government to transfer people. the percentage of poor people in an calculation formula is as follows: observation population. For this ratio 푧−푦 calculation: 푃 = ∑푞 푖 1 푖=1 푞 H = 푞 푛 Information: P1 = poverty gap index Information: z = Poverty Line H = The ratio of the number of yi = 1st household income employees (0 to 1) q = Number of households that q = Number of Households that have income below the poverty Have Income Below the line. Poverty Line n = Total population If after the distribution of zakat, then the value of this index will decrease, The family poverty line is meaning that zakat has a positive obtained from multiplying the per capita meaning on the submission of poverty poverty line per month with the average levels. Or in other words, the smaller this family size of the poverty line of West index, the less the difference between the Sumatra Province is Rp. 476 554. The aggregate income of the poor and the headcount usage ratio index in this study poverty line is getting better. aims to calculate the number of Furthermore, the Income Gap households receiving zakat higher than Index is used to calculate the percentage the poverty line and can determine the of poor households whose opinions number of mustahik that can be obtained depend below the poverty line. The through the utilization of zakat. If the smaller the index value, the fewer poor value of the headcount index is reduced, households in the community. This it means that the utilization of zakat has second index can represent the success a positive influence, because it can of a program. The following income gap reduce the number of mustahik living formula is as follows: 6 International Journal of Zakat Vol. 4(2) 2019

푔푖 I = ∑푖=∈푆(푧) Beik and Arsyianti (2016) 푞푧 explained that the Sen Index formula Information: (P2) above is a combination of three I = Income gap index indices namely the headcount ratio, the gi = z - yi (Difference in income income gap ratio, and the Gini between poor households with coefficient of the poor population. P2 is poverty line, yi 0, gives an interesting cardinal observed interpretation. 푧 = poverty line The modified index reflects the number of years a population needs to 푔푖 = Short-fall income of the i poor population get out of poverty needed to ensure all α = Sensitivity parameter with a income grows at the “g” level. Thus, value of ≥0 providing a simple metric of potential economic growth to reduce poverty and Investigating the Impact of Zakat on Poverty Alleviation:…… 7

in this way can help to illuminate the RESULTS AND DISCUSSIONS contested policy debate. The method of calculating this method is formulated as Analysis of the Impact of Zakat in West follows: Sumatra Province Based on Poverty Indicators 푗 ln(푧) − ln (푦푗) 푡푔 = 푔 Table 2. Indicators of Poverty Before and Information: After Zakat 푡푗 = Average Time Taken to Exit 푔 Indicator of Before After Change Poverty Poverty zakat zakat (%) 푧 = Poverty Line H 0.59 0.185 -0.68 푦푗 = Income of poor households in j P1 (Rp) 633 110.71 326 186.11 -48.5 (where yj grows constant I 0.27 0.14 -48.5 positively at g per year) P2 0.30 0.08 -73.3 푔 = Economic growth rate per year P3 0.06 0.01 -83.3 in a region Source: Calculated by Authors (2019). Mussa (2015) defined as the time needed by households to reach the Headcount Ratio Index poverty line through economic growth The use of this index is intended to (income), which is assumed to grow determine the number of poor steadily with a constant amount per year. households that can be reduced through This method can also be used to increase efforts to utilize zakat. Based on the the level of household expenditure. calculation, it is known that the While the compilation of households is Headcount Ratio (H) value has above the poverty line. decreased after the BAZNAS zakat Based on the research done by empowerment program of 0.59 to 0.18. Gibson and Olivia (2002) in Papua New This decrease indicates that the zakat Guinea to calculate the level of poverty empowerment program in West Sumatra in this area. This study calculates the size can reduce the number of poor of the time out of Papua New Guinea. households by 68 percent. The results of this study indicate that the average time taken to get out of poverty Poverty Gap Index and Income Gap is 6.2 years if the growth rate is 2 Index percent. One reason for the average time of only 6.2 years is more than two-thirds The Poverty gap ratio (P1) and the of the population above the poverty line, Income gap ratio (I) are indicators that so the time of discharge is zero. Things can show the level of poverty in that should be considered by households in a region. Based on the policymakers are ways to reduce poverty Table 2, it is known that the utilisation of of policymakers. Moreover, it takes 20.5 zakat provided by zakat institutions is years to get out of inequality. from the previous Rp. 633.110 to Rp. 326.186. Likewise, the value of I has decreased from 0.27 to 0.14. Both of these indicate that the level of depth of poverty of households in West Sumatra was reduced after the zakat empowerment program by BAZNAS. 8 International Journal of Zakat Vol. 4(2) 2019

Sen Index Index and FGT Index Figure 1. Average Time of Taken to Exit Poverty Mustahik Household Without zakat Sen Index (P2) and FGT Index (P3) are distribution analytical tools used to measure the severity of poverty in a region. The Without Zakat Distribution results of the analysis show that the P2 6,9 8 6 value has decreased from 0.30 to 0.08. 5,2 6 This value is known to be worth 0. 4

Hence, there is no household that has Year income below the poverty line, whereas 2 if it is worth 1 then all families have 0 income above the current poverty line. 5,29 6 7 While the P3 value shows a decrease Economic Growth of West Sumatra from previous 0.06 to 0.01 This result shows that the empowerment program Source: Prepared by Authors (2019). initiated by BAZNAS was able to reduce the severity of farmer households by Figure 2. Average Mustahik Time Taken to 83.3 percent. Exit Poverty of Households, there is a Zakat Distribution Average Time Taken To Exit Poverty Analysis Without And With Zakah With Zakat Distribution 3,3 Based on Figure 1 and Figure 2, it is 4 2,8 known that there is a decrease in the 3 2,4 average time needed for beneficiaries of 2 zakat empowerment programs to get out Year 1 of poverty, or at least be able to reach the 0 Poverty Line of West Sumatra Province. 5,14 6 7 This calculation uses the assumption of Economic Growth of West Sumatra economic growth in the Province of West Sumatra in 2017 which is 5.29 and Source: Prepared by Authors (2019). in 2018 of 5.14 per year. This shows that the management Based on this research, it can be of zakat and the distribution of zakat by concluded that the zakat program BAZNAS of West Sumatra to mustahik managed by BAZNAS in West Sumatra has been able to accelerate income Province is able to contribute positively increases while shortening the time the to poverty alleviation programs. The people who receive zakat funds can get performance of amil institutions in terms out of poverty and can become a person of distribution is quite good. Despite the who pays zakat. It can be noted the increase in the aspect of zakat results of the analysis using the method distribution, the collection of actual of analysis of average time taken to exit zakat is still far behind its potential. poverty, from before it took 6.9 years There is a big gap between the potential without zakat and can be reduced to only and the collected zakat. 3.3 years if zakat can be optimized in its If the value of economic growth use. in West Sumatra Province can increase to 6 to 7 percent, this will have an impressive impact repeatedly. Because the time needed for mustahik to get out Investigating the Impact of Zakat on Poverty Alleviation:…… 9

of poverty is getting faster. If the growth expected potential amount. Likewise, rises to 6 per cent without the zakat, the zakat institutions are recommended to average value of time taken to exit keep and improve their innovation in poverty is 6 years, however, if it is empowering Mustahik. accompanied by the distribution and utilization of zakat in a professional manner, it will decrease by 2.8 years. REFERENCES Especially, if the growth reaches 7 per cent, without zakat it takes 5.2 years but, Ahmad, Z. (1989). “Public Finance in after zakat only takes 2.4 years based on Islam”, International Monetary the formula average time taken to exit Fund Working Paper, Islamabad, poverty. Pakistan. Therefore, it is important to Al-Mamun, A. & Haque, A. (2015). promote equitable economic growth. “Perception of Muslim Consumers Not only for certain people who can towards Tax Deduction through experience economic growth, but people Zakat in Malaysia: An Empirical who fall into the middle to lower Investigation of Muslims in category can also face it. Zakat is helpful Malaysia”. Proceeding The First if it can be empowered properly and International Conference On correctly. Based on the results of a study Shari’ah Oriented Public Policy in by Jonaidi (2012), the estimation results Islamic Economic System show that economic growth is negatively (ICOSOPP 2015), pp.532-549. correlated with Indonesia’s poverty Banda Aceh. level. This means that the more Ali, A.F.M., Noor, Z.M. Aziz, M.R.A. & economic growth in Indonesia, the lower Ibrahim, M.F. (2013). “Impact of Indonesia’s poverty. This is also proven Zakat Distribution on Poor and in the average analysis tool taken time to Needy Recipients: An Analysis in exit poverty in this work. Kelantan, Malaysia”. Australian Journal of Basic and Applied Sciences, 7(13): 177-182 CONCLUSION Bakar, N. & Rahman, A. (2007), “A Comparative Study of Zakah and The analysis using the indicators of the Modern Taxation” J.KAU: Islamic Headcount Ratio Index, the Poverty Econnomics, 20(1), 25-40 Depth Index and the Poverty Severity Baznas Provinsi Sumatera Barat. (2018). Index, shows that zakat can reduce Annual report Baznas Provinsi poverty in West Sumatra, Indonesia. It Sumatera Barat. May 2019. may also be seen that with zakat, the Beik, I.S. & Laily, A. (2016). Ekonomi underprivileged community can get out Pembangunan Edisi Revisi. PT of poverty faster, than those of without Raja Grafindo Persada: Indonesia. zakat. In this regard, the government can ISBN: 978-97-97699-36-9. optimise the collection of zakat funds in Bukowski, A. (2014), “Social Role of West Sumatra to best target in realising Alms (zakāt) in Islamic its potential and supporting the local Economies”, University of Lodz, agenda of poverty alleviation. Institute of Economics. Ethics in In the province, Zakat fund Economic LifeVol. 17, 123-131. which has been collected reached Rp. 1.7 Firdaus, M. Beik, I.S., Irawan, T. & trillion, which falls short from the Juanda B. (2012). “Economic Estimation and Determinations of 10 International Journal of Zakat Vol. 4(2) 2019

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International Journal of Zakat Vol. 4(2) 2019 page 13-22 Measuring Amil Happiness Using Psychological Approach: Evidence from Yogyakarta, Indonesia

Zaki Abdullah, Duddy Roesmara Donna Graduate School, Universitas Gadjah Mada

Dinda Aisyah Najmi Faculty of Economics and Management, IPB University

ABSTRACT

The implementation of Good Amil Governance as one of the important aspects of a standard of international zakat management, which is stated in Zakat Core Principles, requires an approach that is more than just amil competence and qualification aspects. The psychological perspective of amil also needs to be considered to obtain and maintain the best human resources. As a profession that is oriented towards social benefits, an amil has different working rhythm and consequences. This research aims to measure level of amil’s happiness in the workplace and further study its impact on amil productivity. The result shows that amil is a satisfying job. Further, the most blissful factor for amil is work motivation, while the most unhappy factor for amil is the career path, which seems to be less promising. In addition, the happiness level of amil has a positive relationship with his or her productivity level. Therefore, psychology condition of an amil should be considered in order to increase the performance of zakat institutions.

Keywords: Amil Zakat, Good Amil Governance, Happiness, Productivity, Psychology JEL Classification: D23, D91

INTRODUCTION zakat fund can serve as a tool to decrease poverty and the gap in the economy. Poverty and the gap in economic welfare According to Statistik Zakat are the problems of developing Nasional (2017), the current collection of countries. Therefore, the poverty zakat remains at Rp. 454million or 2.8 alleviation and gap of economic decrease percent from the measured potential. indicators are included in Sustainable There are still many tasks to be done by Development Goals (SDGs) of The zakat institutions in digging the potential United Nations, as a development goal of zakat. As an effort to optimize the for human. Zakat becomes one of the existing potential, zakat management right tools to reduce poverty and the gap should be well driven by competent and of economic welfare (Beik, 2009). A credible institutions. Beik et al. (2016) study by Firdaus et al. (2012) found that provide the reference of Zakat Core the potential of zakat in Indonesia Principles that are fundamental reached Rp.16.2billion or 3.4% of principles of zakat management as an Indonesia’s GDP in 2010. Further, in effort by the zakat institutions to 2019, research done by BAZNAS Center implement the ideal management zakat for Strategic Studies shows that potential system. of zakat fund is at Rp.21.3billion. This One of the critical principles of zakat institutions is Good Amil 14 International Journal of Zakat Vol. 4(2) 2019

Governance. This is because amil is the and professional in accordance with the motor of the system in zakat institutions required field. covering administration, collection, and However, in addition to the distribution of zakat. This matter competency and professional factors of strengthened by Rusydiana & an amil, the psychological well-being in Firmansyah (2017) in their research that the implementation of Good Amil put Good Amil Governance as the most Governance also needs to be a concern. priority aspect of Supervision. This In this regard, well-being has a broad shows that this aspect is one of the meaning. Thus, the measurement of considered principles in supporting the well-being using arranged indicators that optimization of existing zakat potentials. not only to describe the condition of The implementation of Good material prosperity but also lead to the Amil Governance can be conducted by condition of subjective welfare or implementing the following aspects; happiness (BPS, 2017). transparency, accountability, As elaborated in the above text, responsibility, justice, and local wisdom this paper aims to measure the degree of (Chotib et al., 2018). Therefore, it is amil’s happiness using a psychological necessary for an amil to be competent approach method.

Figure 1. Framework of Thinking Source: Authors’ own.

LITERATURE REVIEW their work because all of their needs are satisfied. That also goes to amils. In this In research conducted by Sharifzadeh & regard, an amil who works happily will Almaraz (2014), it was found that happy be more loyal to the zakat institution workers tend to be more productive than where he or she works. those who are less happy. Workers also Cadmus (2012) in his study do not need to worry and can focus on found that among the factors that Measuring Amil Happiness Using Psychological Approach: Evidence… 15

influence the happiness of a environment, heavy workload, and worker, in special relation to passion discrepancy, should bring down psychological well-being, is a relevant an amil’s performance. workload, work time and balanced life, decent salary, a positive environment, Objectives and a clear career path. Although The psychological aspect of an amil is an happiness in workplace cannot be essential variable in zakat institution. achieved continuously, these factors That is because the condition of an amil need to be considered by human as a motor of zakat institution will resources (HR) managers. The target and determine the productivity and productivity of the institution that will be achievement of the institution. This achieved need to be determined research tries to look at the role and realistically and wisely by looking at the management of amil from a different aspects of the resources they have. perspective, which is related to the Work motivation has a positive psychology of amil in managing zakat impact on the commitment to an funds. organization (Mangkunegara & Psychological well-being can be Octorend, 2015). Work motivation also measured through the happiness of amil has a positive effect on employee in the workplace. Happiness can be happiness. Workers who are increasingly measured through several latent motivated and committed will work variables. Thereby, there are 2 (two) better and be satisfied (Sohail et al, objectives in this study which are; 2014). As a non-profit institution, zakat measuring happiness of amil zakat institution has different characteristics institutions in Yogyakarta, and compared to that of profit-oriented ones, investigating its impact on amil including in managing their human productivity. resources. This circumstance is because Measuring amil happiness in there is no production or sales process in Yogyakarta is interesting due to zakat institutions, but making the Yogyakarta is the happiest province in collection of zakat funds as a factor of Java Island (BPS, 2017). Java Island is production, then channeling the fund to the most strategic island in Indonesia the mustahik in order to equalize social because it is the center of economic and economics condition in the society. business activities in the country. It also These different goals make the work contributes the most to Indonesia’s GDP. motivation of employees at the zakat Meanwhile, Yogyakarta is one of the institution different. exclusive provinces in Indonesia and the As the above, it can be concluded happiest province among other special that the happiness of an amil in work is regions such as DKI Jakarta, Aceh, and needed because the implementation of Papua based on Indonesia Happiness Good Amil Governance as one of the Index. Zakat Core Principles cannot be carried out without the support of amil psychological factors. Disorders of METHODOLOGY psychological factors will harm amil’s performance and his or her Work Happiness Factors of Amil professionalism. For example, the factors of financial inadequacy, unclear Happiness can be measured through career paths, less suitable work several factors to describe amil 16 International Journal of Zakat Vol. 4(2) 2019

satisfaction as worker in general. The The data used in this study is the primary happier person will make him or her data. It is obtained directly through field more productive at work (Sgroi, 2015). surveys. The data retrieval method is Based on the principle of Good Amil conducted by filling out the administered Governance in the Zakat Core Principles, questionnaires that have been made and an amil does not only have an orientation processed by the authors. The data in the to work, but also charity under the zakat questionnaire is ordinal. The data was institution as a social organization at the obtained from 46 respondents who were same time. These factors can also amils of zakat institutions in Yogyakarta. illustrate the psychological side of an The selection of respondents was done amil profession. The proxies of with a purposive sampling method, happiness of amil can be described by which determines the respondent based the following factors: on the provisions made by the authors. The amils involved in this study Table 1. Determinants of Happiness at were from 3 (three) official zakat Work institutions, including BAZNAS Yogyakarta City, BAZNAS Yogyakarta Determinants of Province, and Dompet Dhuafa (DD) No Worker Reference Happiness Yogyakarta. 1 Workload Cadmus (2012), Shah et al (2011) Analysis Method 2 Career Path Cadmus (2012), The data obtained from the primary SEEK Asia (2017) source was processed by a validity test to 3 Financial Cadmus (2012), determine the validity of question as a Welfare/Salary SEEK Asia proxy which illustrates the happiness of (2017), Wulandari & Widyastuti amil. After that, the reliability test is (2014) conducted to determine the level of 4 Work Motivation Sohail et al questionnaire consistency. Furthermore, (2014), descriptive analysis is conducted to Mangkunegara & measure the happiness of amils in their Octorend (2015) working environment. The measuring 5 Work Cadmus (2012), scale is at the range from 1 to 5 where Environment SEEK Asia number 3 is neutral. The bigger the score (2017), Wulandari & Widyastuti describes the happier is an amil. Further, (2014), Fernández Pearson Correlation Analysis is used to et al (2017) determine the relationship between the 6 Working Time Cadmus (2012), happiness level of amil to the level of SEEK Asia productivity at work. (2017), Fernández et al (2017) 7 Passion Spehar et al RESULTS AND DISCUSSION (2016), Purba & Ananta (2018) Validity and Reliability Test Source: Prepared by Authors. After the completion of the questionnaires, the validity test was Types and Data Sources conducted. There were 25 from 35 questions that have fulfilled the prerequisites to be valid. The 25 Measuring Amil Happiness Using Psychological Approach: Evidence… 17

questions have r-count > r-table based on value or composite reliability should be the significant test at a level of 5 percent. more than 0.7 although 0.6 is still While the other ten questions were acceptable (Hair et al. dalam Putri & invalid because the error level of more Gunawan, 2014). than 0,05 percent. The result of the reliability test of the 25 valid questions shows that the Table 2. Result of Validation Test questionnaire is highly reliable as can be seen in Table 3. Correlation Item Indicator r-table Conclusion Coeff. Table 3. Result of Reliability Test X1.1 Work 0,746 0,444 Valid Motivation X1.2 Work 0,492 0,444 Valid Cronbach's Number of Motivation Alpha Statement X1.3 Work 0,493 0,444 Valid 0.945 25 Motivation X1.4 Work 0,714 0,444 Valid Motivation Source: computed by Authors (2019). X2.1 Working 0,673 0,444 Valid Time Cronbach’s Alpha 0.945 value X2.2 Working 0,490 0,444 Valid shows that the 25 questions on the Time employed questionnaire have a relatively X2.3 Working 0,528 0,444 Valid Time high degree of reliability. After validity X3.1 Work 0,676 0,444 Valid and reliability tests, the analysis of the Environment respondents’ answers is further X3.2 Work 0,577 0,444 Valid conducted. Environment

X3.3 Work 0,578 0,444 Valid Environment Analysis of Amil’s Happiness at Work X4.1 Workload 0,763 0,444 Valid The result of a descriptive analysis X4.2 Workload 0,521 0,444 Valid obtained from the average of X4.3 Workload 0,809 0,444 Valid respondents has shown several findings. X5.1 Career Path 0,728 0,444 Valid The career path was found to be the least X5.2 Career Path 0,696 0,444 Valid X5.3 Career Path 0,562 0,444 Valid unhappy factor for the sampled amils X5.4 Career Path 0,602 0,444 Valid with 3.78 (the lowest score). The reason X6.1 Passionate 0,513 0,444 Valid for being so, perhaps, the majority of X6.2 Passionate 0,694 0,444 Valid amils in zakat institutions in Yogyakarta X6.3 Passionate 0,723 0,444 Valid are employed based on contract scheme. X7.4 Passionate 0,796 0,444 Valid This type of employment represents that X7.1 Salary 0,717 0,444 Valid amil profession is not a permanent job. X7.2 Salary 0,684 0,444 Valid Further, regarding the permanent X7.3 Salary 0,590 0,444 Valid amil in the sampled institutions, as X7.4 Salary 0,665 0,444 Valid authors have found, only totaling 5 to 10 amils are employed permanently. Source: computed by Authors (2019). Perhaps, such employment has led to the Following the validity test above, quick change of human resources, which the authors performed the reliability test to some degree, could create a risk to the to all variables considered valid. The test zakat institution itself. It is important to involved the consistency test of the be noted that the quality of an employee questionnaire. Rule of thumb of alpha will be improved with a clear career path (Dewi & Utama, 2016). However, from 18 International Journal of Zakat Vol. 4(2) 2019

the current findings, the impermanent amil was the profession they wanted or occupations factor, the career path aspired. offered by the zakat institutions, are Another indicator that measures found to be unclear and less promising. the happiness of amil is salary. The Although zakat institution is a results show that the salary of an amil has non-profit institution, the management a score of 4.03. This result represents must be professionally conducted. that amils in zakat institution is quite Therefore, amil as a zakat fund manager happy with the salary they earn, notably needs to have adequate and relevant in the context of amils who work in the qualifications and loyalty to the sampled institutions. Based on the institution. If amil’s turnover happens in results of interviews, the average salaries a short time because the offered career of the amil certainly not as big as in path is less-promising, that regard will companies or other profit institutions. weaken the institution. Career path in However, the salary they earn is in zakat institution must be made different accordance the work they have done. from those in the conventional company The amount of their income is above the or civil servant. regional minimum wage. The amount Following the factor of career can fulfill daily needs, which is fair and path, the workload was further found reasonable. with a score of 4. It seems that workload In addition to the above, the in the sampled zakat institutions is less environment at work was also utilized to enjoyed by the respective amils. Perhaps, measure the happiness of amil. The the workload given by the zakat environment in zakat institutions in institution does not meet the amil Yogyakarta was found to be fairly good standard of qualification. The workload with a score of 4.30. This score is much can encourage employee productivity, better than the four previous factors. It but excessive workloads will result in an means that the amils in zakat institutions adverse impact on the form of physical in Yogyakarta are happy with the or mental fatigue (Irawati & Carolina, conditions of the existing environment. 2017). A pleasant work environment Further, the next factor that supports employees to work contributes to the happiness of amil is productively. The colleagues in passion based on the relationship workplace also support each other and do between the expectation and abilities of not overturn each other’s work. The amil and the current field of work. The highest quality standards also must be result of this factor has a score of 4.02, applied to keep the work environment which can be said to be quite good. This productive and professional. Zakat score, perhaps, means that the sampled institutions in Yogyakarta have amils’s passions are in line with their implemented that regard. This condition tasks. The jobs in administration, was reflected in the sampled amil finance, fundraising, management or happiness score as above mentioned. services, are expected by the sample. The other two factors that were Nevertheless, there is an important note found to be good for the happiness of in one of the statements as a proxy for the amil in zakat institutions in Yogyakarta passion of work which is related to the are the factors of working time and desired job. On average, the respondents motivation. The office hours are not too answered that they were not sure that tight and ideal (8 hours of work). On that, an amil is given proportional time for Measuring Amil Happiness Using Psychological Approach: Evidence… 19

vacation and leave. The policy about the Happiness covers not only the standard of working hours and overtime material aspect but also non-material is following the Law No. 13 of 2003 such as the needs of spirituality, social about Manpower. Furthermore, the amil contacts, and suitability in the field of can enjoy working moments, and daily work. In this regard, the authors have work can be completed on time. The records that zakat institution can do to happiness score for working time factor increase the happiness of amil, which is 4.45. can improve career and development The last factor is work path of its amil. motivation. It contributes to the highest score as a happiness factor of amil zakat The Relationship between Work in Yogyakarta with a score of 4.46. Happiness and Productivity of Amil Perhaps, this is because the motivation as After knowing the level of work an amil aims at helping people in need. happiness of amil, it is important to Amil job is a noble profession as Allah investigate the relationship between mentioned in the Qur’an Chapter 9 work happiness to the productivity of (Surah At-Taubah) verse 60. The score amil in order to better understand this of happiness based on this high working subject matter. In this study, the test is motivation shows that the amils are the done following Sharifzadeh & Almaraz ones who have a high social spirit and a (2014) dan Sgroi (2015), who found that good level of spirituality. Based on the that happy workers tend to be more work motivation they had, the amils feel productive at work. happy even though they do not expect The result of the descriptive their current job. analysis from the questionnaires indicated that each happiness factor has 5,00 4,46 4,45 4,30 different contributions to the level of 4,00 4,02 4,03 amil productivity. The level of happiness 4,00 3,78 from work motivation has the most 3,00 significant contribution to the sampled amils productivity with a score of 4.50. 2,00 Perhaps, this is because the work 1,00 motivation factor encourages someone to work better while they enjoy the job. The happiness of amil as a result of the work motivation factor has a high score. Therefore, it is natural when the work motivation occupies the highest position Source: computed by Authors (2019). in influencing productivity. Figure 2. Level of Amil Happiness by Furthermore, the factor which Determinants has the most significant contribution to amil productivity after work motivation Based on the seven factors as a is working time and working mean of measuring the happiness of amil environment with the same score of 4.40. in Yogyakarta above, then an average That was then followed by a passion for score of 4.15 is obtained. This score work with score of 4.30, salary with 4.20 shows that the profession of amil is a and workload with a score of 4,10. While satisfying job and this means that the the factor that affects productivity with sampled amils are happy. 20 International Journal of Zakat Vol. 4(2) 2019

the lowest score is the career path with The result of the Pearson 3.75. correlation was 0.899 as can be seen in As the level of happiness, the Table 4. These results indicate that there contribution of the career path in the is a strong relationship between zakat institutions makes amil feel happiness and productivity level of amil. unhappy, which may result in reduced Therefore, even though amil is a productivity. Overall, the sampled amils satisfying profession, the determinants agreed that the happiness factor is one of of happiness of the amil need to be the factors that affect their productivity. continuously improved in order to That was indicated by the average score increase the productivity of amil, of 4.22, which states that each happiness especially in improving career paths and factor has an impact on their work providing workload. productivity.

Motivation 4,5 CONCLUSION Worktime 4,4 The happiness of amil zakat in Environment 4,4 Yogyakarta has been investigated in this Workload 4,1 study. The most blissful factor for amil is work motivation. The work motivation is Career Path 3,75 the perception that amil is a noble Passion 4,3 profession in Islam who aims to help Salary 4,2 people in need through zakat funds. It can be concluded that the majority of 1,00 2,00 3,00 4,00 5,00 amil had high spirituality and social sensitivity. Source: computed by Authors (2019). Adversely, the most unhappy factor is a career path that seems to be Figure 3. The Amount of Each Factor unclear and less promising. This factor Contribution to Amil Productivity could demotivate amil at work and reduce loyalty towards the institution. In Further, this study has carried out order to keep and maintain the good amil a correlation analysis to find out the governance, it is necessary to have a relationship between happiness and bright and promising career path map productivity level of amil. Table 4 shows that including material plans such as the findings. financial and the position, and non- material advantages such as the scope of Table 4. Correlation Analysis between Happiness and Productivity of Amil social contributions and flexibility time to work. Productivity Correlation Value In addition, the level of work Level of Amil happiness of amil also was covered in Happiness Level of 0,899 this paper. It has a positive relationship Amil with the level of work productivity. The Number of Variable 7 happier an amil, the more productive at (N) work he or she will be. Therefore, the Source: computed by Authors (2019). psychological conditions of an amil must be concerned and maintained in order to improve the performance of zakat Measuring Amil Happiness Using Psychological Approach: Evidence… 21

institutions, especially for the Dewi, N.L.P.A.A. dan Utama, I.W.M. implementation of Good Amil 2016. "Pengaruh Pengembangan Governance in terms of human Karir terhadap Kinerja Karyawan resources. melalui Mediasi Motivasi Kerja Finally, future research may pada Karya Mas Art Gallery". E- study on similar field, which can be Jurnal Manajemen Unud 5(9): conducted in other regions and countries 5494-5523. to support the evidence from the current Fernández, J.L.F., Gamez, M.A.F., findings. Aragón, N.D.Q. dan Gil, A.C. "Happiness at Work, Business Behaviour, and Worker REFERENCES Perceptions: A Case Study. Ramon Llull Journal of Applied Ethics (8): Badan Amil Zakat Nasional. 2018. 33-64. Statistik Zakat Nasional 2017. Firdaus, M., Beik, I.S. dan Irawan T. Juni. BAZNAS Republik "Economic Estimation and Indonesia. Jakarta. Determinations of Zakat Potential Badan Amil Zakat Nasional. 2019. in Indonesia". IRTI Working Paper Indikator Pemetaan Potensi Zakat. Series. Islamic Development Juli. BAZNAS Republik Bank. 9 Oktober. Jeddah. Indonesia. Jakarta. Irawati, R. dan Carollina, D.A. 2017. Badan Pusat Statistik. 2017. Indeks "Analisis Pengaruh Beban Kerja Kebahagiaan 2017. Desember. terhadap Kinerja Karyawan BPS Republik Indonesia. Jakarta. Operator pada PT Giken Precision Beik, I.S. 2009. “Analisis Peran Zakat Indonesia". Inovbiz: Jurnal dalam Mengurangi Kemiskinan : Inovasi dan Bisnis 5(1): 51-58. Studi Kasus Dompet Dhuafa Mangkunegara, A.P. dan Octorend, T.R. Republika”. Jurnal Pemikiran dan 2015. "Effect of Work Discipline, Gagasan 2(1): 1-11. Work Motivation and Job Beik, I.S. 2014. "Toward an Satisfaction on Employee Establishment of an Efficient and Organizational Commitment in the Sound Zakat System: Proposed Company (Case Study in PT. Dada Core Principles for Effective Zakat Indonesia)". Universal Journal of Supervision". Disajikan dalam Management 3(8): 318-328. Working Group of Zakat Core Pemerintah Indonesia. 2003. Undang- Principles 2014. undang No. 13 Tahun 2003 Cadmus, F. 2012. Happiness at Work: tentang Ketenagakerjaan. Rules for Employee Satisfaction Lembaran Negara Republik and Engagement. Dalam Trends. Indonesia Tahun 2003, No. 39. Editor Philip C. Berwick, New Jakarta: Sekretariat Negara. York: William S. Hein & Co., Inc. Purba, S.D. dan Ananta, A.N.D. 2018. Chotib, M., Yuswadi, H., Toha A. dan "The Effects of Work Passion, Wahyudi, E. "Implementation of Work Engagement and Job Good Amil Governance At Amil Satisfaction on Turn Over Zakat Institution". International Intention of The Millennial Journal of Humanities and Social Generation". Jurnal Manajemen Science Invention 7(1): 93-100. Dan Pemasaran Jasa 11(2): 263- 274. 22 International Journal of Zakat Vol. 4(2) 2019

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International Journal of Zakat Vol. 4(2) 2019 page 23-40 Governance of Formal Zakat Institution in Saudi Arabia; Issues and Challenges to Improving Zakat Payers’ Compliance

Abdulsalam Ahmed Sawmar IIiBF, International Islamic University Malaysia (IIUM)

Mustafa Omar Mohammed Kulliyah of Economics and Management Sciences, International Islamic University Malaysia (IIUM)

ABSTRACT

This study investigates the issues of governance practices of the formal zakat institution in Saudi Arabia, GAZT. It also attempts to develop a framework which explains how to improve zakat compliance through good governance. In order to achieve these objectives, the study employs a content analysis of relevant literature and qualitative interviews. Specifically, a total of 21 interviews were conducted with zakat experts in Saudi Arabia who represent diverse backgrounds to explore the issues and factors related to zakat governance-compliance relationship. The findings of the interviews’ analysis suggested several issues that likely affect zakat payers’ compliance in the Saudi context. These issues included the lack of control mechanisms that guarantee zakat payers’ compliance, the perceived image of the GAZT role in relation to zakat, the lack of trust, and issues affecting the perceived procedural fairness. In addition, the analysis of the qualitative interviews was used to develop a framework that explains how to improve zakat compliance through good governance. This study contributes to the literature by investigating governance issues and challenges to improving zakat payers’ compliance. Also, it provides practical implications for zakat administrators, especially in Saudi Arabia, to address these issues and improve the effectiveness of the zakat authority.

Keywords: zakat institutions, governance, Saudi Arabia, zakat payment compliance

INTRODUCTION prosperity and development of Muslim societies. Several reports suggest that Zakat is a monetary, religious duty zakat was effective in eradicating imposed on Muslims whose wealth is poverty in certain times. For instance, entitled to zakat payment according to during the period of Umar bin Al- shariah principles (Al-Qaradawi, 2002). Khattab (13-22H) and Umar bin Abdul The importance of zakat is manifested Aziz (99-101H), it was reported that through its ranking among the five zakat officers could not find needy pillars of Islam and its sizable socio- recipients in some regions (Al-omar, economic impact within the Muslim 1996; Al-Qaradawi, 2002). These communities. Zakat is intended to examples are evidence that zakat can be provide a fair redistribution of wealth, a powerful and effective mechanism in aiming to alleviate poverty and reduce combating poverty and income the socio-economic gaps. Zakat in the inequality, especially if appropriately early history of Islam, had played a managed. crucial role in the socio-economic 24 International Journal of Zakat Vol. 4(2) 2019

Despite the enormous impact of estimating that about 20% of Saudis live zakat in the past, it is believed that the under the poverty line (S. AlDamigh, role of zakat has been insignificant in 2014). Another indication of the extent contemporary Muslim countries. of poverty can be seen in the numbers of Evidently, many Muslim countries welfare programs recipients. According suffer from widespread poverty and to the latest official report, there are increasing income inequality. Many 1,222,411 citizens registered in the scholars assert that zakat has not been Social Security Agency under the allowed to fulfil its potential role within Ministry of Labour and Social the economic policies of current Muslim Development (Saudi Ministry of Labour countries (Al-Qaradawi, 2002; Shaikh, & Social Services, 2017). This number 2016; Shihata, 2006). The absence of represents about 16% of the Saudi formal and regulated zakat institutions in population, excluding the non-Saudi the majority of Muslim countries are citizens. evidence of their negligence to the role The rising poverty and increasing of zakat. However, a few Muslim cost of living in the Kingdom have raised countries have established zakat the public concerns over the regulations and institutions for managing effectiveness of the zakat authority in zakat, such as Saudi Arabia, Sudan, combating poverty issues. Such Malaysia, and Pakistan. Nonetheless, it concerns have frequently been voiced, is believed they are facing significant especially by zakat payers who are challenges with ensuring zakat payment legally obligated to pay their zakat compliance and improving their through the General Authority of Zakat effectiveness (Guermat, Tucker, & Al- and Tax (GAZT), which is the official Utaibi, 2003; Saad & Haniffa, 2014; zakat collection body in Saudi Arabia. Shirazi & Amin, 2006). Moreover, zakat payment compliance is Although Saudi Arabia is seen as deemed to be a significant challenge an immensely wealthy and resourceful facing GAZT. The lack of zakat payers’ country, poverty is said to exist on an compliance is evident based on recent increasing scale over the years. Despite statistics published by the GAZT which the lack of official statistics concerning reported the numbers of submitted zakat poverty in Saudi Arabia, several reports statements by business owners who have indicated the significant magnitude complied with zakat rules in the last two of poverty that exists in the Kingdom. years in comparison with the total For example, S. AlDamigh (2014) registered businesses subject to zakat mentions that the Gulf oil states are laws (see figure 1). Furthermore, hardly distinguished between the rest of previous studies estimating zakat the Arab countries in the Human Poverty potential could indicate to the significant Index (HPI). According to statistics from zakat gap in Saudi Arabia between the the human development reports and formally collected zakat proceeds other social indicators, Saudi Arabia has through the GAZT and the estimated a poverty range between 10 – 20%. zakat potential (see Farhan, 2008; Moreover, there are non-official reports Shaikh, 2016, Kahf 1989).

Governance of Formal Zakat Institution in Saudi Arabia; Issues and….. 25

800.000 678.565 600.000 356.181 340.890 400.000 190.356 200.000 0 2016 2017 No. of submitted zakat statements No. of businesses

Figure 1. Level of Zakat Non-Compliance Issues in the Last Two Years

Source: statistics were retrieved from gazt.gov.sa

Despite the early establishment compliance with the regulations and of the formal zakat institution in Saudi objectives of the entity. Arabia, there has been limited literature There are several studies that addressing the issues and challenges have discussed governance of zakat facing the zakat authority. However, few institutions in several contexts, such as previous studies have suggested a the relationship between governance and significant extent of compliance issues performance (Fadilah, 2013); and zakat evasion cases in the GAZT governance and efficiency (Abd Wahab context (AlSaad, 2013; Al-Utaibi et al., & Abdul Rahman, 2011); and 2003). Specifically, Al-Saad’s study governance and zakat payers' trust (2013) concerning zakat evasion in the (Abioye et al., 2013). However, the GAZT context suggested that the lack of current study employs a qualitative trust was found to be a significant factor approach to investigate the issues leading to zakat evasion. In addition, it pertaining to the governance of the Saudi was mentioned that the lack of Zakat Authority, the GAZT, and how to transparency of the GAZT regarding the improve zakat payers' compliance distributions process triggered zakat through good governance practices. payers’ concerns regarding the Accordingly, the rest of the paper is appropriate treatment of zakat fund. The structured as follows: section two issue of trust has also been mentioned in provides a background to the Saudi zakat Al-Utaibi et al. study (2003), which system. Section three discusses the referred to the absence of shariah methodology employed in collecting and supervisory as a cause of concerns for analysing the data in this study. Section zakat payers. Accordingly, such issues Four discusses the issues pertaining to could be linked to the governance the governance of the GAZT based on practices of the GAZT, which this study the interviews’ analysis. Section five attempted to investigate. The term elaborates on how to improve zakat governance can be defined as “the compliance by implementing good arrangements put in place to ensure that governance practices. It also presents the the intended outcomes for stakeholders developed framework that explains the are defined and achieved” ((IFAC) & influence of governance practices of (CIPFA), 2014). The process of formal zakat institutions on zakat payers’ governance includes making and compliance. Section six concludes the implementing decisions, setting paper and provides suggestions for strategies, and giving directions in future studies. 26 International Journal of Zakat Vol. 4(2) 2019

BACKGROUND ON THE SAUDI Ministry of Social Affairs. The SSA is ZAKAT SYSTEM the official body handling the distribution of zakat proceeds beside the The Kingdom of Saudi Arabia is an funds allocated from the public treasury Islamic country that derives its laws and aiming to provide financial assistance to legislations from the Quran and the needy categories of the Saudi citizens tradition of the Prophet (PUBH) Thus, the mandatory collection of according to its Basic Law, which is zakat through the formal zakat authority, regarded as the constitution. Hence, the the GAZT, applies only on business imposition of zakat has long been entities possessing commercial records articulated in its Basic Law, authorising and permitted to operate in Saudi Arabia. the Saudi government to collect and With regard to the other forms of wealth, distribute zakat for the entitled there is no official channel to manage the beneficiaries (The Saudi Basic Law, collection of zakat, such as personal Article 21). Moreover, AlLami (2015) bank accounts and other non- claims that zakat is regarded as a form of commercial assets. However, zakat on taxation since the Saudi Basic Law does agricultural produce and livestock is not accommodate other ad-hoc taxes as collected by ad hoc committees the case with zakat. As a matter of fact, appointed by the Ministry of Finance in the Saudi Basic Law restricts the coordination with other government government from imposing taxes except agencies (Jamjoom, 1990). when needed and on a fair basis (The The recent change to the GAZT, Saudi Basic Law, 1422, Article 20). from a sub-department under the Accordingly, the Department of Zakat Ministry of Finance into an independent and Income Tax (DZIT), currently the authority that took effect in April 2017 GAZT, was established in 1951 as the has brought new structural changes official body to handle the collection of within the GAZT governance. This zakat. Also, the first Zakat Law was administrative change was also followed issued in the same year, setting up the by new zakat regulations which gave the regulations and role of the DZIT. GAZT legal and financial independence According to the GAZT regulations, the from the Ministry of Finance. Moreover, main objectives of the GAZT are to the new regulations have brought new calculate and collect zakat on business governance components in the GAZT inventory from Saudi companies and organisational structure, such as the individuals operating in the Kingdom. In Board of Directors and the Shariah addition, the GAZT is tasked with Committee. The Board of the GAZT is levying taxes from non-Saudi chaired by the Finance Minister and businesses, besides the recently comprise of representatives of relevant introduced Value Added Tax (VAT). ministries and governmental agencies. However, the distribution of zakat is The board includes representatives from carried out by another agency, the Social Ministries of Finance, Commerce and Security Agency (SSA), under the Investment, Economy and Planning; the Ministry of Social Affairs. Specifically, Central Bank of Saudi Arabia (SAMA); the collected zakat proceeds by the and the Capital Market Authority GAZT are regularly transferred to a (CMA); and two experienced and special account at the Saudi Central knowledgeable personals appointed by Bank SAMA, which, then, transferred to the Ministerial Council based on the the Social Security Agency (SSA) of the Board Chairman’s recommendation. The Governance of Formal Zakat Institution in Saudi Arabia; Issues and….. 27

role of the board mainly revolves around The second new component in decision making and supervision over the GAZT organisational structure is the GAZT progress. Particularly, the establishing a Shariah committee which board approves policies, strategic plans, consists of five members who shall be internal regulations and structure, taxes experts in the fields of Islamic treaties with international parties, annual jurisprudence, zakat accounting, and budget, and financial reports. Also, the law. The role of Shariah committee is to board may propose regulatory bills, review proposed regulations and bill amendments on current laws, appoint drafts, tackle issues related to the internal and external auditors, and accept collection of zakat, conducting research gifts, donations, grants, Waqf or on zakat and other tasks requested by the endowments in accordance with the board (GAZT regulation, 2017). relevant regulations (GAZT regulation, 2017)

SAR40.000 SAR33.740 SAR35.000 SAR30.000 SAR27.015 SAR25.291 SAR23.968 SAR22.344 SAR25.000 SAR21.642 SAR20.474 SAR20.000 SAR16.523 SAR14.137 SAR15.259 SAR15.431 SAR15.000 SAR12.731 SAR10.000 SAR5.000 SAR0 1434-2013 1435-2014 1436-2015 1437-2016 1438-2017 1439-2018

Zakat collection by GAZT Distributed subsidies by SSA

Note: numbers shown are in millions SAR

Figure 2. Comparison between Zakat Collection by GAZT and Distributed Welfare Subsidies by SSA

Sources: statistics were retreived from GAZT.gov.sa & the annual report of SSA

Although the Saudi government need to explore issues affecting zakat has imposed mandatory zakat collection payment compliance and how it is by formal zakat authority since 1951, the influenced by governance practices of collected zakat by the GAZT is said to be zakat authority, which the main objective insufficient. This low zakat proceed is of this paper. The next section discusses partially due to the lack of zakat payers’ the methodology used to gather the data compliance as reported by the GAZT for this study. (see figure 1). In addition, zakat revenues have been far from satisfying the of the needs of welfare recipients from Saudi METHODOLOGY families receiving funds from the Saudi Social Security Agency (see figure 2). This study has employed a qualitative Besides, the lack of relevant literature approach to achieve its objectives. The and the uniqueness of the legal system of lack of literature and the uniqueness of zakat in Saudi Arabia emphasise the the legal system of zakat in Saudi Arabia 28 International Journal of Zakat Vol. 4(2) 2019

required a qualitative exploration of the determined based on the attainment of issues about the governance practices of saturation. The data saturation is the GAZT. In addition, the analysis of achieved after ensuring that the obtained the qualitative data was used to develop data can sufficiently explain the research a framework that explains the influence phenomenon (Creswell & Plano Clark, of governance on zakat payers’ 2007). Moreover, the selection of the compliance in the Saudi context. interviewees was based on their Accordingly, the collection of availability and willingness to data was done through in-depth participate and communicate their interviews with experts selected based experience and opinions. In addition, the on the purposive sampling technique. diversity of experts’ backgrounds was This technique is widely used in considered during the selection of the qualitative research as the most efficient participants in order to obtain multiple way to obtain information based on the perspectives regarding the investigated participants’ experience and knowledge issues. Overall, the number of (Creswell & Plano Clark, 2007). participants interviewed in this study Moreover, expert sampling is useful was 21 experts. This sample size was when there is a lack of literature so that believed to suffice the concept of experts can provide practical ways to saturation as the researcher felt there was investigate new areas of research no significant information that (Etikan, Musa, & Alkassim, 2016). contributes to the discussion after the With regard to the sample size, 18th interviews. Table 1 presents the the number of interviewees was participants’ profile in the study.

Table 1. List of Participants' Profiles

No. Areas of Expertise Affiliation Experience

Ex1 Legal consultant, former head of Al-Riyadh branch GAZT 14 years Ex2 Legal consultant GAZT 13 years Ex3 Director-General of Senior zakat and taxpayers GAZT 17 years Ex4 Director-General of Assessment and Inspection Department GAZT 15 years Ex5 Academician, the chairman of Zakat Accounting Studies, a GAZT KAU 14 years member of the GAZT objection committees Ex6 Economist, a member of the GAZT objection committees GAZT IRTI- 16 years IDB Ex7 Academician, a researcher at the Zakat Accounting Studies GAZT KAU 18 years Chair, a member of the GAZT objection committees Ex8 Academician, zakat and tax accounting expert and trainer IPA 11 years Ex9 Academician, a researcher at Zakat Accounting Studies Chair KAU 18 years Ex10 Accountant, Researcher in zakat accounting UQU 8 years Ex11 Legal and shariah consultant, a researcher in zakat studies IUM 7 years Ex12 Deputy dean of the Islamic Economics Institute, a former KAU 12 years lawyer and legal consultant Ex13 Economic consultant, Islamic Economics expert Business 18 years owner Ex14 Academician, Islamic Economics researcher IMBSU 17 years Ex15 Academician, Islamic Economics researcher KAU 16 years Governance of Formal Zakat Institution in Saudi Arabia; Issues and….. 29

No. Areas of Expertise Affiliation Experience

Ex16 Dean of The Islamic Economics Institute, Islamic Economics KAU 21 years expert Ex17 Islamic Economics Expert, Economic and Financial Business 13 years consultant owner Ex18 Academician, a researcher in zakat and waqf studies IUM 6 years Ex19 Islamic Economics researcher Business 8 years owner Ex20 Director of Zakat research Centre in Riyadh ZCR 5 years Ex21 Islamic Economics Expert, Lawyer and legal consultant Business 16 years owner

The interview questions were GAZT governance that are believed to developed based on the objectives of the affect the level of zakat payment study, which is to explore issues related compliance. These issues can be grouped to governance practices of the GAZT, into four factors based on the following and how to improve zakat payers’ order: compliance through implementing good 1. The lack of control mechanisms governance practices. Next, the that guarantee zakat payers’ interviews’ questions were validated on compliance. their relevance, rigour, and clarity 2. The perceived image of the GAZT through a peer-review process. role in relation to zakat. Following the questions’ validation 3. The lack of trust. process, the researcher translated the 4. Issues affecting the perceived developed questions into the Arabic fairness of the GAZT. language, which was reviewed by an The first factor concerns the lack expert in both English and Arabic of control mechanisms that guarantee languages. Accordingly, nine questions zakat payers’ compliance. It was were developed which address the zakat suggested that this factor leads to gap in the Saudi context, the issues increasing the numbers of zakat evasion affecting zakat payment compliance, and cases committed by either individuals or how to improve zakat compliance agents of zakat accountants on behalf of through governance mechanisms. their clients. For example, zakat evasion Subsequently, the analysis of the occurs in many forms, such as presenting qualitative interviews followed the false or altered business records and thematic analysis approach, which is a concealing business activities in order to qualitative descriptive methodology for reduce the amount of zakat due. In identifying patterns (themes) within data addition, the lack of control mechanisms and reporting the findings (Braun & is believed to allow some zakat payers Clarke, 2006). The following sections not to follow up with the GAZT discuss the findings of the data analysis. regarding the payment of their business. This lack of control could be attributed to the insufficient number of qualified ISSUES PERTAINING TO THE zakat accountants working with the GOVERNANCE OF THE GAZT GAZT to examine zakat statements provided by zakat payers. Besides, the The analysis of the interviews data GAZT over-reliance on the discretionary suggested several issues pertaining to assessment of zakat, particularly for 30 International Journal of Zakat Vol. 4(2) 2019

small and medium businesses, can have collecting taxes from foreign a negative impact on zakat payers’ commercial entities and the recently compliance. For example, the introduced Value Added Tax VAT, discretionary assessment method for besides collecting zakat from Saudi calculating zakat is believed to allow business owners and companies. This some zakat payers to hide their business dual role can have adverse effects on the records in order to pay as minimum as perceived image of the GAZT by possible of zakat to the GAZT. regarding it as a tax authority more than Although this factor has received a zakat institution. Moreover, the limited limited attention in the literature, there role of the GAZT on the collection of were few studies indicating its impact on zakat might reinforce such negative zakat compliance in the Saudi context. perceptions, which also does not reflect For example, AlSaad, (2013) mentioned the traditional role of zakat institutions. the lack of penalties and enforcement Furthermore, it was mentioned that there mechanisms as one of the causes for were other factors that could contribute zakat evasion. Another recent study by to reinforcing an unfavourable image, Alosaimi (2018) has examined the such as the lack of spirituality in the influence of two related concepts, GAZT operations and collection process namely detection risk and penalty and the absence of shariah supervisory magnitude, on zakat compliance committees in its administrative behaviours. While the relationship structure. Hence, such negative between the detection risk and zakat perception is believed to adversely affect compliance intention showed an zakat payers’ compliance with zakat insignificant relationship, the penalty rules and procedures imposed by the magnitude was found to have a GAZT. significant and positive relationship. The third factor relates to the lack Hence, it was suggested that an increase of trust, which could be attributed to in the perceived penalty magnitude could several issues that trigger issues of trust, significantly increase zakat compliance including the lack of transparency and intention. Alosaimi’s (2018) justification disclosure about the management of to the result concerning the insignificant zakat fund. In addition, several relationship between detection risk and interviewees voiced similar concerns zakat compliance intention was similar over the distribution process, which is to the above discussion regarding the done based on meeting certain criteria overuse of the discretionary assessment for registering eligible recipients by the method by the GAZT staff. Such a SCA. These criteria may not apply to the method can reduce the effect of detection conditions of eligibility for receiving risk as zakat avoiders would be subject zakat money according to shariah to it once the GAZT required them to pay principles. However, the GAZT has no zakat due. control over the distribution process due The second factor concerns the to the separation between the collection perceived image of the GAZT in relation and distribution functions. Besides, the to zakat collection. Although there are SSA source of funding is not limited to various issues that could shape zakat the collected zakat proceed as it is payers’ perception toward the GAZT, combined with additional fund allocated the concern is mostly triggered by its from the public revenue of the Saudi dual role in collecting both tax and zakat. government. Specifically, the GAZT is tasked with Governance of Formal Zakat Institution in Saudi Arabia; Issues and….. 31

Previous studies have mentioned procedural fairness in the GAZT context. the issue of trust in the GAZT context as For example, AlSaad (2013) mentioned one of the causes of zakat evasions (Al- that the lack of clarity regarding the Malafikh, 2014; AlSaad, 2013). Thus, criteria used for zakat assessment by the this finding from the qualitative data GAZT contributes to zakat non- analysis is in line with the previous compliance issues. Similarly, Asiri & studies’ findings regarding the existence Yamani (2017) mentioned that the of the trust issue in the GAZT context. different assessment methodologies and Moreover, the influence of trust on calculation of zakat from certain assets compliance behaviours has been were cited among the leading causes of documented in various areas of the disputes between zakat payers and the literature, including tax compliance GAZT. Such issues can be linked to the (Murphy, 2004), and policing and law- perceived fairness of the process and abiding behaviours (Braithwaite & procedures followed by the GAZT, Makkai, 1994). However, although few which should be based on established studies have examined the influence of rules that take zakat stakeholders’ trust on zakat compliance behaviours, no interest into accounts. significant relationship has yet been found (Ahmad, Nor, & Daud, 2011). The last factor discussed in the IMPROVING ZAKAT COMPLIANCE interviews concerns the perceived THROUGH GOOD GOVERNANCE fairness of zakat assessment and (DEVELOPING A FRAMEWORK) collection procedures imposed by the GAZT. There are several issues that This section discusses the remaining could cause disputes over the methods of questions that were asked in the assessing zakat due by the GAZT. Such interviews regarding how to improve issues can be attributed to the differences zakat compliance through good of juristic views regarding the governance. The themes discussed in the calculation of zakat from certain assets, remaining questions were based on the such as loans and assets under lease- review of the literature with probing purchase contracts. Moreover, the lack questions that provide room for further of flexibility in demanding the full discussions of factors and aspects that payment of zakat due by the GAZT were not included in the main themes. At might discourage some zakat payers’ the end of the analysis, four themes were from disclosing all assets subject to zakat identified, namely: 1- the administration assessment. For example, many zakat of zakat institution; 2- the performance payers wishing to distribute their zakat of zakat institution; 3- the transparency directly on needy relatives or neighbours and disclosure practice of zakat might resort to seeking ways that institutions; 4- the fairness of zakat minimise their due zakat. Hence, the lack regulations and procedures. of flexibility could be related to the Accordingly, a positive perception of the perceived fairness of the GAZT because above-mentioned dimensions would the wishes and interests of zakat payers likely boost zakat payers' confidence should be respected and protected, towards Zakat Authority and encourage besides protecting the interest of zakat greater compliance with zakat beneficiaries. regulations. The following sub-sections There has been limited literature provide further discussions of those four that discusses issues related to dimensions. Also, a summary of the 32 International Journal of Zakat Vol. 4(2) 2019

discussed themes and their related payers. The organisational mission aspects are presented in figure (3) at the and objective should also be in- end of this section. line with the Shariah objectives of zakat, established in the Islamic 1. The Administration of Zakat jurisprudence and the early Authority institution of zakat. The administration department is the b. Appointing reputable and backbone of any organisation which competent board members and top facilitates sound running of its managers: the integrity and operations. The role of the competence of the leaders of the administration is seen as the most zakat Authority are crucial to influential factor that shapes the protect zakat fund from being organisational culture and dynamics. It abused or mismanaged. The board also has a fundamental role in ensuring should consist of members with the alignment of the direction and the diverse skills and academic commitment to the values and vision that backgrounds, which enables them the organisation tries to accomplish to recognise issues that the zakat (Drath et al., 2008). In this context, the authority encounters. It is also administration of zakat institution refers suggested that the board should to the board and the top-level include members representing the management in charge of formulating interest of zakat stakeholders, such policies, setting objectives, allocating as zakat payers and zakat resources and supervising the recipients besides other relevant organisation’s activities. Accordingly, stakeholders. zakat administration is responsible for c. Ensuring sound shariah building and maintaining a positive governance over the collection and image which reflects their accountability distribution process: the existence to zakat stakeholders. Also, it has a of a shariah body or department significant role in enacting the that observe and supervise the organisational vision and ensuring the management of zakat fund would implementation of strategies to achieve likely reinforce zakat payers’ zakat objectives. Therefore, this confidence towards the zakat dimension has a crucial influence on authority and encourage greater zakat payment compliance by creating zakat compliance. positive perception towards the d. Building the organisational credibility and competence of the zakat capacity to manage the collection authority in managing zakat affairs. and distribution of zakat The analysis of the interviews efficiently and effectively: The with zakat experts emphasised several administration of zakat should aspects that are crucial to creating a demonstrate accountability by positive perception towards the zakat building the capacity to manage administration. Those aspects include: the collection and distribution of a. Setting up a clear mission and zakat fund. objectives of the Zakat Authority: it is crucial that the organisational 2. The Performance of Zakat Authority mission and objectives of Zakat Authority are well-known and The second dimension that could respected by the public and zakat influence zakat payment compliance concerns the performance of zakat Governance of Formal Zakat Institution in Saudi Arabia; Issues and….. 33

authority. However, assessing the c. Effective use of technology: The performance of zakat institutions is advantages of adopting technology different from the performance of the and online system for zakat private and for-profit sector, which relies collection in the GAZT context are heavily on financial indicators. evident. It can be observed that the Evidently, the goals for performance use of technology has significantly measurement of zakat institutions is facilitated the efficiency of the similar to charity organisations and the collection process. The current IT public service sector. According to Dunn system of the GAZT allows zakat and Mathew (2001), the performance payers to submit their business assessment in charities aims to evaluate: statements and view zakat 1- meeting the expectations and standers assessment, then pay it online set by funders or donors; 2- providing rather than following up with the satisfactory services to stakeholders; 3- nearest branch. This easy and enhancing staff performance through convenient process has brought a learning and development; 4- positive impact on zakat proceeds demonstrating the management collected by the GAZT as it accountability and transparency to facilitates the zakat collection stakeholders (as cited in Yang, Brennan, process. In addition, this online & Wilkinson, 2014). The performance system serves as a guarantee dimension in this framework covers mechanism for ensuring the several aspects that were mentioned by compliance of zakat payers with the interviewees, which include the zakat rules by linking other following: governmental services, so that a. Improving the efficiency of zakat zakat avoiders may not receive collection and distribution other services unless they pay their processes: The need to improve the zakat dues. efficiency of the collection and d. Enhancing the skills and distribution of zakat is a knowledge of zakat staff: The continuous challenge. Issues quality of zakat staff can shape the affecting the perceived efficiency perception of zakat payers can have a significant impact on regarding how they are being zakat payers’ confidence towards treated and served and the level of zakat authority and discourages knowledge and skills of zakat zakat compliance behaviours. assessors in performing their jobs. b. Spreading zakat awareness and Therefore, it is of prime promoting zakat authority role in importance that the zakat managing zakat: Effective administration pays primary communication between the attention to recruiting zakat staff administration of zakat and the and equip them with the skills and public and zakat payers is crucial training needed for the job. for the success of zakat e. Providing good service quality and institutions. Good communication care for zakat stakeholders: The with the public should increase quality of services that zakat zakat awareness and convey the payers receive when dealing with management’s commitment and zakat authority can also influence competence in managing zakat zakat compliance. It is suggested affairs. that zakat authority could employ 34 International Journal of Zakat Vol. 4(2) 2019

the use of indicators that evaluate followed during zakat assessment, zakat payers’ satisfaction with the including all assets subject to zakat services provided and make assessment, and exempted assets improvements accordingly. and expenses. Such clarity of zakat laws should be fair and well- 3. The Transparency and Disclosure of established from zakat Zakat Authority jurisprudence in order to be The third dimension generated from the respected and followed by zakat interviews’ analysis relates to payers. transparency and disclosure practices of b. Following a transparent process in the zakat authority. Accordingly, the the collection and distribution of transparency and disclosure of zakat zakat: The transparency of zakat institutions are likely the most crucial collection and distribution process factor that significantly influences the provides assurance to zakat trust and compliance of zakat payers. A stakeholders regarding the proper high level of transparency and disclosure handling of zakat fund until its is believed to encourage the social and delivery to the rightful ethical incentives of zakat payers to pay beneficiaries, whose well-being their zakat to a particular zakat and dignities are preserved institution. Although transparency and through zakat. A transparent disclosure of information are two process should define the role of different concepts, they are necessarily zakat institution as an intermediary connected and reflected on the outcome between zakat payers and zakat of each other. Specifically, disclosure of beneficiaries, which is achieved by information is the primary tool that the disclosure of sufficient regulators ensure the transparency of information. corporates’ managements to c. The transparency of the stakeholders and investors who, then, administration’s financial could make informed decisions. resources and budget: Running the In the current context, the public management of zakat institutions and zakat payers perceive the level of requires considerable resources transparency of zakat institutions which accommodates the through their disclosure practices. Thus, operations’ expenses and the the discussion of this dimension salaries of the managers and highlighted several aspects related to employees. It is established that transparency and disclosure, that are zakat workers are allowed to have believed to be significant to gain the trust their share from zakat proceed and compliance of zakat payers. Those according to the Quranic verse aspects can be summarised as follows: stipulating the beneficiaries of a. Identifying the rights and zakat (At-Taubah, 60), which responsibilities of zakat indicates that zakat management’s stakeholders within zakat laws and expenses can also be covered from regulations: The clarity of zakat the collected zakat. Thus, zakat laws and regulations are crucial for administrations should be zakat stakeholders to understand transparent in disclosing their their rights and responsibilities and share from zakat and their sources obey the law. For example, zakat of funding. The transparency laws must identify the rules should reveal the remunerations Governance of Formal Zakat Institution in Saudi Arabia; Issues and….. 35

and salaries of zakat dimension with the interviewees administrators and staff, which emphasised several aspects that related demonstrate their accountability to to zakat assessment, collection and the public. distribution procedures, which can be d. Providing periodic disclosure of summarised as follow: the collected and distributed zakat: a. Following fair Zakat assessment Disclosure of information is an and collection procedures: The effective way for zakat institutions perceived fairness of the to demonstrate the transparency assessment and collection and accountability of the procedures can be a significant management to zakat stakeholders determinant for zakat payers’ and the public. Thus, zakat compliance. The variations of authority should provide sufficient juristic views regarding the information on the collected zakat methodologies of zakat assessment fund, including statistics on zakat present a challenge to zakat sources, whether from companies authority in implementing a or individuals, industry types and methodology that is fair to zakat region. Also, the details of the stakeholders. Finding such distributed zakat should include methodology requires engaging the impact on society and zakat zakat stakeholders and shariah recipients. Such information is experts to agree on the appropriate crucial to show the socio- rules followed in the assessment economic role of zakat to the and collection of zakat in public, which provides incentives accordance with shariah for zakat payers to comply with principles. zakat laws and rules. b. Providing fair mechanisms that e. Publishing audited periodic reports ensure zakat payers’ compliance: on zakat authority’s activities: It is established in zakat literature Zakat authority should avail to the that the public authority can public periodic reports and mandate the payment of zakat publications that show their form wealth owners. Accordingly, activities and provide detailed ensuring zakat payers’ compliance information about the management requires that the zakat authority of zakat. In addition, the annual might use penalties and sanctions report should be verified by on those who refuse to pay zakat. internal and external auditors in However, the procedures for order to reinforce good enforcing the collection of zakat governance practices within the must be fair and effective which zakat authority. provide incentives for compliant zakat payers in one hand, and the 4. Fairness of the Regulations and use of power and penalties on the Procedures Followed by Zakat other hand. Authority c. Following a fair zakat distribution The fairness of zakat regulations and process: fairness should be applied administrative procedures is crucial for when delivering zakat proceeds to acquiring the trust of zakat payers and the rightful recipients by encouraging compliance with zakat protecting zakat fund from being regulations. The discussion of this 36 International Journal of Zakat Vol. 4(2) 2019

misappropriated or abused during the distribution of zakat.

Figure 3. A summary of the Developed Framework for Improving Zakat Compliance

Source: Prepared by Author

CONCLUSION Accordingly, the issues raised by the interviewed experts can be grouped Saudi Arabia has a long history of into four factors. The first factor related implementing zakat through formal to the lack of legal mechanisms that bodies that manage the collection and guarantee zakat payers’ compliance or distribution of zakat. Yet, there has been the limitations of zakat regulations to limited literature that addresses the Saudi enforce zakat collection from non- zakat system and the issues and compliant business owners. The second challenges that could limit achieving its factor related to the perceived image of optimum potential. Thus, this study the GAZT as a zakat institution, which is intended to fill this gap by employing largely affected by its dual role in qualitative interviews of 21 experts with collecting both zakat and taxes. The third a high level of knowledge and factor related to the lack of trust, which experience on the issues addressed in could be attributed to several issues. this study. The interviews’ data were Such issues include concerns over the analysed to identify major issues followed distribution procedure and the pertaining to the governance of zakat absence of shariah supervision over the authority in Saudi Arabia. In addition, collection and distribution processes. this paper has developed a framework to The fourth factor concerns the perceived improve zakat compliance by fairness of zakat assessment and implementing good governance collection procedure followed by the practices. GAZT. This factor includes issues affecting the perceived fairness, such as Governance of Formal Zakat Institution in Saudi Arabia; Issues and….. 37

calculating zakat from certain assets that Abioye, M. M. (2013). Exploratory are disputed among shariah scholars, e.g. Study of Nigerian Zakat loans and leased-purchased assets. Institutions and Role of Subsequently, the second part of this Governance on Zakat Payers’ paper discussed the development of a Trust. IIUM. framework that explains how to improve Ahmad, S., Nor, N. G., & Daud, Z. zakat compliance through good (2011). Tax-Based Modeling of governance practices. The developed Zakat Compliance. Jurnal framework includes four dimensions that Ekonomi Malaysia, 45, 101–108. تطبيقات االحتساب .(were derived from the literature and the Al-Malafikh, M. (2014 في مجال الزكاة لدى مصلحة الزكاة والدخل .analysis of interviews’ data في المملكة العربية السعودية. جامعة االمام In conclusion, this paper .محمد بن سعود االسالمية provides an in-depth investigation into إدارة مؤسسة الزكاة .(governance-related issues and Al-omar, F. A. (1996 في المجتمعات المعاصرة: دراسة تحليلية governance-compliance relationship in .مقارنة مع بيت الزكاة في دولة الكويت ,the case of the Saudi zakat authority GAZT. Although the scope was limited Kuwait: ZatuAlssalasil to the Saudi context, the findings should publication- Kuwait. provide interesting insights to Al-Qaradawi, Y. (2002). Fiqh Al-Zakah policymakers and zakat administrators 1. Jeddah, Saudi Arabia: Scientific on how to improve zakat payment Publishing Centre King Abdulaziz compliance through good governance University Jeddah, Saudi Arabia. خط الكفاية في المملكة .(practices. Future studies are encouraged AlDamigh, S. (2014 Riyadh-SA: King .العربية السعودية to empirically examine the generalizability of the developed Khalid Foundation. framework on actual zakat payers. AlLami, A. W. (2015). Principlizing Finally, improving zakat compliance and Islamic Zakat as A system of good governance of zakat institutions are Taxation. Brunel University, the two essential components for London. Retrieved from optimising the effectiveness of zakat and http://search.sdl.edu.sa/Viewer/De achieving its objectives within Muslim fault.aspx?ecode=RTpcRGlzc2Vy communities. dGF0aW9uc1Jvb3RcMjkwMjRc QWJkdWxsYWggVy4gQWxsY W1pIChTNTcyMykucGRmfDIw REFERENCE MTYxMDE2MDQyNDEz Alosaimi, M. H. (2018). Factor (IFAC), & (CIPFA). International Influencing Zakah on Business Framework: Good Governance in Compliance Behaviour among the Public Sector (2014). Sole Proprietors in Saudi Arabia. Abd Wahab, N., & Abdul Rahman, A. R. University Utara Malaysia. التهرب الزكوي في المملكة .(A framework to Analyse AlSaad, S. (2013 .(2011) العربية السعودية، أساليبه وصوره وأسبابه the Efficiency and Governance of King .وطرق عالجه: دراسة ميدانية Zakat Institutions. Journal of Islamic Accounting and Business Abdul Aziz University Journal of Research, 2(1), 43–62. Economics and Management, https://doi.org/10.1108/17590811 27(2), 3–106. Retrieved from 111129508 http://www.kantakji.com/media/1 75741/66394_37934.pdf 38 International Journal of Zakat Vol. 4(2) 2019

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Abdulsalam Ahmed Sawmar International Islamic University Malaysia (IIUM [email protected]

Mustafa Omar Mohammed International Islamic University Malaysia

40 International Journal of Zakat Vol. 4(2) 2019

International Journal of Zakat Vol. 4(2) 2019 page 41-72

Zakat Management Information System: E-Service Quality and Its Impact on Zakat Collection in Indonesia

Randi Swandaru The National Board of Zakat, Republic of Indonesia (BAZNAS)

ABSTRACT

The purpose of this study is to examine the impact and the electronic service quality of the national zakat management information system (SIMBA) on the national zakat collection. This paper uses a multiple regression analysis in its explorative attempt to illustrate the impact of SIMBA implementation on zakat collection in Indonesia. It shows that SIMBA is positive and significantly impact the national zakat collection as well as the human development index that is used as a proxy for the human resource management quality of zakat institutions. Nonetheless, the population is negative and significant to the zakat collection as endemic poverty and reluctance to pay zakat are indicated as the reasons. Moreover, this study has succeeded in adapting and conducting an e-service quality survey to zakat information system realm. All the tests prove that the instrument in this study has a high degree of reliability and validity. The results show that some of the demographic factors significantly impact the perceived performance of SIMBA. Multiple regression analysis that is conducted in this study shows that e-service quality dimension is positive and significant towards SIMBA’ overall quality, perceived value, and loyalty intention. This study contributes to the zakat literature, especially in the impact of the national zakat information system, which is pivotal in enhancing zakat collection and poverty alleviation program funded by zakat.

Keyword: BAZNAS, electronic service quality, management information system, SIMBA, zakat.

INTRODUCTION which will lead to reputational risk and systemic risk that may collapse the Despite its advancement, the growth of whole industry (Qattan, 2006) Islamic banking and finance (IBF) has Several studies such as Asutay derailed from its path towards becoming (2007a; 2007b; 2012) argue that it is an instrument for financialization and paramount to return to zakat and waqf failed to attain the social and the that can deliver developmentalism that developmental goals as were expected. was expected from the IBF. Zakat, ElGamal (2006) argues that IBF sadaqat, and waqf that have development that replicating the endogenously embedded in Muslim conventional counterpart makes this society are considered as a solution to peculiar banking model less efficient in inequality and poverty problem. These providing the same product. Current IBF institutions can mobilize Islamic model is also not significantly different religious fund among the society and in risk feature according to Abedifar et. help the less fortunate through social al., (2015), and the reverse engineering security scheme and economic approach to create an Islamic product empowerment program (Chapra, 2008). may cause sharia non-compliance risk The nature of this model that promotes 42 International Journal of Zakat Vol. 4(2) 2019 social justice and welfare inclusion bureaucracy, and geographical challenge makes it more effective than are some hindrances on the effective use conventional finance that has excluded of zakat for poverty alleviation. On the the poor through debt-based operation other side, a study by White (1952) (Obaidullah & Khan, 2007). shows that management information Empirical findings by Shirazi & system can increase public trust to non- Amin (2009) shows that OIC countries profit organization i.e. zakat institutions can mobilize zakat fund ranging from 1.8 and safeguard the ethics within the percent to 4.3 percent of their GDP organization by providing transparency, which is very potential to combat disclosure, oversight, and conflict of poverty that endemic in Muslim interest avoidance. In addition, Ahmed countries. Moreover, a meticulous study (2004) argues that the pivotal aspect of indicates that about 20 OIC countries can enlarging the contribution of the zakat solve extreme poverty by solely and waqf institutions on poverty mobilizing and utilizing zakat funds alleviation is knowledge development from internal sources (Mohieldin et. al., and information assimilation. Therefore, 2012). Nonetheless, the current situation this particular study is aimed to scrutiny indicates that there are a lot of things to the impact of the national zakat do to achieve the full potential of zakat information management system in Muslim countries. In Indonesia, the (SIMBA) on the Indonesian zakat largest Muslim country, although the management system and operation zakat collection increases over the years, it is still stuck at 1.68 percent of its total potential (BAZNAS, 2017) AIMS, OBJECTIVES AND Having a limited amount of RESEARCH QUESTIONS mobilized zakat, current literature on zakat can be categorized into three This paper aims to evaluate the groups. The first one is the literature that performance of SIMBA by examining its aims to optimize the utilization of zakat impact on zakat collection. In addition, by looking for a zakat disbursement this study aims at examining the model that can significantly reduce electronic service quality dimensions of poverty in Muslim countries. The second SIMBA as perceived by the operators to group is literature that trying to increase capture the gap between the expected the actual collection by looking for and the real service quality of this determinants that significantly induce system. Muslim to pay zakat. The last group, In fulfilling the aims, the which is more scarce than the other two, following objectives are developed: is literature that scrutiny the zakat 1. Developing an advanced management, operation, and understanding of the zakat performance. management systems; Interestingly, the study in this 2. Assembling secondary data on field, especially on the zakat zakat transactions through management information system is BAZNAS and conducting a survey pivotal to effectively eradicate poverty with SIMBA operators on their and boost collection. For instance, a perceptions towards the system; study by Othman & Noor (2012) in 3. Examining the correlation between Malaysia finds that inaccurate database the implementation of SIMBA and of asnaf, under-identification of asnaf, the zakat collection in respective local BAZNAS offices; Zakat Management Information System: E-Service Quality and…. 43

4. Evaluating the performance of the (2009) show that OIC countries can national zakat information system mobilize zakat fund ranging from 1.8% using e-service quality. to 4.3% of their GDP in annual basis. In In line with identified aims and Pakistan, the total zakat collection is objectives, the following research estimated up to 7% of its GDP Shaikh (2014) whereby in Indonesia it is about questions are developed: 1. Has BAZNAS and SIMBA 3.4% of its GDP in 2010 Firdaus, et. al. improved the collection of zakat as (2012). Moreover, Sapingi, et. al. (2011) indicated in the total zakat conclude that educational background collection? positive and significantly correlated with 2. Has the SIMBA system fulfilled the intention to pay zakat. On the the expectations of the operators? contrary, lack of institutional support results in zakat ignorance (Ummulkhayr, et. al., 2017). Other than that, studies on LITERATURE REVIEW the zakat collection discuss fiqh related matters. Kahf (1989) extends Zakat Management System: A Qaradawi’s work on fiqh zakat by Worldwide Survey creating three zakat estimation approaches namely the traditional fiqh There is a large number of academic and position, Qaradawi’s view, and modified professional research on zakat that can Qardawi’s view by adding zakat on a be classified into three major categories. fixed asset at the premium of 2.5% of The following part provides a survey of their stock. such topical areas and points out the gap Differ from the two discussed in the literature that significantly be topic above, the third group, studies on fulfilled by this research. the zakat management system and its First, the literature on zakat as a performance are quite limited if not socioeconomic intervention. Most of the scarce. One can expect the reason is that studies in this group elaborate how zakat this particular type of study needs a can reduce poverty and inequalities with stronger involvement and attachment to evidence from a lot of Muslim countries operational activities of zakat in the (see, among others: Abdelbaki, 2013; sense of assembling primary data. Kasri, 2014; Ali & Hatta, 2014; Kareem Nonetheless, there are some studies that & Bankole, 2016). In addition, Huq scrutiny the performance of zakat (1993) elaborates how zakat not merely institutions such as Noor (2012) and addressing poverty but also sustain Embong, et. al. (2014) who use balance economic growth, while Kahf & Yafai scorecard for assessing the performance (2015) suggest that zakat that can give of the zakat institutions in Malaysia. significant relief to governmental budget Moreover, Wahab & Rahman (2012) in providing social assistance and measure the productivity growth of zakat security. Similarly, risk-sharing institutions in Malaysia using data contracts and zakat as part of the envelopment analysis. Using the same redistributive instrument in Islam can methodology, Hamzah & Krishnan induce financial inclusion (Iqbal & (2016) finds that excessive usage of staff Mirakhor, 2012). has caused inefficiency in the zakat Secondly, studies that elaborate institutions in Malaysia. Similarly, zakat estimation in Muslim countries and Rusydiana & Al-Farisi (2016) tells that its determinant factor. Shirazi & Amin high operational cost is the source of 44 International Journal of Zakat Vol. 4(2) 2019 inefficiency in zakat institutions in that MIS can ease NGO in data Indonesia. Wahab & Rahman (2013) documentation and analysis, emphasizes the importance of performance monitoring and strategic information and communication decision making. Moreover, MIS will technology as well as the computerized help NGO to increase credibility and zakat system to improve zakat accountability by presenting their institutions’ efficiency. activities to the public. It might also help Other than that, research on the in safeguarding the four pillars of ethics zakat management information system is in NGO, namely disclosure, an area that needs much further transparency, avoidance of conflict of development. This aligns with several interest, and oversight as elaborated by findings in some studies in which zakat (White, 1952) institutions do not successfully address Moreover, management the poverty and equality problem information system can ease the zakat (Mahamod, 2011; Embong & Nor, administrator to run the operation 2013). Inaccurate database of asnaf, efficiently as it can lower the cost of under-identification of asnaf, dissemination of information (O’Connor bureaucracy, and geographical challenge & Martinsons, 2006). In this regard, are some hindrances on the effective use management information system can of zakat for poverty alleviation (Othman reduce unnecessary cost by enlarging the & Noor, 2012) that can be resolved by usage of internet and online transaction optimizing the zakat management system. This is absolutely relevant to the information system. fact that the amount of zakat that can be This emphasizes the importance utilized to organize zakat is limited to of management information system one eight in accordance with Hanafi’s which is able to tackle the entire process ruling. Therefore, integrating of zakah giving, such as an information management information system to the system benefiting from the latest zakat operation is essential to enhance technology that can robustly conduct the zakat management system. such identification and ease the zakat management in modern time. This The Emergence and Development of identification is important both for SIMBA muzaki and mustahiq. For muzaki, the The current zakat act has several direct identification may be relevant for implications to the national zakat deducting or reducing the amount of tax management system. payment. On the distribution side, such i. First, it provides the legal and identification is important to avoid political assurance from the state redundant disbursement so that it can for every Moslem to perform zakat attain equitable and fair zakat under positive law. It also distribution. Such identification is also emphasizes the role of zakat in important to monitor the progress of national socio-economic zakat recipient and the effectiveness of development, especially in the zakat program. bringing public welfare and social Several studies also have justice (Constitutional Court of revealed the importance of management The Republic Indonesia, 2012). information system (MIS) in the non- ii. Secondly, it acknowledges equally profit organization (NGO) such as zakat the role of the state and civil institution. Dash & Mishra (2014) argue society in administering zakat. It Zakat Management Information System: E-Service Quality and…. 45

does not impose zakat to the database. Mustahik database Moslem or perceive it as state integration is one of the benefits of income, but put government a unified and integrated zakat budget to enhance the benefits of management system that can avoid zakat to the society. On the other redundant distribution, prevent hand, it recognises the role of civil inequality disbursement between society both in administering and regions, and become a baseline of supervising zakat activities. Nasar performance measurement or (2014) argues that zakat policymaking (Beik, 2014). This management in Indonesia is not aligns with Ahmed (2004) states considered as totalitarianism that the performance of zakat where the state is the only institution to combat poverty legitimate body to manage zakat hinges on the information and not also considered as secular exchange in which the zakat where the practice of zakat left institution can gain trust from the behind to the society without any customer and increase its support from the government; credibility. Lastly, Kustiawan (2014) and iii. It induces to the unified and Hafidhuddin et. al. (2015) articulates the integrated zakat management zakat act No.23/2011 into a house system whereby zakat institutions building block as illustrated in Figure 1. conduct their activities under a which is also adapted in the years standard regulation and integrate strategic planning of national zakat their report into an agreed platform management (BAZNAS, 2016a). to create a national report and

Figure 1. Zakat Management System Building Blocks

Source: BAZNAS (2016a:26)

The emergence of SIMBA This act assigns BAZNAS as the leader should be considered as a logical of national zakat management. Having consequence of Zakat Act No. 23/2011. this role, BAZNAS is charged with 46 International Journal of Zakat Vol. 4(2) 2019 several tasks as identified below that will (iii) To eradicate poverty by be impossible to conduct without a optimizing the zakat fund robust national zakat information utilization and consider some system1: principles such as equity and (i) To implement the principles of fairness in each region; zakat act, i.e. sharia-compliant, (iv) To provide a zakat transaction trust, expedience, justice, legal receipt for payers that can be certainty, integrated, and used as a tax deduction; lastly accountable to the national zakat (v) To conduct national zakat management system; hierarchical reporting system. (ii) To increase the service effectiveness and efficiency of national zakat management;

Figure 2. National Zakat Reporting Structure

Source: BAZNAS (2016a: 33)

On October 2012, with the help SIMBA as the national zakat of Bank Rakyat Indonesia Syariah under management information system its CSR scheme, BAZNAS launched (Republika, 2012). SIMBA has two main

1 The tasks are derived from (Zakat Act, 2011). See article 1,2,3,6,7,15,19,23,26,28, and 29 Zakat Management Information System: E-Service Quality and…. 47

functions: recording collection and central office in Jakarta. Having said disbursement of zakat and creating a that, BAZNAS has put information report based on the submitted data which system and technology as one out of six works under the zakat information aspects in the Zakat Strategic Planning management system. In addition, and Roadmap 2016-2020. The plan SIMBA also consists of supporting expects that all zakat institutions organizational information system that including 514 regional BAZNAS and maintains several information systems LAZ have implemented SIMBA by the such as finance, human resource, end of 2017. However, the dissemination logistic, public affairs and others. It is a of this technology thus far has reached web-based system that connects each only 108 out of 514 office in the BAZNAS office in every region to respective cities (BAZNAS, 2017). BAZNAS headquarter in Jakarta. Although only about 21% of BAZNAS Therefore, this feature allows SIMBA to regional offices that have been create a real-time online report of implemented SIMBA, it is necessary to national zakat activities at each level in measure the contribution of this every region. This model is even more breakthrough model to the national zakat suitable to produce the national zakat management system. hierarchical report as mandated by the zakat act. Figure 2 shows the structure of the national zakat reporting system. RESEARCH DESIGN Besides representing a reporting structure, above also shows some of the A number of research design methods national zakat management system are available; exploratory research, stakeholders; such as president, MORA, explanatory research, descriptive parliament, governor, and others. research, survey research and case study Nonetheless, the main stakeholders of (Sekaran & Bougie, 2013). This research zakat operation are muzaki and mustahik is constructed as an exploratory study that directly involved in zakat activities. which aims at exploring participants’ Therefore, the development of SIMBA is views on the operation of zakat aimed to ultimately benefiting them. For management information system. In instance, in the front end, SIMBA addition, since it focuses on a particular connects with banks, e-commerce, organisation, that is BAZNAS, this study banks, payment gateway, and other should also be considered as a case payment points to easing both to study. Furthermore, since further data collection and disbursement activities. In analysis on the primary data through the backend, all of the data submitted to econometrics specification is conducted, SIMBA are used to create reports that this study also benefits from being an latter can be utilized for strategic explanatory study. planning, decision making, research, and public disclosure. The complexity and huge amount RESEARCH STRATEGY of data within time and resource This study applies two different constraint make it impossible to create a approaches as its strategies to answer the national zakat report manually unless research questions. An inductive utilising a robust national zakat approach is used to measure the impact information system in each regional of SIMBA on the national zakat office that integrated together with the collection. This study observes the 48 International Journal of Zakat Vol. 4(2) 2019 existence or non-existence of SIMBA in national zakat collection, namely total 85 cities and attempts to offer a bottom- zakat and infaq collection (collection), up abstraction of its impact on the total local population, gross domestic national zakat collection together with regional product (GDRP), GINI some other control variables. On the coefficient (GINI), Human Development other hand, the deductive approach is Index (HDI) and the existence of applied to measure the electronic service SIMBA in respective city, as depicted in quality perceived by the SIMBA Table 1. All these data are in local level operator’s opinions at nation-wide level. creating 170 observations-strongly balanced panel data (85 regions during 2014-2015). Nonetheless, due to data ECONOMETRICS MODEL availability constraints in some SPECIFICATION AND VARIABLES provinces where GINI coefficient for some cities is not found, GINI There are six key data in this research to coefficient of its respective provinces are measure the impact of SIMBA on the used to fill the gap as a proxy.

Table 1. Variables Description

Variables Notation Source Unit Total Zakat and Infaq Log of Collection in Indonesian LogCollection BAZNAS Collection rupiah Total Local Population LogPop BPS Log of Population Number Index (1 to 100, 100=the highest Human Development Index HDI BPS score) Real Gross Domestic Regional Indonesia million rupiah per GDRPcap BPS Product (GDRP) percapita capita (million IDR/cap) GINI Coefficient GINI BPS Index (0 to 1, 1=the highest score) Dummy varable:1 if SIMBA SIMBA Implementation SIMBA BAZNAS exist; 0 otherwise

Source: prepared by Author.

Accordingly, the econometric RESEARCH METHOD FOR DATA model for this research is a linear COLLECTION regression as illustrated below: Questionnaire Survey Design 퐿표푔퐶표푙푙푒푐푡푖표푛푖푡 = 훼 + 훽1퐿표푔푃표푝푖푡 + 훽2퐻퐷퐼푖푡 + The questionnaire is structured with 훽3퐺퐷푅푃푐푎푝푖푡 + 훽4퐺퐼푁퐼푖푡 + close-ended questions consisting of four 훽5푆퐼푀퐵퐴푖푡 + 휀푖푡 (1) parts. Part I screens the respondents that do not have any experience in using where, α: constant; i: city; t: year;훽: SIMBA, while Part II measures slope; ε: error term, the rest of the respondents’ interaction with SIMBA, variables are defined in Table 1. including usage intensity and training participation. Part III consists of 4 main questions that measure the importance and perception of e-service quality dimensions; overall quality; perceived Zakat Management Information System: E-Service Quality and…. 49

value; and loyalty of customers towards al. (2009). In this study, the SIMBA. The responses to the questions questionnaire is developed and adapted regarding e-service quality dimensions to zakat operation realm as a first draft and customer loyalty are recorded using questionnaire. Then, this draft is used as 5-point Likert scale, whereas the SIMBA an initial document in a focus group overall quality and the perceived value discussion that involved one head are recorded under 10-point Likert scales division of BAZNAS IT & Reporting; ranging from poor to excellent. Part IV one IT manager, and two BAZNAS records the demographic information of system analysts, as they are involved in each of the respondents. The initial SIMBA development and questionnaire can be viewed in Table 2. understand all the features of SIMBA. Differ from the initial service The focus group discussion has quality model developed by contributed to the questionnaire mainly Parasuraman et. al. (1988) that is used to in adapting and translating the initial e- measure people-delivered service, the e- service quality statements into zakat service quality is developed by operation realm. Furthermore, there Parasuraman et. al. (2005) to measure were 13 people involved in a pilot test service that is delivered electronically which helped to improve the semantical via web sites. This questionnaire has translation of several questions, as the been widely adapted to other virtual questionnaire is administered in the web-based services such as social media Indonesian language. The modified e- service of university library Kim (2015) service quality statements that are used or e-government service website Jun et. in this study are depicted in Table 2.

Table 2. Modified E-Service Quality Statements

Dimension Item Modified E-Service Quality Statement for This Study

Efficiency EFF1 SIMBA makes it easy to find which service I need

EFF2 SIMBA makes it easy to get anywhere on the site

EFF3 SIMBA enables me to complete a zakat transaction quickly EFF4 Information provided in SIMBA is well organized EFF5 SIMBA loads its pages fast EFF6 SIMBA is simple to use EFF7 SIMBA enables me to get on to it quickly EFF8 SIMBA is well structured System SYS1 SIMBA is always available fot service Availability SYS2 SIMBA launches and runs right away SYS3 The pages of SIMBA display normally SYS4 There is no error occurred during using SIMBA Fulfilment FUL1 SIMBA offers service when necessary data and materials are submitted FUL2 SIMBA processes transaction within a suitable time frame FUL3 SIMBA provides information that I expect quickly FUL4 SIMBA gives reliable service FUL5 Service that available in SIMBA is fully accessible and functioned well FUL6 SIMBA is truthful about its offered services FUL7 SIMBA makes accurate promises about its service Privacy PRI1 SIMBA protects muzaki and mustahik personal identity 50 International Journal of Zakat Vol. 4(2) 2019

Dimension Item Modified E-Service Quality Statement for This Study PRI2 SIMBA does not leak the muzaki and mustahik information that I input to public PRI3 SIMBA protects my submitted materials’ information

Source: Prepared by Author.

Then, the questionnaire was research, it is used to measure the 22 conducted using an online platform multiple items in four different called ‘surveymonkey’ starting from 9 dimension of e-service quality towards August to 14 August 2017. It is the dependent variables as illustrated in necessary to mention that the Figure 3. respondents in this study are the operator of SIMBA as the end-user of the system. Hence, the population of the survey is all SIMBA operator in Indonesia. The survey closed with 193 respondents giving their answers to the self- administered questionnaires; however, only 133 questionnaires deemed to be useful for analysis due to non- completion of the rest. Figure 3. E-Service Quality Model Source: Santouridis et. al. (2012) Secondary Data Collection

Two primary data sources for the secondary data used in this study are RESULTS AND DISCUSSION from Indonesian Office for Statistics (BPS RI) and BAZNAS. The year 2014- The Regression Results 2015 is chosen in this study because this The initial analysis commences in this period represents the best availability of section with the regression analysis in national zakat collection as well as the measuring the impact of SIMBA on the availability of the control variables (i.e. national zakat collection, for which the population, GINI, HDI, and GDP per key findings are shown in Table 3. As capita). Consequently, this research is can be seen, all variables are statistically unable to use data from all regions. significant in explaining the log Having cleaned all the data, eventually collection per capita of zakat and infaq only 85 regions that have proper data. except the GDRP per capita and GINI Consequently, this research in total has coefficient. There are 170 observations 170 observations-strongly balanced captured in the regression model and panel data (85 regions during 2014- resulting R-squared is at 0.409 which 2015). implies that the model in this research can explain about 40.9 percent of the Multiple Regression Analysis variation observed, which is quite This method is applied to measure the satisfactory. The implementation of impact of more than one independent SIMBA is significant at 1 percent level variables on the dependent variables and has coefficient at 0.3068. It means (Sekaran & Bougie, 2013). In this that SIMBA significant in positively Zakat Management Information System: E-Service Quality and…. 51

increase the national zakat and infaq cities observed in this study are outside collection by 0.3068 in magnitude. This Java, where the poverty rate is high relevant with findings in Wahab & (Wibisono, 2017). Other than that, there Rahman (2013) that argues that are still a lot of people that do not want information technology can increase the to pay zakat via zakat institutions but performance of zakat institutions, in this directly to the poor as stated by Teten regard is zakat collection Kustiawan, BAZNAS Managing Director, in Republika (2013). In Table 3. Regression Results addition, the HDI that used as the proxy Dependent Variable: Zakat Collection of human resources quality in respective regional BAZNAS office is significant at Variables Model1 10% level. Nonetheless, the magnitude LogPopulation -0.9503*** (0.0942) of this proxy is quite low (0.021) to the GDRPCap 0.0003 dependent variable. However, it implies (0.0003) that one unit increase in HDI can GINI 1.6777 increase zakat collection by 0.021. (1.057) Table 3 shows the GRDP per HDI 0.0210* capita is not significant which means (0.0106) SIMBA 0.3068*** statistically there is no correlation (0.1072) between zakat and infaq collection with Constant 6.7968*** GDRP per capita. Figure 4 can briefly (0.9220) illustrate that the trend of zakat Observations 170 collection in the last 15 years is not R-squared 0.409 correlated with the growth of national Notes: Standard errors in parentheses GDP. This can perhaps be explained by *** p<0.01, ** p<0.05, * p<0.1 people’s willingness to pay rather than Moreover, the log population is searching for the ways they can avoid or also significant at 1 percent but has a pay the minimum. Lastly, the GINI negative coefficient. This can be coefficient is also not significant. One interpreted that population brings a may argue that the wealth disparity in the burden instead of a favour to the total observed cities perhaps increases the collection. A further explanation can be collection. Further research is needed to emanated from the fact that 70 out of 85 examine this phenomenon.

Figure 4. The National Growth of Zakat Collection 52 International Journal of Zakat Vol. 4(2) 2019

No Measure Label Item Frequency Percent 1 Male 81 60.9% 1 Gender 0 Female 52 39.1% Total 133 100.0% 1 < 20 years 1 0.8% 2 20-25 years 32 24.1% 3 26-30 years 53 39.8% 4 31-35 years 33 24.8% 2 Age 5 36-40 years 11 8.3% 6 41-45 years 2 1.5% 7 > 55 years 1 0.8% Total 133 100.0% 0 Single 52 39.1% 3 Marriage 1 Married 81 60.9% Total 133 100.0% 1 High School 24 18.0% 2 Diploma 10 7.5% 4 Education 3 Bachelor 93 69.9% 4 Postgraduate 6 4.5% Total 133 100.0% 1 less than IDR 1.000.000 21 15.8% 2 IDR 1.000.000 - IDR 1.999.999 60 45.1% 3 IDR 2.000.000 - IDR 2.999.999 30 22.6% 5 Salary 4 IDR 3.000.000 - IDR 3.999.000 19 14.3% 5 IDR 4.000.000 - IDR 4.999.000 2 1.5% 6 more than IDR 5.000.000 1 0.8% Total 133 100.0% 1 Daily 92 69.2% 2 Weekly 15 11.3% 6 Usage Intensity 3 Monthly 22 16.5% 4 Yearly 4 3.0% Total 133 100.0% 1 Never 6 4.5% 2 1 time 43 32.3% 7 Training Participation 3 2-4 times 71 53.4% 4 5 or more 13 9.8% Total 133 100.0% 1 Sumatra 47 35.3% 2 Jawa 41 30.8% 3 Kalimantan 16 12.0% 8 Location (Residence) 4 Sulawesi 19 14.3% 5 Bali dan Nusa Tenggara 8 6.0% 6 Maluku dan Papua 2 1.5% Total 133 100.0%

Table 4. Respondent Demographic Distribution

Source: prepared by Author.

Respondents Characteristics male and 39.1 percent female. Moreover, Out of about 240 total SIMBA the respondents of this study can be operator throughout the country, 193 categorized into four generations in have responded the questionnaire with referring to PewResearchCenter (2010); only 133 responses that are valid for data Alexander & Sysko (2012); and analysis. Table 4 summarises the (Deloitte, 2015). The first group is baby respondent demographic distribution. boomer who born before 1965 (age>55 years). This group is represented by 0.8 The respondents consist of 60.9 percent percent of in the sample. Secondly, about Zakat Management Information System: E-Service Quality and…. 53

9.8 percent respondents who are born in participants have never been in training 1962-1982 (age: 36-45 years) who are throughout their career. Moreover, most usually called as generation X. The most of the respondents have an intensive dominant respondent’s group (88.7 interaction with SIMBA as 69.9 percent percent) is millennial or generation Y use SIMBA in the daily basis and 11.3 that is born in 1982-2002 (age: 20-35 percent on weekly basis. Only 16.5 years). The last group is Generation Z percent and 3 percent of respondent use that is born after 2002 or aged less than SIMBA every month and year 20 years, which is only 0.8 percent of the respectively. respondents. It should be noted from Table 4 In addition, similar to gender that most of those high education level; distribution, most respondent (60.9 intensive training; and high workload percent) the, while the singles constitute respondents are paid poorly: about 15.8 39.1 percent of the sample. As can be percent are paid below IDR 1,000,000 seen in Table 4, most of the respondents and 45.1 percent earn between IDR are highly educated with 69.9 percent 1,000,000 to IDR 1,999,999. For the have a bachelor degree and 4.5 percent record, 35.3 percent respondent live in have postgraduate degrees indicating a Sumatra and 30.8 percent live in Java, good sign for their capability in where the average minimum wage is comprehending and responding to the IDR 2,019,236, (Deny, 2016) which questionnaire. Only 7.5 percent and 18 implies that they are underpaid reflecting percent of the respondents have diploma the nature of the economy in the country. level and high school education, Bearing in mind that 60.9 percent respectively. respondent are married which makes this As for skills training, 53.4 situation even more difficult for them as percent of respondent attended SIMBA the limited salary can be a huge training for 2 to 4 times and 9.8 percent constraint in their life. In this sense, attended more than 5 training sessions. BAZNAS should pay attention to it in About 32.3 percent respondents trained order to prevent human resources drain at least once and only 4.5 percent of the out.

Table 5. E-Service Quality Dimension and Dependent Variables Descriptive Statistics

Mean of Summed Number Mean Std Deviation (mean) Factors Score of items Impo. Perf. Impo. Perf. Impo. Perf. Efficiency 8 4.43 4.33 35.43 34.61 0.41 0.35 E-S-Qual System Availability 4 4.24 4.18 16.96 16.71 0.62 0.52 Dimensions Fulfillment 7 4.41 4.35 30.87 30.47 0.33 0.27 Privacy 3 4.55 4.46 13.65 13.37 0.26 0.16 Overall Quality 1 8.45 8.45 1.51 Criterion Perceived Value 4 8.57 34.29 0.52 Variables Loyalty Intentions 5 4.63 23.15 0.28

Source: prepared by Author.

Descriptive Statistics & Gap Analysis questionnaire. As can be seen from the Table 5 describes and summarises the responses, 22 e-service quality item in 5 respondent’ responses towards the Likert scores are 4.41 for importance and 4.33 for performance. It also shows that 54 International Journal of Zakat Vol. 4(2) 2019 privacy is the dimension with the highest visualization can help to analyse which mean scores both for the importance and item or dimension that is perceived performance at 4.55 and 4.46 important, performed well or bad, and respectively. Moreover, the 22 items how much is the gap. This study mean summed score is 96.92 for provides two visualization model which importance and 95.15 for performance, are radar chart and quadrant chart. with a possible range of 22 to 110. The Figure 5 illustrates that most of means of overall quality and perceived the item’s performance scores are lower value are 8.45 and 8.57, with a possible than its importance scores. Only item range of 1 to 10 while the means of SYS4 (+0.03) and FUL1 (+0.05) that respondent’ loyalty intentions is 4.63, exceed their importance score. SYS4 with a possible score of 1 to 5. The mean represents that there is no error during its of summed score for each criterion are service while FUL1 represents that 8.45; 34.29; and 23.15, respectively. The SIMBA offers service after necessary table also provides the means of standard data is submitted. On the contrary, the deviation for each dimension and largest gap perceived by the operator is criterion variables. in item FUL6 (-0.18) and SYS2 (-0.19). The e-service quality FUL6 score illustrates that SIMBA is not questionnaire can capture the gap quite truthful about its offered services between respondent’s expectation and while SYS2 score illustrates that SIMBA the perceived performance of each e- is perceived does not launch and run service quality item. Gap analysis right away once it is accessed.

Figure 5. Radar Chart of 22 Items’ Importance and Performance Score

Adapting Lynch et.al. (1996) importance score as x-value and putting model in applying quadrant chart for the gap between the importance and strategic planning, this study creates the performance score as the y-value. four quadrants by putting the mean of Having said that, the first quadrant is an Zakat Management Information System: E-Service Quality and…. 55

area where the item is perceived not so important and scores low whereas important and scores high while quadrant for is an area with high score quadrant two is an area with high but low importancy. Figure 6 ilustrates importance but low score. Moreover, the plot of each item in the quadrant quadrant three is where item is perceived chart.

Figure 6. E-Service Quality Quadrant Chart

Table 6 summarizes the two that need to be improved in terms of recommendation for each item. its performance in contrast to its BAZNAS as the main stakeholder importance. In addition, there are six should retain items in quadrant one items in quadrant four that have been which is perceived important and have a perceived good but less important which high score. Those items are the essentially need to be repositioned in its information structure, service importance value. Lastly, in Pareto availability, website display, and optimality, BAZNAS should not focus SIMBA performance in safeguarding the or ignore EFF5 and EFF8 in quadrant information that is submitted to it. four as they have low score while not Moreover, there are ten items in quadrant perceived important by the respondent.

Table 6. Items and Recommendations for Each Quadrant

Quadrant Recommendations Items 1 Retain EFF4; SYS1; SYS3; PRI2 2 Improve Performance EFF1; EFF6; EFF7; FUL2; FUL3; PRI3; SYS2; PRI1; FUL6; EFF3 3 Ignore or Improve Importance EFF5; EFF8 4 Reposition EFF2; FUL1; FUL4; FUL5; FUL7; SYS4 Source: prepared by Author. 56 International Journal of Zakat Vol. 4(2) 2019

Reliability the minimum value to accept that the Cronbach’s Alpha Statistical Test is data is reliable (Nunnally & Bernstein, applied to measure data reliability using 2013). The result of this test is also in the SPSS 20 program. With a possible range range of the previous study by Kim from 0 to 1, the higher result of this test (2015) who studied e-s quality in library service and the original e-s quality represents the higher data reliability it offers. Table 7Error! Reference source questionnaire by Parasuraman et. al. not found. shows that the overall (2005). The test shows that there is not Cronbach’s Alpha coefficient is 0.973 any item that has a low correlation to the and for each dimension is ranging from total score which implies that it has high 0.829 to 0.954 which is higher than 0.7, internal consistency.

Table 7. Reliability Statistics of E-Service Quality Dimensions

E-S-Qual Dimensions Number of items Cronbach's Alpha Overall Dimension 22 0.973 Efficiency 8 0.946 System Availability 4 0.829 Fulfillment 7 0.954 Privacy 3 0.887

Source: prepared by Author.

Validity service quality use a stricter threshold on Factor analysis is conducted in this study KMO results such as Mohd-Shariff to measure the data validity. It is a (2013) and Kim (2015) which use 0.6 multivariate method that ensures the and 0.7 respectively as the threshold on dimension in the instrument has their study. accurately represented the theory or Table 8. displays the result of concept that is applied the study, which KMO and The Barlett’s test. The overall is e-service quality. It also indicates KMO value in this study is 0.943 whether the item in a particular whereby the each dimension’s KMO dimension is already fit and appropriate value ranges from 0.698 to 0.924 which or should it be categorised under other exceeds 0.5 and 0.6, the minimum dimensions (Sekaran & Bougie, 2013). threshold for KMO test that used by In this sense, factor analysis is conducted Yusoff (2010) and Mohd-Shariff (2013). Even, it still exceeds 0.7 the threshold whether the 22 items of e-service quality has correctly categorised under their used by Kim (2015). Only privacy specific dimensions. Each item is dimension that is slightly under 0.7 at considered valid if the Kaiser-Meyen- 0.698 which is still tolerable. In addition, Olkin (KMO) sampling adequacy all dimension are significant on the exceeds 0.5 while the Bartlett's Test of Bartlett's Test of Sphericity with p-value Sphericity is significant (p-value < 0.05; less than 0.05. see: Yusoff, 2010). Other studies on Zakat Management Information System: E-Service Quality and…. 57

Table 8. Kaiser-Meyer-Olkin and The Bartlett’s Test Result

Bartlett's Test of Sphericity KMO Measure of E-S-Qual Dimensions Approx. Sampling Adequacy df Sig. Chi-Square Overall Dimensions .943 3144.658 231 .000*** Efficiency .923 908.127 28 .000*** System Availability .774 252.937 6 .000*** Fulfillment .924 964.451 21 .000*** Privacy .698 245.123 3 .000*** Note:***, **, * denotes significant in 1%, 5%, 10% respectively Mann-Whitney U Test status groups, towards the perceived Mann-Whitney U Test is applied to performance of the 22 items in e-service identify whether there is a significant quality questionnaire and the SIMBA’ overall quality, perceived value, and difference between across control loyalty intention. variables, such as gender and marital

Table 9. Mann-Whitney U Test (Gender-1)

Mean Mean Mean Mean Item Gender N Sig. Item Gender N Sig. Item Gender N Sig. Item Gender N Sig. Rank Rank Rank Rank Female 52 65.18 Female 52 65.61 Female 52 70.46 Female 52 68.03 EFF1 Male 81 68.17 0.628 EFF7 Male 81 67.9 0.714 FUL1 Male 81 64.78 0.357 FUL6 Male 81 66.34 0.783 Total 133 Total 133 Total 133 Total 133 Female 52 63.98 Female 52 68.6 Female 52 67.98 Female 52 67.34 EFF2 Male 81 68.94 0.425 EFF8 Male 81 65.98 0.676 FUL2 Male 81 66.37 0.790 FUL7 Male 81 66.78 0.929 Total 133 Total 133 Total 133 Total 133 Female 52 64.27 Female 52 68.12 Female 52 65.18 Female 52 63.48 EFF3 Male 81 68.75 0.440 SYS1 Male 81 66.28 0.766 FUL3 Male 81 68.17 0.629 PRI1 Male 81 69.26 0.329 Total 133 Total 133 Total 133 Total 133 Female 52 66.14 Female 52 67.21 Female 52 67.42 Female 52 64.95 EFF4 Male 81 67.55 0.821 SYS2 Male 81 66.86 0.955 FUL4 Male 81 66.73 0.910 PRI2 Male 81 68.31 0.575 Total 133 Total 133 Total 133 Total 133 Female 52 69.01 Female 52 69.29 Female 52 67.56 Female 52 63.24 EFF5 Male 81 65.71 0.606 SYS3 Male 81 65.53 0.537 FUL5 Male 81 66.64 0.883 PRI3 Male 81 69.41 0.281 Total 133 Total 133 Total 133 Total 133 Female 52 68.76 Female 52 60.13 EFF6 Male 81 65.87 0.636 SYS4 Male 81 71.41 0.086 Total 133 Total 133

Gender Group In a similar manner, findings in Table 9 displays that there is no gender Table 10 support that there is no impact towards the perceived significant difference between male and performance of 22 items in e-service female respondents in perceiving quality as there none of the items that are SIMBA overall quality, perceived value, significant at 10% confidence level. and loyalty intention. Accordingly, Hence, this data support that there is no BAZNAS should not treat gender significant difference between genders differently in developing and enriching in perceiving the performance of SIMBA in the future. SIMBA. 58 International Journal of Zakat Vol. 4(2) 2019

Table 10. Mann-Whitney U Test (Gender 2)

Mean Mean Criterion Gender N Sig. Gender SEX N Sig. Rank Rank Female 52 69.35 Female 52 66.56 QUA1 Male 81 65.49 0.558 LOY1 Male 81 67.28 0.890 Total 133 Total 133 Female 52 69.06 Female 52 63.84 VAL1 Male 81 65.68 0.608 LOY2 Male 81 69.03 0.369 Total 133 Total 133 Female 52 70.31 Female 52 65.85 VAL2 Male 81 64.88 0.409 LOY3 Male 81 67.74 0.736 Total 133 Total 133 Female 52 67.39 Female 52 64.28 VAL3 Male 81 66.75 0.922 LOY4 Male 81 68.75 0.359 Total 133 Total 133 Female 52 69.78 Female 52 69.13 VAL4 Male 81 65.22 0.483 LOY5 Male 81 65.63 0.428 Total 133 Total 133

Marital Status Group at 5% significance level for LOY1 Table 11 supports that there is no marital (71.17) and at 10% for LOY2 (70.77); status impact on the perceived and LOY4 (70.43). They show that performance of 22 items in e-service married respondents are more loyal quality. Nonetheless, Table 12 shows towards SIMBA than single respondents. that there are significant differences They are more tend to say positive between single and married respondents things, recommend other, and use SIMBA again in the future.

Table 11. Mann-Whitney U Test (Marital Status-1)

Mean Mean Mean Mean Item Marriage N Sig. Item Marriage N Sig. Item Marriage N Sig. Item Gender N Sig. Rank Rank Rank Rank Single 52 66.31 Single 52 61.73 Single 52 63.54 Single 52 63.22 EFF1 Married 81 67.44 0.854 EFF7 Married 81 70.38 0.167 FUL1 Married 81 69.22 0.357 FUL6 Married 81 69.43 0.312 Total 133 Total 133 Total 133 Total 133 Single 52 65.21 Single 52 61.92 Single 52 62.03 Single 52 62.82 EFF2 Married 81 68.15 0.637 EFF8 Married 81 70.26 0.183 FUL2 Married 81 70.19 0.178 FUL7 Married 81 69.69 0.268 Total 133 Total 133 Total 133 Total 133 Single 52 66.85 Single 52 63.59 Single 52 64.81 Single 52 65.38 EFF3 Married 81 67.1 0.965 SYS1 Married 81 69.19 0.362 FUL3 Married 81 68.41 0.560 PRI1 Married 81 68.04 0.654 Total 133 Total 133 Total 133 Total 133 Single 52 65.58 Single 52 65.66 Single 52 66.51 Single 52 62.91 EFF4 Married 81 67.91 0.706 SYS2 Married 81 67.86 0.724 FUL4 Married 81 67.31 0.896 PRI2 Married 81 69.62 0.264 Total 133 Total 133 Total 133 Total 133 Single 52 69.22 Single 52 67.63 Single 52 66.52 Single 52 62.68 EFF5 Married 81 65.57 0.568 SYS3 Married 81 66.59 0.864 FUL5 Married 81 67.31 0.899 PRI3 Married 81 69.77 0.216 Total 133 Total 133 Total 133 Total 133 Single 52 68.81 Single 52 65.71 EFF6 Married 81 65.84 0.627 SYS4 Married 81 67.83 0.747 Total 133 Total 133 Zakat Management Information System: E-Service Quality and…. 59

Table 12. Mann-Whitney U Test (Marital Status-2)

Mean Mean Criterion Marriage N Sig. Criterion Marriage N Sig. Rank Rank Single 52 65.37 Single 52 60.5 QUA1 Married 81 68.05 0.683 LOY1 Married 81 71.17 0.043** Total 133 Total 133 Single 52 65.9 Single 52 61.13 VAL1 Married 81 67.7 0.785 LOY2 Married 81 70.77 0.096* Total 133 Total 133 Single 52 69.22 Single 52 62.6 VAL2 Married 81 65.57 0.579 LOY3 Married 81 69.83 0.197 Total 133 Total 133 Single 52 66.59 Single 52 61.66 VAL3 Married 81 67.27 0.919 LOY4 Married 81 70.43 0.072* Total 133 Total 133 Single 52 68.14 Single 52 66.71 VAL4 Married 81 66.27 0.773 LOY5 Married 81 67.19 0.915 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively

Krusskall-Wallis towards e-service quality perceived As a non-parametric test, Krusskall performance and SIMBA’ overall Wallis test is applied to measure quality, perceived value, and loyalty intention by the respondents. Since these statistical difference across age group, education level, salary, usage intensity, control variables come more than two training participation, and location options instead of Mann-Whitney U test, Krusskall Wallis test is used

Table 13. Krusskall-Wallis (Age Group-1)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Age N Item Age N Item Age N Item Age N Item Age N Item Age N Rank Sig. Rank Sig. Rank Sig. Rank Sig. Rank Sig. Rank Sig. < 20 1 97.50 < 20 1 57.00 < 20 1 40.00 < 20 1 98.50 < 20 1 44.00 < 20 1 94.00 20-25 32 59.13 20-25 32 64.16 20-25 32 61.27 20-25 32 56.95 20-25 32 59.80 20-25 32 58.47 26-30 53 71.18 26-30 53 72.75 26-30 53 71.80 26-30 53 74.87 26-30 53 72.11 26-30 53 72.83 31-35 33 59.20 31-35 33 58.29 31-35 33 63.42 31-35 33 62.95 31-35 33 62.53 31-35 33 62.42 EFF1 0.159 EFF5 0.634 SYS1 0.690 FUL1 0.271 FUL5 0.554 PRI2 0.441 36-40 11 82.09 36-40 11 72.59 36-40 11 70.09 36-40 11 64.27 36-40 11 74.82 36-40 11 72.91 41-45 2 97.50 41-45 2 83.25 41-45 2 70.25 41-45 2 69.50 41-45 2 72.25 41-45 2 65.00 > 55 1 97.50 > 55 1 57.00 > 55 1 100.50 > 55 1 98.50 > 55 1 100.50 > 55 1 94.00 Total 133 Total 133 Total 133 Total 133 Total 133 Total 133 < 20 1 42.50 < 20 1 38.00 < 20 1 43.50 < 20 1 37.00 < 20 1 97.50 < 20 1 90.00 20-25 32 58.75 20-25 32 62.63 20-25 32 64.34 20-25 32 59.98 20-25 32 57.97 20-25 32 53.80 26-30 53 74.22 26-30 53 74.31 26-30 53 70.27 26-30 53 72.35 26-30 53 72.26 26-30 53 74.75 31-35 33 59.80 31-35 33 61.09 31-35 33 61.73 31-35 33 64.50 31-35 33 66.59 31-35 33 66.21 EFF2 0.189 EFF6 0.457 SYS2 0.738 FUL2 0.562 FUL6 0.530 PRI3 0.143 36-40 11 71.05 36-40 11 69.91 36-40 11 75.91 36-40 11 71.82 36-40 11 63.32 36-40 11 67.64 41-45 2 100.00 41-45 2 53.75 41-45 2 56.75 41-45 2 53.00 41-45 2 68.50 41-45 2 59.25 > 55 1 100.00 > 55 1 38.00 > 55 1 98.50 > 55 1 95.50 > 55 1 97.50 > 55 1 90.00 Total 133 Total 133 Total 133 Total 133 Total 133 Total 133 < 20 1 91.00 < 20 1 44.50 < 20 1 37.00 < 20 1 40.50 < 20 1 42.00 20-25 32 62.75 20-25 32 58.69 20-25 32 69.69 20-25 32 58.67 20-25 32 55.98 26-30 53 71.11 26-30 53 71.54 26-30 53 71.04 26-30 53 72.56 26-30 53 74.70 31-35 33 62.70 31-35 33 64.18 31-35 33 60.58 31-35 33 64.08 31-35 33 60.73 EFF3 0.648 EFF7 0.549 SYS3 0.642 FUL3 0.463 FUL7 0.141 36-40 11 63.73 36-40 11 75.59 36-40 11 61.64 36-40 11 74.77 36-40 11 79.23 41-45 2 91.00 41-45 2 73.00 41-45 2 52.50 41-45 2 55.50 41-45 2 71.25 > 55 1 91.00 > 55 1 101.50 > 55 1 97.00 > 55 1 99.50 > 55 1 100.50 Total 133 Total 133 Total 133 Total 133 Total 133 < 20 1 41.50 < 20 1 45.00 < 20 1 78.50 < 20 1 40.00 < 20 1 92.50 20-25 32 57.98 20-25 32 56.86 20-25 32 62.63 20-25 32 62.13 20-25 32 56.17 26-30 53 75.20 26-30 53 74.31 26-30 53 70.96 26-30 53 74.69 26-30 53 75.21 31-35 33 61.98 31-35 33 62.39 31-35 33 58.56 31-35 33 59.47 31-35 33 62.24 EFF4 0.277 EFF8 0.261 SYS4 0.553 FUL4 0.370 PRI1 0.170 36-40 11 70.32 36-40 11 75.82 36-40 11 81.86 36-40 11 68.73 36-40 11 71.41 41-45 2 55.00 41-45 2 56.75 41-45 2 78.00 41-45 2 54.25 41-45 2 51.50 > 55 1 99.50 > 55 1 101.50 > 55 1 78.50 > 55 1 97.50 > 55 1 92.50 Total 133 Total 133 Total 133 Total 133 Total 133

Age Group shows that there is one dimension that Table 13 indicates that there is no significantly different from other age statistical difference across age category categories which is operator’ intention to say positive things about SIMBA to in perceiving SIMBA e-service quality performance. On the contrary, Table 14 others. This is represented by LOY1 60 International Journal of Zakat Vol. 4(2) 2019

(0.062) that is significant at 10% categories. One might infer that SIMBA confidence level. It implies that is perceived better by the older employee respondents who are at the age of 36-40 that is usually has reached management (mean: 84.5) and 41-45 (mean: 84.5) are level such manager or executive equally more eager to say positive things members. about SIMBA in comparison to other age

Table 14. Krusskall-Wallis (Age Group-2)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Age N Item Age N Item Age N Item Age N Rank Sig. Rank Sig. Rank Sig. Rank Sig. < 20 1 80.00 < 20 1 80.00 < 20 1 31.00 < 20 1 81.00 20-25 32 63.88 20-25 32 65.95 20-25 32 64.31 20-25 32 58.48 26-30 53 71.02 26-30 53 69.98 26-30 53 67.71 26-30 53 72.14 31-35 33 63.85 31-35 33 64.11 31-35 33 69.26 31-35 33 64.76 QUA1 0.541 VAL3 0.987 LOY2 0.692 LOY4 0.394 36-40 11 58.64 36-40 11 66.09 36-40 11 66.91 36-40 11 68.64 41-45 2 112.00 41-45 2 59.25 41-45 2 90.50 41-45 2 81.00 > 55 1 47.00 > 55 1 50.50 > 55 1 31.00 > 55 1 81.00 Total 133 Total 133 Total 133 Total 133 < 20 1 47.50 < 20 1 63.50 < 20 1 29.00 < 20 1 15.00 20-25 32 68.42 20-25 32 64.42 20-25 32 64.09 20-25 32 67.84 26-30 53 68.82 26-30 53 73.13 26-30 53 70.36 26-30 53 70.49 31-35 33 63.21 31-35 33 63.68 31-35 33 63.82 31-35 33 63.64 VAL1 0.681 VAL4 0.758 LOY3 0.511 LOY5 0.267 36-40 11 61.27 36-40 11 60.82 36-40 11 71.91 36-40 11 59.55 41-45 2 109.50 41-45 2 53.50 41-45 2 88.00 41-45 2 78.00 > 55 1 47.50 > 55 1 32.50 > 55 1 29.00 > 55 1 78.00 Total 133 Total 133 Total 133 Total 133 < 20 1 37.50 < 20 1 21.50 20-25 32 71.36 20-25 32 59.28 26-30 53 68.20 26-30 53 69.92 31-35 33 58.35 31-35 33 65.67 VAL2 0.377 LOY1 0.062* 36-40 11 72.14 36-40 11 84.50 41-45 2 109.50 41-45 2 84.50 > 55 1 37.50 > 55 1 21.50 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively

Table 15. Krusskall-Wallis (Education Level-1)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Education N Item Education N Item Education N Item Education N Rank Sig. Rank Sig. Rank Sig. Rank Sig. High School 24 79.81 High School 24 78.44 High School 24 72.85 High School 24 67.19 Diploma 10 65.45 Diploma 10 70.3 Diploma 10 65.85 Diploma 10 58.9 EFF1 Bachelor 93 63.72 0.246 EFF7 Bachelor 93 63.31 0.281 FUL1 Bachelor 93 65.13 0.745 FUL6 Bachelor 93 67.73 0.896 Postgraduate 6 69.17 Postgraduate 6 73 Postgraduate 6 74.42 Postgraduate 6 68.5 Total 133 Total 133 Total 133 Total 133 High School 24 75.67 High School 24 76.19 High School 24 71.58 High School 24 68.52 Diploma 10 67.3 Diploma 10 69.95 Diploma 10 57 Diploma 10 67.4 EFF2 Bachelor 93 63.84 0.366 EFF8 Bachelor 93 63.3 0.271 FUL2 Bachelor 93 66.31 0.626 FUL7 Bachelor 93 65.66 0.765 Postgraduate 6 80.83 Postgraduate 6 82.67 Postgraduate 6 76 Postgraduate 6 81 Total 133 Total 133 Total 133 Total 133 High School 24 73 High School 24 64.92 High School 24 68.83 High School 24 69.17 Diploma 10 61.4 Diploma 10 54.3 Diploma 10 54.6 Diploma 10 72.7 EFF3 Bachelor 93 65.15 0.476 SYS1 Bachelor 93 68.04 0.492 FUL3 Bachelor 93 66.4 0.270 PRI1 Bachelor 93 66.05 0.911 Postgraduate 6 81 Postgraduate 6 80.33 Postgraduate 6 89.67 Postgraduate 6 63.5 Total 133 Total 133 Total 133 Total 133 High School 24 72.58 High School 24 78.9 High School 24 78.31 High School 24 64.67 Diploma 10 73.2 Diploma 10 60.05 Diploma 10 65 Diploma 10 68.45 EFF4 Bachelor 93 64.04 0.483 SYS2 Bachelor 93 63.83 0.189 FUL4 Bachelor 93 64.18 0.357 PRI2 Bachelor 93 66.95 0.931 Postgraduate 6 80.17 Postgraduate 6 80.17 Postgraduate 6 68.75 Postgraduate 6 74.67 Total 133 Total 133 Total 133 Total 133 High School 24 78.44 High School 24 78.29 High School 24 69.44 High School 24 69.38 Diploma 10 58.1 Diploma 10 57.7 Diploma 10 62.55 Diploma 10 69 EFF5 Bachelor 93 64.94 0.340 SYS3 Bachelor 93 65.09 0.304 FUL5 Bachelor 93 66.24 0.860 PRI3 Bachelor 93 66.01 0.961 Postgraduate 6 68.08 Postgraduate 6 67 Postgraduate 6 76.5 Postgraduate 6 69.5 Total 133 Total 133 Total 133 Total 133 High School 24 74.63 High School 24 72.75 Diploma 10 52.85 Diploma 10 57.1 EFF6 Bachelor 93 65.28 0.164 SYS4 Bachelor 93 66.72 0.724 Postgraduate 6 86.75 Postgraduate 6 64.83 Total 133 Total 133

Zakat Management Information System: E-Service Quality and…. 61

Education Level difference in the operator’s overall Table 15 supports that different quality, perceived value, and loyalty education level does not significantly intention upon SIMBA. This might affect respondent in perceiving SIMBA imply that SIMBA has successfully e-service quality performance. Similarly, designed and developed to meet its goal across in various operator’s educational in Table 16, there is no significant background.

Table 16. Krusskall-Wallis (Education Level-2)

Mean Asymp. Mean Asymp. Mean Asymp. Item Education N Item Education N Item Education N Rank Sig. Rank Sig. Rank Sig. High School 24 68.17 High School 24 74.1 High School 24 69.75 Diploma 10 75.3 Diploma 10 71.4 Diploma 10 61.9 QUA1 Bachelor 93 65.7 0.884 VAL4 Bachelor 93 65.01 0.699 LOY3 Bachelor 93 66.75 0.928 Postgraduate 6 68.67 Postgraduate 6 62.17 Postgraduate 6 68.33 Total 133 Total 133 Total 133 High School 24 70.38 High School 24 64.71 High School 24 66.9 Diploma 10 70.25 Diploma 10 57.6 Diploma 10 66.9 VAL1 Bachelor 93 65.7 0.941 LOY1 Bachelor 93 67.47 0.352 LOY4 Bachelor 93 66.8 0.990 Postgraduate 6 68.17 Postgraduate 6 84.5 Postgraduate 6 70.75 Total 133 Total 133 Total 133 High School 24 71.35 High School 24 66.4 High School 24 66.67 Diploma 10 68.7 Diploma 10 63.95 Diploma 10 64.1 VAL2 Bachelor 93 65.69 0.926 LOY2 Bachelor 93 67.25 0.981 LOY5 Bachelor 93 68.04 0.736 Postgraduate 6 67 Postgraduate 6 70.67 Postgraduate 6 57 Total 133 Total 133 Total 133 High School 24 74.17 Diploma 10 75.95 VAL3 Bachelor 93 63.57 0.452 Postgraduate 6 76.58 Total 133

Table 17. Krusskall-Wallis (Income Level-1)

Income Mean Asymp. Income Mean Asymp. Income Mean Asymp. Income Mean Asymp. Income Mean Asymp. Item N Item N Item N Item N Item N (million IDR) Rank Sig. (million IDR) Rank Sig. (million IDR) Rank Sig. (million IDR) Rank Sig. (million IDR) Rank Sig. < 1 21 73.69 < 1 21 76.86 < 1 21 73.95 < 1 21 79.26 < 1 21 69.4 1.0 - 1.9 60 66.51 1.0 - 1.9 60 66.16 1.0 - 1.9 60 66.47 1.0 - 1.9 60 66.02 1.0 - 1.9 60 69.66 2.0 - 2.9 30 63.55 2.0 - 2.9 30 62.5 2.0 - 2.9 30 66.17 2.0 - 2.9 30 62.95 2.0 - 2.9 30 59.53 EFF1 3.0 - 3.9 19 64.76 0.856 EFF6 3.0 - 3.9 19 64.29 0.678 SYS3 3.0 - 3.9 19 65.42 0.406 FUL4 3.0 - 3.9 19 65.71 0.238 PRI2 3.0 - 3.9 19 66.53 0.762 4.0 - 4.9 2 69.25 4.0 - 4.9 2 67.25 4.0 - 4.9 2 22.5 4.0 - 4.9 2 25.5 4.0 - 4.9 2 65 > 5.0 1 97.5 > 5.0 1 96.5 > 5.0 1 97 > 5.0 1 97.5 > 5.0 1 94 Total 133 Total 133 Total 133 Total 133 Total 133 < 1 21 71.38 < 1 21 79.67 < 1 21 79.38 < 1 21 74.86 < 1 21 73.12 1.0 - 1.9 60 67.83 1.0 - 1.9 60 64.42 1.0 - 1.9 60 64.79 1.0 - 1.9 60 67.24 1.0 - 1.9 60 68.64 2.0 - 2.9 30 60.18 2.0 - 2.9 30 66.77 2.0 - 2.9 30 62.82 2.0 - 2.9 30 63 2.0 - 2.9 30 63.07 EFF2 3.0 - 3.9 19 71.13 0.603 EFF7 3.0 - 3.9 19 63.79 0.253 SYS4 3.0 - 3.9 19 68.5 0.194 FUL5 3.0 - 3.9 19 66.16 0.446 PRI3 3.0 - 3.9 19 60.87 0.751 4.0 - 4.9 2 42.5 4.0 - 4.9 2 28.25 4.0 - 4.9 2 26 4.0 - 4.9 2 28.5 4.0 - 4.9 2 59.25 > 5.0 1 100 > 5.0 1 101.5 > 5.0 1 118.5 > 5.0 1 100.5 > 5.0 1 90 Total 133 Total 133 Total 133 Total 133 Total 133 < 1 21 74.05 < 1 21 77.5 < 1 21 74.33 < 1 21 74.76 1.0 - 1.9 60 63.2 1.0 - 1.9 60 65.68 1.0 - 1.9 60 65.61 1.0 - 1.9 60 70.24 2.0 - 2.9 30 70.8 2.0 - 2.9 30 59.9 2.0 - 2.9 30 65.7 2.0 - 2.9 30 60.72 EFF3 3.0 - 3.9 19 64.58 0.716 EFF8 3.0 - 3.9 19 68.29 0.519 FUL1 3.0 - 3.9 19 66.47 0.690 FUL6 3.0 - 3.9 19 59.39 0.353 4.0 - 4.9 2 61 4.0 - 4.9 2 73.25 4.0 - 4.9 2 40.5 4.0 - 4.9 2 39.5 > 5.0 1 91 > 5.0 1 101.5 > 5.0 1 98.5 > 5.0 1 97.5 Total 133 Total 133 Total 133 Total 133 < 1 21 76.83 < 1 21 74.1 < 1 21 66.19 < 1 21 70.29 1.0 - 1.9 60 66.08 1.0 - 1.9 60 66.94 1.0 - 1.9 60 67.34 1.0 - 1.9 60 69.29 2.0 - 2.9 30 60.43 2.0 - 2.9 30 61.78 2.0 - 2.9 30 66.62 2.0 - 2.9 30 60.9 EFF4 3.0 - 3.9 19 70.39 0.429 SYS1 3.0 - 3.9 19 68.66 0.584 FUL2 3.0 - 3.9 19 67.79 0.938 FUL7 3.0 - 3.9 19 66.63 0.653 4.0 - 4.9 2 41.5 4.0 - 4.9 2 40 4.0 - 4.9 2 49.25 4.0 - 4.9 2 42 > 5.0 1 99.5 > 5.0 1 100.5 > 5.0 1 95.5 > 5.0 1 100.5 Total 133 Total 133 Total 133 Total 133 < 1 21 86.86 < 1 21 70.98 < 1 21 72.21 < 1 21 73.71 1.0 - 1.9 60 62.88 1.0 - 1.9 60 63.81 1.0 - 1.9 60 65.34 1.0 - 1.9 60 68.69 2.0 - 2.9 30 63.32 2.0 - 2.9 30 68.68 2.0 - 2.9 30 63.7 2.0 - 2.9 30 60.35 EFF5 3.0 - 3.9 19 64.74 0.067* SYS2 3.0 - 3.9 19 72.34 0.491 FUL3 3.0 - 3.9 19 71.55 0.783 PRI1 3.0 - 3.9 19 63.76 0.702 4.0 - 4.9 2 37.75 4.0 - 4.9 2 29.25 4.0 - 4.9 2 52 4.0 - 4.9 2 63.5 > 5.0 1 109.5 > 5.0 1 98.5 > 5.0 1 99.5 > 5.0 1 92.5 Total 133 Total 133 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively 62 International Journal of Zakat Vol. 4(2) 2019

Income Level to other income levels. On the other Table 17 shows that item EFF5 (0.067) hand, Table 18 supports that there is not is significant at 10%, which tells that any significant difference in various respondents with income more than IDR income level in perceiving SIMBA 5 million per month (mean: 86.86) overall quality, perceived value, and loyalty intention. acknowledge that SIMBA loads its pages fast while they are using it in comparison

Table 18. Krusskall-Wallis (Income Level-2)

Income Mean Asymp. Income Mean Asymp. Income Mean Asymp. Income Mean Asymp. Income Mean Item N Item N Item N Item N Item N (million IDR) Rank Sig. (million IDR) Rank Sig. (million IDR) Rank Sig. (million IDR) Rank Sig. (million IDR) Rank < 1 21 81.52 < 1 21 76.81 < 1 21 80.5 < 1 21 69.76 < 1 21 69.88 1.0 - 1.9 60 65.63 1.0 - 1.9 60 64 1.0 - 1.9 60 65.27 1.0 - 1.9 60 68.42 1.0 - 1.9 60 68.05 2.0 - 2.9 30 64.7 2.0 - 2.9 30 66.97 2.0 - 2.9 30 64 2.0 - 2.9 30 62.57 2.0 - 2.9 30 62.87 QUA1 3.0 - 3.9 19 62.05 0.461 VAL2 3.0 - 3.9 19 62.76 0.623 VAL4 3.0 - 3.9 19 60 0.413 LOY2 3.0 - 3.9 19 70.16 0.343 LOY4 3.0 - 3.9 19 68.05 4.0 - 4.9 2 47 4.0 - 4.9 2 73.5 4.0 - 4.9 2 69.25 4.0 - 4.9 2 20.25 4.0 - 4.9 2 50.25 > 5.0 1 47 > 5.0 1 109.5 > 5.0 1 106 > 5.0 1 90.5 > 5.0 1 81 Total 133 Total 133 Total 133 Total 133 Total 133 < 1 21 73.55 < 1 21 74.38 < 1 21 71.69 < 1 21 67.76 < 1 21 64.43 1.0 - 1.9 60 66.87 1.0 - 1.9 60 65.93 1.0 - 1.9 60 65.46 1.0 - 1.9 60 68.72 1.0 - 1.9 60 67 2.0 - 2.9 30 67.02 2.0 - 2.9 30 64.55 2.0 - 2.9 30 67.13 2.0 - 2.9 30 64.9 2.0 - 2.9 30 71.23 VAL1 3.0 - 3.9 19 63.24 0.891 VAL3 3.0 - 3.9 19 67.13 0.945 LOY1 3.0 - 3.9 19 63.71 0.853 LOY3 3.0 - 3.9 19 67.95 0.379 LOY5 3.0 - 3.9 19 64.74 4.0 - 4.9 2 47.5 4.0 - 4.9 2 65.25 4.0 - 4.9 2 84.5 4.0 - 4.9 2 19.5 4.0 - 4.9 2 46.5 > 5.0 1 47.5 > 5.0 1 50.5 > 5.0 1 84.5 > 5.0 1 88 > 5.0 1 78 Total 133 Total 133 Total 133 Total 133 Total 133

Table 19. Krusskall-Wallis (Usage Intensity-1)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Usage N Item Usage N Item Usage N Item Usage N Rank Sig. Rank Sig. Rank Sig. Rank Sig. Daily 92 65.50 Daily 92 63.68 Daily 92 65.64 Daily 92 66.77 Weekly 15 61.03 Weekly 15 63.90 Weekly 15 65.13 Weekly 15 56.43 EFF1 Monthly 22 80.80 0.151 EFF7 Monthly 22 79.30 0.176 FUL1 Monthly 22 70.89 0.701 FUL6 Monthly 22 73.86 0.486 Yearly 4 48.00 Yearly 4 87.25 Yearly 4 84 Yearly 4 74.13 Total 133 Total 133 Total 133 Total 133 Daily 92 64.36 Daily 92 64.11 Daily 92 66.63 Daily 92 63.34 Weekly 15 64.63 Weekly 15 66.97 Weekly 15 65.93 Weekly 15 72.47 EFF2 Monthly 22 80.30 0.283 EFF8 Monthly 22 75.39 0.362 FUL2 Monthly 22 67.95 0.974 FUL7 Monthly 22 75.16 0.290 Yearly 4 63.50 Yearly 4 87.38 Yearly 4 74.25 Yearly 4 85.88 Total 133 Total 133 Total 133 Total 133 Daily 92 67.17 Daily 92 63.71 Daily 92 64.43 Daily 92 65.77 Weekly 15 59.67 Weekly 15 69.70 Weekly 15 67.63 Weekly 15 66.1 EFF3 Monthly 22 70.91 0.781 SYS1 Monthly 22 77.05 0.371 FUL3 Monthly 22 75.41 0.539 PRI1 Monthly 22 71.86 0.874 Yearly 4 69.00 Yearly 4 77.38 Yearly 4 77.5 Yearly 4 72 Total 133 Total 133 Total 133 Total 133 Daily 92 63.32 Daily 92 66.02 Daily 92 63.2 Daily 92 66.47 Weekly 15 72.17 Weekly 15 58.90 Weekly 15 72 Weekly 15 67.67 EFF4 Monthly 22 75.59 0.289 SYS2 Monthly 22 75.91 0.502 FUL4 Monthly 22 76.57 0.264 PRI2 Monthly 22 66.48 0.901 Yearly 4 85.00 Yearly 4 71.00 Yearly 4 83.13 Yearly 4 79.5 Total 133 Total 133 Total 133 Total 133 Daily 92 62.48 Daily 92 65.73 Daily 92 63.96 Daily 92 66.62 Weekly 15 64.70 Weekly 15 62.67 Weekly 15 71.43 Weekly 15 63.7 EFF5 Monthly 22 86.27 0.047** SYS3 Monthly 22 69.82 0.310 FUL5 Monthly 22 78.55 0.303 PRI3 Monthly 22 69.45 0.914 Yearly 4 73.63 Yearly 4 97.00 Yearly 4 56.75 Yearly 4 74.63 Total 133 Total 133 Total 133 Total 133 Daily 92 66.29 Daily 92 62.46 Weekly 15 61.20 Weekly 15 66.13 EFF6 Monthly 22 72.77 0.748 SYS4 Monthly 22 82.73 0.082 * Yearly 4 73.25 Yearly 4 88.25 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively Usage Intensity perceived that SIMBA loads its pages Table 19 shows that there are two items fast while those who use it yearly do not that significant at 5% and 10% namely, find any error while utilising it for EFF5 (0,047) and SYS4 (0,082) with recording zakat transaction. In addition, item LOY5 (0,030) is significant at 5 % mean 86.27 and 88.25 respectively. Respondents that use SIMBA monthly as shown in Table 20. It indicates that Zakat Management Information System: E-Service Quality and…. 63

operators that use SIMBA in a daily months that those who use it less basis (mean: 70.21) are more likely to frequent. use SIMBA again in the upcoming

Table 20. Krusskall-Wallis (Usage Intensity-2)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Usage N Item Usage N Item Usage N Item Usage N Item Usage N Rank Sig. Rank Sig. Rank Sig. Rank Sig. Rank Sig. Daily 92 64.52 Daily 92 66.59 Daily 92 67.88 Daily 92 69.26 Daily 92 68.79 Weekly 15 63.47 Weekly 15 56.13 Weekly 15 59.83 Weekly 15 55.50 Weekly 15 58.43 QUA1 Monthly 22 76.45 0.398 VAL2 Monthly 22 73.16 0.440 VAL4 Monthly 22 69.14 0.855 LOY2 Monthly 22 63.84 0.424 LOY4 Monthly 22 66.43 0.562 Yearly 4 85.25 Yearly 4 83.38 Yearly 4 62.00 Yearly 4 75.63 Yearly 4 61.13 Total 133 Total 133 Total 133 Total 133 Total 133 Daily 92 65.45 Daily 92 68.33 Daily 92 68.66 Daily 92 68.45 Daily 92 70.21 Weekly 15 60.23 Weekly 15 54.27 Weekly 15 57.03 Weekly 15 56.27 Weekly 15 55.47 VAL1 Monthly 22 78.11 0.450 VAL3 Monthly 22 69.68 0.575 LOY1 Monthly 22 63.68 0.301 LOY3 Monthly 22 64.45 0.279 LOY5 Monthly 22 66.09 0.030** Yearly 4 67.00 Yearly 4 69.50 Yearly 4 84.50 Yearly 4 88.00 Yearly 4 41.50 Total 133 Total 133 Total 133 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively Table 21. Krusskall-Wallis (Training Participation-1)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Training N Item Training N Item Training N Item Training N Rank Sig. Rank Sig. Rank Sig. Rank Sig. Never 13 71.38 Never 13 68.31 Never 13 67.35 Never 13 79.65 1 time 6 64.50 1 time 6 52.67 1 time 6 64.75 1 time 6 62.58 EFF1 2-4 times 43 58.90 0.298 EFF7 2-4 times 43 61.67 0.390 FUL1 2-4 times 43 62.78 0.781 FUL6 2-4 times 43 66.91 0.562 > 5 times 71 71.32 > 5 times 71 71.20 > 5 times 71 69.68 > 5 times 71 65.11 Total 133 Total 133 Total 133 Total 133 Never 13 68.69 Never 13 68.54 Never 13 77.50 Never 13 66.62 1 time 6 66.08 1 time 6 67.75 1 time 6 56.17 1 time 6 64.83 EFF2 2-4 times 43 60.41 0.497 EFF8 2-4 times 43 62.07 0.737 FUL2 2-4 times 43 62.27 0.411 FUL7 2-4 times 43 61.81 0.649 > 5 times 71 70.76 > 5 times 71 69.64 > 5 times 71 68.86 > 5 times 71 70.39 Total 133 Total 133 Total 133 Total 133 Never 13 77.15 Never 13 70.12 Never 13 76.81 Never 13 77.27 1 time 6 47.33 1 time 6 54.00 1 time 6 59.17 1 time 6 69.17 EFF3 2-4 times 43 57.19 0.024** SYS1 2-4 times 43 58.64 0.150 FUL3 2-4 times 43 59.29 0.241 PRI1 2-4 times 43 61.42 0.462 > 5 times 71 72.75 > 5 times 71 72.59 > 5 times 71 70.54 > 5 times 71 68.32 Total 133 Total 133 Total 133 Total 133 Never 13 72.73 Never 13 85.81 Never 13 68.73 Never 13 66.54 1 time 6 65.33 1 time 6 55.00 1 time 6 59.08 1 time 6 70.75 EFF4 2-4 times 43 61.90 0.667 SYS2 2-4 times 43 57.86 0.047** FUL4 2-4 times 43 61.15 0.480 PRI2 2-4 times 43 63.36 0.845 > 5 times 71 69.18 > 5 times 71 70.11 > 5 times 71 70.89 > 5 times 71 68.97 Total 133 Total 133 Total 133 Total 133 Never 13 70.19 Never 13 78.54 Never 13 74.00 Never 13 80.54 1 time 6 59.42 1 time 6 57.33 1 time 6 60.33 1 time 6 65.92 EFF5 2-4 times 43 57.44 0.152 SYS3 2-4 times 43 64.86 0.548 FUL5 2-4 times 43 60.13 0.383 PRI3 2-4 times 43 62.16 0.350 > 5 times 71 72.85 > 5 times 71 67.00 > 5 times 71 70.44 > 5 times 71 67.54 Total 133 Total 133 Total 133 Total 133 Never 13 76.42 Never 13 68.88 1 time 6 51.75 1 time 6 53.17 EFF6 2-4 times 43 58.48 0.104 SYS4 2-4 times 43 61.62 0.448 > 5 times 71 71.73 > 5 times 71 71.08 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively Training Participation more than 5 times training experience feel that the information provided in Table 21 shows that there are two items SIMBA and the overall convenience in that are significant at 5 percent namely, using SIMBA is excellent, which is a EFF3 (mean: 77.15) and SYS2 (mean: better result than what other group 71.08). Respondents that have never been in SIMBA training state that perceived it. Meanwhile, respondents SIMBA helps them to complete zakat that have only been once in SIMBA transaction quickly and they do not find training perceive much better value is any error while using SIMBA than the using SIMBA than any other group. other respondents who have been in the Lastly, item LOY3 is significant at 10% training. and respondents that never been in In addition, Table 22 displays training (mean: 81.38) tend to more that item VAL1, VAL2, and VAL4 are eager to tell their friends to use SIMBA significant at 5%. Respondents with than other respondents that have been participating in SIMBA training. 64 International Journal of Zakat Vol. 4(2) 2019

Table 22. Krusskall-Wallis (Training Participation-2)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Training N Item Training N Item Training N Item Training N Item Training N Rank Sig. Rank Sig. Rank Sig. Rank Sig. Rank Sig. Never 13 61.62 Never 13 58.31 Never 13 59.88 Never 13 79.08 Never 13 81.00 1 time 6 62.33 1 time 6 74.25 1 time 6 78.25 1 time 6 53.58 1 time 6 58.33 QUA1 2-4 times 43 60.40 0.356 VAL2 2-4 times 43 55.84 0.047** VAL4 2-4 times 43 55.36 0.040** LOY2 2-4 times 43 60.19 0.150 LOY4 2-4 times 43 61.79 0.126 > 5 times 71 72.38 > 5 times 71 74.74 > 5 times 71 74.40 > 5 times 71 70.05 > 5 times 71 68.32 Total 133 Total 133 Total 133 Total 133 Total 133 Never 13 57.96 Never 13 61.38 Never 13 74.81 Never 13 81.38 Never 13 78.00 1 time 6 73.92 1 time 6 69.67 1 time 6 60.67 1 time 6 42.33 1 time 6 78.00 VAL1 2-4 times 43 55.83 0.045** VAL3 2-4 times 43 58.02 0.189 LOY1 2-4 times 43 60.27 0.239 LOY3 2-4 times 43 62.33 0.053 * LOY5 2-4 times 43 60.65 0.086 > 5 times 71 74.84 > 5 times 71 73.24 > 5 times 71 70.18 > 5 times 71 69.28 > 5 times 71 67.90 Total 133 Total 133 Total 133 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively

Location are SYS4 (0.006); FUL4 (0.010); FUL5 Under this group, Krusskall Wallis test (0.010); FUL7 (0.006); and PRI3 finds significant differences among the (0.009). Interestingly, across those 22 items of e-service quality. At 1% items, respondents who live in Bali and significance level, there are five Nusa Tenggara are the most satisfied significant items (p value < 0.01) which respondent with mean rank ranging from 90.00 to 98.50, as depicted in Table 23.

Table 23. Krusskall-Wallis (Location-1)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Location N Item Location N Item Location N Item Location N Rank Sig. Rank Sig. Rank Sig. Rank Sig. Sumatra 47 63.19 Sumatra 47 68.06 Sumatra 47 68.95 Sumatra 47 66.18 Jawa 41 69.00 Jawa 41 59.79 Jawa 41 61.38 Jawa 41 66.11 Kalimantan 16 53.84 Kalimantan 16 54.56 Kalimantan 16 51.84 Kalimantan 16 53.16 EFF1 Sulawesi 19 76.05 0.106 EFF7 Sulawesi 19 78.24 0.014** FUL1 Sulawesi 19 78.11 0.107 FUL6 Sulawesi 19 72.66 0.240 Bali & Nusa Tenggara 8 90.44 Bali & Nusa Tenggara 8 101.50 Bali & Nusa Tenggara 8 87.69 Bali & Nusa Tenggara 8 90.25 Maluku & Papua 2 41.00 Maluku & Papua 2 44.50 Maluku & Papua 2 69.50 Maluku & Papua 2 68.50 Total 133 Total 133 Total 133 Total 133 Sumatra 47 69.13 Sumatra 47 70.14 Sumatra 47 74.46 Sumatra 47 69.74 Jawa 41 60.95 Jawa 41 60.61 Jawa 41 56.37 Jawa 41 62.20 Kalimantan 16 53.31 Kalimantan 16 51.75 Kalimantan 16 60.81 Kalimantan 16 42.34 0.006 EFF2 Sulawesi 19 78.03 0.050** EFF8 Sulawesi 19 73.66 0.067* FUL2 Sulawesi 19 70.66 0.090* FUL7 Sulawesi 19 79.87 *** Bali & Nusa Tenggara 8 92.81 Bali & Nusa Tenggara 8 94.44 Bali & Nusa Tenggara 8 84.88 Bali & Nusa Tenggara 8 93.19 Maluku & Papua 2 42.50 Maluku & Papua 2 73.25 Maluku & Papua 2 53.00 Maluku & Papua 2 71.25 Total 133 Total 133 Total 133 Total 133 Sumatra 47 68.57 Sumatra 47 68.85 Sumatra 47 70.50 Sumatra 47 68.79 Jawa 41 62.37 Jawa 41 60.37 Jawa 41 60.21 Jawa 41 64.70 Kalimantan 16 56.50 Kalimantan 16 58.06 Kalimantan 16 49.00 Kalimantan 16 46.72 EFF3 Sulawesi 19 76.79 0.231 SYS1 Sulawesi 19 73.00 0.168 FUL3 Sulawesi 19 77.26 0.032** PRI1 Sulawesi 19 71.21 0.030** Bali & Nusa Tenggara 8 83.50 Bali & Nusa Tenggara 8 92.94 Bali & Nusa Tenggara 8 92.13 Bali & Nusa Tenggara 8 92.50 Maluku & Papua 2 50.00 Maluku & Papua 2 70.25 Maluku & Papua 2 70.00 Maluku & Papua 2 92.50 Total 133 Total 133 Total 133 Total 133 Sumatra 47 66.59 Sumatra 47 68.29 Sumatra 47 69.33 Sumatra 47 65.04 Jawa 41 60.06 Jawa 41 62.27 Jawa 41 61.01 Jawa 41 68.23 Kalimantan 16 60.56 Kalimantan 16 53.59 Kalimantan 16 49.63 Kalimantan 16 46.38 0.010 EFF4 Sulawesi 19 80.47 0.068* SYS2 Sulawesi 19 80.32 0.114 FUL4 Sulawesi 19 78.79 PRI2 Sulawesi 19 76.97 0.053** *** Bali & Nusa Tenggara 8 92.25 Bali & Nusa Tenggara 8 84.75 Bali & Nusa Tenggara 8 97.50 Bali & Nusa Tenggara 8 83.00 Maluku & Papua 2 41.50 Maluku & Papua 2 43.50 Maluku & Papua 2 40.00 Maluku & Papua 2 94.00 Total 133 Total 133 Total 133 Total 133 Sumatra 47 69.45 Sumatra 47 72.83 Sumatra 47 69.44 Sumatra 47 70.77 Jawa 41 58.74 Jawa 41 53.20 Jawa 41 65.94 Jawa 41 61.43 Kalimantan 16 60.34 Kalimantan 16 68.69 Kalimantan 16 41.78 Kalimantan 16 45.59 0.010 0.009 EFF5 Sulawesi 19 77.11 0.020** SYS3 Sulawesi 19 74.63 0.016** FUL5 Sulawesi 19 75.79 PRI3 Sulawesi 19 75.63 *** *** Bali & Nusa Tenggara 8 96.38 Bali & Nusa Tenggara 8 89.50 Bali & Nusa Tenggara 8 93.44 Bali & Nusa Tenggara 8 90.00 Maluku & Papua 2 18.50 Maluku & Papua 2 37.00 Maluku & Papua 2 44.00 Maluku & Papua 2 90.00 Total 133 Total 133 Total 133 Total 133 Sumatra 47 71.80 Sumatra 47 63.10 Jawa 41 62.11 Jawa 41 62.63 Kalimantan 16 48.88 Kalimantan 16 53.06 0.006 EFF6 Sulawesi 19 68.50 0.033** SYS4 Sulawesi 19 87.66 *** Bali & Nusa Tenggara 8 96.50 Bali & Nusa Tenggara 8 98.50 Maluku & Papua 2 67.25 Maluku & Papua 2 37.50 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively

At 5% significant level, there are FUL3 (0.032); PRI1 (0.03); and PRI2 eight significant items (p value < o.o5) (0.053). Bali and Nusa Tenggara are the namely EFF2 (0.05); EFF5 (0.02); EFF6 locations where most respondents (0.033); EFF7 (0.014); SYS3 (0.016); satisfied with the performance of those Zakat Management Information System: E-Service Quality and…. 65

items indicated by the highest mean rank EFF8 (0.067); and FUL2 (0.09). Again, in each group with mean rank ranging Bali and Nusa Tenggara are regions from 89.50 to 101.50. Nonetheless, where respondents satisfied the most on Maluku & Papua rank the highest on those items with mean rank 92.95; 94.44; item PRI2 with mean rank 94.00, while and 84.88 respectively. It can be inferred both Maluku & Papua and Bali & Nusa that respondents who live in Bali and Tenggara share the highest mean rank on Nusa Tenggara are those who are very item PRI1. satisfied with SIMBA e-service quality, At 10 % significant level, there then followed by those who live in are three items that are significant (p Maluku and Papua at the second rank. value < 0.10) which are EFF4 (0.068);

Table 24. Krusskall-Wallis (Location-2)

Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Mean Asymp. Item Location N Item Location N Item Location N Item Location N Item Location N Rank Sig. Rank Sig. Rank Sig. Rank Sig. Rank Sig. Sumatra 47 65.89 Sumatra 47 66.04 Sumatra 47 66.86 Sumatra 47 68.70 Sumatra 47 71.01 Jawa 41 64.20 Jawa 41 60.05 Jawa 41 62.00 Jawa 41 54.71 Jawa 41 58.61 Kalimantan 16 44.44 Kalimantan 16 56.03 Kalimantan 16 61.91 Kalimantan 16 62.06 Kalimantan 16 55.19 0.073 QUA1 Sulawesi 19 77.89 0.007* VAL2 Sulawesi 19 82.37 VAL4 Sulawesi 19 74.11 0.316 LOY2 Sulawesi 19 81.11 0.010* LOY4 Sulawesi 19 77.76 0.020** *** Bali & Nusa Tenggara 8 103.88 Bali & Nusa Tenggara 8 92.81 Bali & Nusa Tenggara 8 91.50 Bali & Nusa Tenggara 8 90.50 Bali & Nusa Tenggara 8 81.00 Maluku & Papua 2 80.00 Maluku & Papua 2 70.50 Maluku & Papua 2 48.00 Maluku & Papua 2 90.50 Maluku & Papua 2 81.00 Total 133 Total 133 Total 133 Total 133 Total 133 Sumatra 47 69.60 Sumatra 47 68.27 Sumatra 47 69.03 Sumatra 47 70.74 Sumatra 47 72.43 Jawa 41 61.15 Jawa 41 62.15 Jawa 41 60.62 Jawa 41 52.71 Jawa 41 60.02 Kalimantan 16 44.13 Kalimantan 16 51.22 Kalimantan 16 61.41 Kalimantan 16 65.63 Kalimantan 16 61.44 0.093 VAL1 Sulawesi 19 77.13 0.010* VAL3 Sulawesi 19 78.92 LOY1 Sulawesi 19 71.24 0.254 LOY3 Sulawesi 19 78.68 0.006* LOY5 Sulawesi 19 67.53 0.145 *** Bali & Nusa Tenggara 8 97.00 Bali & Nusa Tenggara 8 91.81 Bali & Nusa Tenggara 8 84.50 Bali & Nusa Tenggara 8 88.00 Bali & Nusa Tenggara 8 78.00 Maluku & Papua 2 92.75 Maluku & Papua 2 50.50 Maluku & Papua 2 84.50 Maluku & Papua 2 88.00 Maluku & Papua 2 78.00 Total 133 Total 133 Total 133 Total 133 Total 133 Note:***, **, * denotes significant in 1%, 5%, 10% respectively

Error! Reference source not Multiple Regression Analysis found.Table 24 displays that there are In this part, this study measures if there four items that are significant at 1% is a significant impact of the e-service namely QUA1, VAL1, LOY2, and quality dimensions on SIMBA’ overall LOY3. Respondents in Bali and Nusa quality, perceived value, and loyalty Tenggara argue that SIMBA overall intention using multiple regression quality (QUA1) and information technique. Accordingly, the results in provided in SIMBA (VAL1) are this part respond to research questions excellent with mean rank: 103.88 and H5a; H5b; and H5c. In doing so, this 97.00, respectively. Likewise, study defines the three regression model respondents in Maluku & Papua and Bali as follow: & Nusa Tenggara share the highest mean rank on item LOY2 (90.5) and LOY3 푄푈퐴 = 훼 + 훽 퐸퐹퐹 + 훽 푆푌푆 + (88.0). 1 2 훽3퐹푈퐿 + 훽3푃푅퐼 + 휀1 At 5% significance level, again, (0-1) Maluku & Papua and Bali & Nusa 푉퐴퐿 = 훼 + 훽 퐸퐹퐹 + 훽 푆푌푆 + Tenggara share the highest rank with 1 2 훽3퐹푈퐿 + 훽3푃푅퐼 + 휀2 mean rank 81.00 on the item of LOY4. (0-2) Moreover, at 10% significant level item 퐿푂푌 = 훼 + 훽 퐸퐹퐹 + 훽 푆푌푆 + VAL2 and VAL3 are also significant 1 2 훽3퐹푈퐿 + 훽3푃푅퐼 + 휀3 together with Bali and Nusa Tenggara (0-3) who have the highest mean rank 92.81 and 91.91 respectively. where: QUA: Overall Quality; VAL: Perceived Value; LOY: Loyalty Intention; EFF: Efficiency; SYS: System Availability; FUL: 66 International Journal of Zakat Vol. 4(2) 2019

Fulfilment; PRI: Privacy; 훼: constant; 훽: Slope; 휀: error term.

Table 25. Regression Model Summary

Adjusted R Std. Error of Durbin- Model R R Square Square the Estimate Watson 1 .676 0.456 0.440 1.13416 1.923 2 .682 0.466 0.449 1.00837 1.990 3 .629 0.396 0.377 0.44088 1.962

Having the regression model, the ideal 2.0 which highly represents that result is gained by applying the mean there is no autocorrelation within the value of e-service quality dimensions as model (Karadimitriou & Marshall, the independent variables and the mean 2015). value of three criterion as dependent Moreover, Table 26 shows the variables in SPPS program. Table 25 ANOVA test results upon the three displays the model summary of the regression model. It confirms that all of regression. The adjusted R-square for the three models are significant which model 1 to model 3 are 0.440; 0.449; and means that the e-service quality 0.377 which is quite satisfactory. The dimensions have a significant impact on result of Durbin Watson test are 1.923; the overall quality, perceived value and 1.990; and 1962 respectively. They are in loyalty intention. the range of 1.5 to 2.5 and close to the

Table 26. ANOVA Test Result

Sum of Mean Model Items df F Sig. Squares Square Regression 138.285 4 34.571 26.876 .000*** 1 Residual 164.648 128 1.286 Total 302.932 132 Regression 113.447 4 28.362 27.893 .000*** 2 Residual 130.151 128 1.017 Total 243.598 132 Regression 16.28 4 4.07 20.938 .000*** 3 Residual 24.88 128 0.194 Total 41.16 132 Note:***, **, * denotes significant in 1%, 5%, 10% respectively

Table 27 provides further Moreover, there are two dimensions on analysis for these three models that have Model 2 that are significant namely a direct impact on its respective ‘efficiency’ and ‘fulfilment’ with p value dependent variables. It shows that in below 0.05. They have coefficient value Model 1 there is only one dimension that 0.359 and 0.404 respectively. is significant with p value 0.001 namely Nonetheless, there is no dimension that ‘efficiency’ with coefficient value 0.605. is significant in Model 3. Zakat Management Information System: E-Service Quality and…. 67

Table 27. Regression Coefficient Results

Unstandardized Coefficients Standardized Model Dimension Coefficients t Sig. B Std. Error Beta EFF 1.307 0.376 0.605 3.475 0.001*** SYS -0.421 0.306 -0.202 -1.378 0.171 1 FUL 0.529 0.385 0.257 1.372 0.172 PRI 0.007 0.172 0.003 0.038 0.970 EFF 0.695 0.334 0.359 2.078 0.040** SYS -0.200 0.272 -0.107 -0.734 0.464 2 FUL 0.746 0.343 0.404 2.177 0.031** PRI 0.076 0.153 0.043 0.497 0.620 EFF 0.204 0.146 0.256 1.396 0.165 SYS 0.128 0.119 0.167 1.077 0.284 3 FUL 0.234 0.150 0.309 1.565 0.120 PRI -0.092 0.067 -0.127 -1.374 0.172 Note:***, **, * denotes significant in 1%, 5%, 10% respectively

CONCLUSION Gross Domestic Regional Product (GDRP) per capita and GINI coefficient Reflections and Conclusion are not significantly impacting zakat This study has evaluated the impact of collection. SIMBA on the national zakat collection Moreover, this study has and its electronic service quality succeeded in adapting and conducting e- perceived by the SIMBA operators at a service quality survey to zakat nation-wide level. Prior to that, the information system realm. All the tests earlier chapters have established an prove that the instrument in this study understanding of the development of has a high degree of reliability and zakat management system in Indonesia validity. and the importance management The empirical findings show that information system in zakat operation. SIMBA operators are highly educated, The regression results in its have significant training experience and explorative attempt to illustrate the intensive interaction with SIMBA but impact of SIMBA implementation on the are underpaid. It should bring an national zakat collection shows that attention to BAZNAS in order to prevent SIMBA is positive and significantly human resources drain out. In addition, impact the national zakat collection. BAZNAS as the main stakeholder Moreover, the HDI that represents the should pay significant attention to the human resource quality of management SIMBA operator’s characteristic which in local BAZNAS office is significantly dominantly millennial. They are tech contribute to increase zakat collection savvy who are loyal to individual but still have a low magnitude in which managers rather than to corporation and BAZNAS central office needs to pay willing to deliver hard work along with attention to increase it. On the contrary, virtually immediate reward. This group the population is still a burden for zakat also consider the company’ commitment collection as endemic poverty and the to people development and society ignorance to pay zakat are identified as contribution which is should be retained the reasons. It is also found that the real by BAZNAS as the organization value. 68 International Journal of Zakat Vol. 4(2) 2019

The gap analysis has revealed BAZNAS should consider the findings that there are two items in SIMBA e- of this study to enhance the electronic service quality performance that exceed service quality of SIMBA in order to the operator expectation, namely SYS4 improve the effectiveness and efficiency and FUL1. SYS4 represents that there is of zakat operation. no error during service while FUL1 represents that SIMBA offers service LIMITATIONS AND FURTHER after necessary data is submitted. This RESEARCH study also has identified and elaborated which e-service quality items that should There are limitations that should be be retained, repositioned, improved and recognised in this study, as it can be a ignored for SIMBA development. major input for further study. The non-parametric tests, Mann- (i) Data availability constraints, as it Whitney U test and Krusskall-Wallis makes only two year period in 85 test, are applied in this study to scrutiny cities are involved in this study; the significant difference among (ii) The primary and secondary data demographic variables collected in this research is limited There is no significant difference to BAZNAS regional office and between gender and among various not capturing any data from LAZ education level in perceiving SIMBA’ at all. In fact, LAZ represents performance, overall quality, perceived 27.93% of total national zakat and value, and loyalty intention which infaq collection (BAZNAS, 2017) indicates that SIMBA has successfully which is quite significant. developed to meet its goal throughout Further study needs to be done to different gender and education level. capture the impact of SIMBA in a much BAZNAS should pay attention to several longer period with much more operator’s characteristics that tend to be observations as SIMBA implementation more loyal towards SIMBA in compare is getting wider each year. to other characteristic groups. They are operators who are married, at the age 36- 45 years old, and using SIMBA in a daily REFERENCES basis. Moreover, Bali & Nusa Tenggara and Maluku & Papua are the regions Abdelbaki, H. H., 2013. The Impact of where respondent perceived highest Zakat on Poverty and Income score in SIMBA’ performance, overall Inequality in Bahrain. Review of quality, perceived value, and loyalty Integrative Business & Economic intention as those regions mostly are Research, 2(1), pp. 133-154. remote and serve a wide area of service. Abedifar, P., Ebrahim, S. M., Molyneux, Therefore, BAZNAS may take these P. & Tarazi, A., 2015. Islamic findings as an input to make a SIMBA Banking and Finance: Recent development strategy and human Empirical Literature and capacity enhancement program for Directions for Future Research. operator SIMBA in the future. Journal of Economic Surveys, Volume 4, pp. 637-670. The multiple regression analysis shows Ahmed, H., 2004. Role of Zakah and that the three models developed in this Awqaf in Poverty Alleviation. study are significant in explaining the Jeddah: IRTI, IDB. SIMBA overall quality, perceived value, and loyalty intention. In this regard, Zakat Management Information System: E-Service Quality and…. 69

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International Journal of Zakat Vol. 4(2) 2019 page 73-86 Zakat Institutions and Universities Strategic Partnership for Poverty Alleviation

Abu baker Ramadan Mohamed Hussain Department of Finance and Economics College of Business Administration, Taibah University

ABSTRACT Despite the global efforts to eradicate poverty around the world, avoid exists in the literature examining the role of an effective strategic partnership between universities and Zakat institutions as a core social protection provider in the Muslim world. This paper contributes to the literature in this area by assessing the prevailing patterns of collaboration between Zakat organizations and universities. The main objective is two folds; first, by appraising their potentialities, it establishes common interests that focus on shared goals and objectives; ethics and values; and networks and processes. The second is to propose strategic partnership framework. The proposed strategic partnership framework will increase penetration and outreach by bridging the knowledge gap, better targeted social protection components and improving communication and networks. The adoption of the framework will change how these institutions approach their goals and respond to community pressures providing variety of differentiated products and services to reduce poverty.

Keywords: Zakat, Strategic Partnership Framework, Poverty Alleviation, Zakat Institutions

INTRODUCTION private and civil society partnerships, besides enhancing capacity building, Poverty is a severe challenge to almost data and monitoring, governance, all countries. International organizations finance and policy coherence (World believe knowledge and knowledge Development Indicators 2016, and sharing are core approach to alleviate COMCEC, 2016). poverty; they emphasize that To achieve SDGs goals, the partnerships are indispensable to declaration stresses on strengthening the achieving the common strategic goal means of implementation and revitalize (The World Bank, 2014; FAO, IFAD & the global partnership for sustainable WFP, 2012). Partnering with the public development. This places Zakat to address societal needs are growing in institutions and universities strategic number and importance and especially partnership as core social institutions to among organizations that think inspire sustainable development in the institutionally (Kanter, 2013). Recent Organization of Islamic Countries trends on knowledge economy stresses (OICs). on knowledge as enabler to eradicate Zakat is the third pillar of Islam, poverty that shifted the global strategic it means literally purification and growth goals and momentums from Millennium (Gahf, 2010; IRIT, 2014). Legally, it Development Goals (MDGs) towards means the transfer of ownership of Sustainable Development Goals (SDGs) specific wealth to specific individuals promoting effective public, public- 74 International Journal of Zakat Vol. 4(2) 2019

mentioned in the Holy Quran (Quran: is considered by leading international 9:60). It implies that poor people have organizations and developing countries the right in the wealth of the rich as a means to eradicate poverty. It (Hussain, 2015). Accordingly, Zakat implies different meanings for institutions are legal entities designated universities across the globe (Banks, to perform the religiously drawn 2016). It varies from relationship for objectives covering collection, specific purpose, partnerships, and distribution and management (Johari, strategic partnerships that are results- 2014). oriented, intensive, dynamic, long term, Global Poverty Map shows that and ethically focused. 21 out of 48 Least Developed Countries Universities are often not viewed are members of OICs, the organization by communities as valued partners in shows 21 percent of the total population problem-solving (Sarena et al, 2003). In living under USD 1.90 (COMCEC, a similar vein, UNICEF (2009) asserts 2016). IRTI (2014) emphasized that that universities have not yet reached multidimensional poverty measures their full potential of partnerships and within the OICs shows diverse records. collaborative relationships. It stresses However, challenges to achieving SDGs the importance of strategic partnerships varied from political will, institutional with civil society organizations, capacity and lack of inclusive growth corporate sector and knowledge processes. Accordingly, metric statistics institutions. The Association of Business among OIC members entails the need for Schools (ABS) (2014) emphasized that collaborative efforts to reduce poverty universities have to include more explicit among organization’s members (Ahmed, links between theory and practice giving 2009; Abdebaki, 2016). more considerable attention to Many scholars underlined the interdisciplinary programs. This requires unrealized role of Zakat institutions to strong local organizational partnerships effectively eradicate poverty (Hussain, to match market needs with local 2015, IRTI, 2014). Others, including capabilities. SESRIC (2015); Ahmed (2015); The existing literature asserts that Ammani (2014); and Sarea (2012) more purposeful engagement is needed questioned the international to assist the diffusion of knowledge. For organizations criteria that linked poverty instance, Porter (2007) emphasizes that measurements to the rate of income, the potentiality of the strategic approach visualizing Zakat as an important between universities and community “Socio-Financial Index” to reduce the organizations can have a significant gap between poor and rich within a impact on regional economic country and between nations. In revitalization without new funding. That comparison between Zakat collection the untapped capabilities of the and distribution, Saad (2014) argues that universities envision sustained regional there are several factors led to prosperity while contributing to the inefficiency in Zakat distribution leadership and universities’ long-term including procedures and processes of prospects. Likewise, Foster (2005) Zakat funds distribution. highlighted the need for collective A partnership is collaborative attention to converting collected relationships between two entities to information into useful systematic work towards shared objectives (CCF, intelligence indicators and to addressing 2010). A strategic partnership approach local community problems. Broström, Zakat Institutions and Universities Strategic Partnership for Poverty… 75

Anders, (2010) appraises collaborative THE ESSENCE OF THE R&D with universities against their RATIONALE motive, desired social returns and subsidies. They concluded that, despite To establish a foundation for financial support by governments to partnership, it is imperative to raise the boost R&D collaboration, forces inducing strategic partnerships’ conceptualization of motives for and common interests. The rationale stems effects from such collaboration remains from three overarching sources namely: poor. unsatisfactory existing patterns of As developing countries move collaboration; potentiality of Zakat towards a knowledge economy, the link institutions and universities: between local institutions (including Zakat) and universities is becoming the Unsatisfactory existing patterns of Zakat primary vehicle to achieve the nation's – universities partnerships developmental goals. One of the Existing literature showed that stumbling blocks to integrating Zakat universities – Zakat strategic partnership institutions and universities is to instil is yet to materialize and formalize to knowledge and R&D mindsets into zakat eradicate poverty. Zakat institutions in organization’s culture. This requires a the Muslim countries differ in a way they shift from considering internal control collaborate and interact with compliance to a more sustainable universities. These differences resulted permeates the entire organization. in varied social protection outcomes. By reviewing the relevant Many scholars like Ahmed (2015); literature, this paper examines whether Dogarawa (2009), and IRTI (2014) the rationale behind universities’ identified two important deficiencies in engagement is driven by the same forces Zakat practices and processes namely; as Zakat institutions; or whether it inefficiency in Zakat distribution and represents a different type of entitlements procedures, while engagement that need to be treated Zakatable funds (collection) that rely on strategically different. Accordingly, the wealth and financial assets are not purpose of this paper is two folds: first, strongly allocated against contemporary is to identify common interests that economic activities. The former attracted reflect the rationale behind the call for enormous attention among researchers collaboration between Zakat institutions highlighting the negligence of and universities. This lays the empowerment of the poor revealing that foundations for strategic partnership most poor people do not possess based on the unsatisfactory patterns of entrepreneurial and technical skills existing forms of collaboration and the needed for wealth creation. However, the potentialities of Zakat institutions and latter omits current economic activities universities. The second aim is to and financial resources. recommend a framework for a strategic Similarly, in a search for partnership between Zakat and excellence, universities tend to form shy- universities as a tool to eradicate away direct collaboration with Zakat poverty. organization to tackle social protection activities and management (Clarke & Feeny, 2007; Banks, 2016). Much research in this field has generated by faculty members on their interests, while

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others depend on government funding. entitlements, type of support, As a result, weak resource management composition, duration and time. by the poor prevails together with fewer Related activities by universities programs targeted vulnerable people, cover collaborative research, research and most importantly how Zakat chairs, training, consultancies, tailored organizations increase their penetration courses and programs. Having the main and outreach (Sarea, 2012). objectives of these institutions to Typical conventional strategic participate in community development, directions for universities include; much of their objective to reap financial engaged research that aims to develop a rewards showed insufficient formal high level of knowledge, skills and engagement with Zakat institutions. culture to serve local communities. Jacob et al. (2015) urged Higher Education is directed to improve Education Institutions (HEIs) to engage students’ employability and to leverage within their local community where they social responsibilities consolidating reside to have sustainable impact on civic identity (Ausi 2013). society; likewise, communities must Perkmann (2013) suggests improve network with HEIs to maintain universities must improve their equal and positive partnership. understanding of causal relationships Mirroring recent practices of between community engagement and Zakat organizations, the state of research performance for identifying knowledge remains relatively contemporary activities; and designing fragmented and tentative. For instance, appropriate policy interventions that Hussain (2015) highlighted the improve human capital and social safety inadequateness of Zakat organizations’ net in dynamic nature of a knowledge internal processes in using knowledge economy. management approaches, especially for Spatial experiences produced activities that support poor people asset different methods of collaboration management and the provision of local exacerbating poverty ratios. In Asia, economic infrastructure. The literature SESRIC, (2015) and IRTI (2014) suggests that some Zakat organizations examined the interaction between across Muslim world, differ in absorbing universities and Zakat organizations in knowledge produced by universities Indonesia, India and Pakistan. The mainly in using information and results showed five different types of knowledge that support certain sections collaboration including student support, of poor and vulnerable people (Saad, institutional (universities) support, 2014). infrastructure, events and dakwah activities. While in African countries The potentiality of Zakat institutions such as Malawi, Uganda, Zambia and Many scholars recognized the Mozambique, their current patterns of importance of reliable and dynamic local Zakat support to higher institutions focus systems and institutions to achieve local on graduate student’s support (Dahiru, economic development goals (Clarks, 2016). That includes financial support 2010; Bassi et al., 2014; Anand, 2011; (bursaries), accommodation and rental World Bank, 2011). Zakat is the third support and stationaries. Prioritizing pillar of Islam aims to bridge the gap these activities require a closer between rich and poor (Quran, 9:60). Its collaboration to identify students’ institutions play a significant role in social protection and socioeconomic Zakat Institutions and Universities Strategic Partnership for Poverty… 77

development (IDB, 2014; Hussain, social safety net acknowledges the 2014). Zakat acts as a core Islamic potentiality of Zakat to deliver best socioeconomic policy responsible for results to combat poverty and increase social protection and financial stability. social inclusion (Abdelbaki, 2016). As As divine self-sustainable institutions, legal entities, Zakat institutions aim to the prime functions of Zakat include strengthen social capital and blistering collection, distribution and managing social assets; as they fully aware of Zakat funds. social structures, that aids the design and Recent global changes implement more effective local emphasized that Zakat institutions must development agendas. reorganize themselves to cope better Third, challenges of the with contemporary challenges and knowledge economy pressurized local pressures on poverty eradication and institutions to formulate effective sustainable development. However, partnerships to achieve their strategic Zakat institutions encompass the goals within the national development following potentials: framework. Among other advocates, the First, Zakat organization UN (2015) assumes effective characterized as a financially self- partnerships enhance community sustained organization (Saad, 2014). involvement, institutional capacities, That Zakat collection contains all governance and strong accountability economic activities if Zakat conditions that help nations to accelerate the are met including enough Zakatable funs reduction of poverty. In this sense, Zakat and the annuity of funds. Before institutions are core learning disbursement, operational expenses and organizations that can create value for all necessary expenditure for collection, the poor and the needy if they exploit distribution and management will be their knowledge to the benefit of their covered. However, this involves strategic objectives (Hussain, 2015). research work and capacity building Zakat institutions are ethically expenses to increase the efficiency and trustworthy organization characterized effectiveness of Zakat. This character by transparency, professional assures the sustainability of the proposed management and accountability to its partnership framework. stakeholders, (Abdelbaki, 2016). Second, global consensus to Forth, modern knowledge eradicate poverty led by the United economy and knowledge management Nation ‘Sustainable Development Goals overshadowed all voluntary, NGOs and (SDGs) prompted developed and community organizations’ processes. developing countries to accommodate Zakat economic activities and these goals into their national strategies institutional governance entail the and policies. This implies the integration essence of knowledge economy of all local organizations to focus on components symbolizing religious deeper, strong and effective strategic commitments and socio-economic participation to strengthen and generate development objectives as strategic knowledge that can be absorbed and goals. The holy Quran specifies and exploited by local communities. Their priorities eight proceed to distribute strategic focus concentrates on building Zakat funds that depend entirely on and coordinating macro-level collection. The collected funds require communities of practice to reduce comprehensive knowledge about poverty (Hussain, 2015). Research on existing economic activities, businesses,

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types of Zakatable funds, Zakat payees typical Zakat institution governance and (individuals and organizations) processes are summarized in the procedures and operational processes. A following figure.

Figure 1. Zakat Processes

Source: Prepared by Author.

Fifth, leading international how knowledge is exchanged to share organizations including the World Bank and to promote exemplary practices and (2011), UNDP (2011), FAO, IFAD & initiatives that have resulted from WFP (2012) stress on knowledge as the engaged research, education and services prime focus to eradicate poverty. Zakat (Théron, 2014). In recent years, their institutions knowledge loop role in enhancing economic growth and encompasses insight and foresight socio-economic development have knowledge. These include data mining, mounted. Many scholars reveal that information, systems, tools, technologies universities have given freedom to required for ongoing management and prioritize their own goals building practices. The generated knowledge is, effective engagement within the however, requires organizational prevailing framework of shared value alignment to national strategic and organization’s ethics (Banks, 2016; approaches, changes in leadership and Broström, 2010, and Brennan, 2004). decision-making processes. By targeting This new role assures the autonomy to the eight proceeds prescribed in the Holy create, disseminate and share knowledge Quran, (9:60), they have a critical to fulfil sustained development agenda. inclusionary mechanism to reshape However, they differ in how societal development goals. knowledge served societies to promote development and economic growth. Potentialities of Universities Accordingly, diverse patterns of Universities are an important source of university-society interactions, knowledge creation and knowledge commitment and motives have emerged transfer (Yusuf, 2007; Clare, Chave, to formalized different types of 2014). Their strategic directions denote collaboration. Although, universities Zakat Institutions and Universities Strategic Partnership for Poverty… 79

ability to create and share knowledge is d. In a similar vein, the demand for the prime force for successful higher education continues to partnership by conducting relevant grow in developing world, research activities covering preventive, particularly in Muslim countries. remedial and development objectives. Universities’ participation is still Other drives to address societal problems below expectations and remains include: significantly correlated with a. New global trends encourage resource management, wealth universities to materialize suitable creation and income distribution. culture to accommodate the needs e. Rethinking the role of universities of a knowledge economy by in growth and development enhancing research, local necessitates the recognition of networks, learning programs and local and regional growth and objective-driven linkages. This community wellbeing; supporting necessitated universities to have a socioeconomic mobility; leading edge in research, Anticipation of future business technology and knowledge needs and building talents and creation to effectively engage in supports local organization’s realizing the global SDGs together evidence-based policymaking. with national, regional and local These potentialities will offer poverty reduction objectives. insights into crucial Zakat institutions b. The increased challenge to expand processes such as recognition of the university’s academic contemporary Zakatable financial engagement beyond the traditional resources and activities scrutinizing objectives of teaching and learning social protection priorities and and research. These include approaches among others. Nevertheless, developing and delivering it gives and universities the necessary programs to stimulate the foundations for building solid societal emerging local / community strategic partnership. economic development activities while sustaining scientific research Common interests funds. c. Recent recognition of the need for The successful strategic partnership exploiting the capabilities of relies on flexibility by both institutions higher education institutions to adapt their organizational goals and (universities) in strategic objectives, shared ethics and values with partnership plays a very significant processes and networks. This is thought role to achieve a community’s to create common strategic objectives development goals. In this sense, and interests. universities must reposition Zakat institutions are strategic partnership within their progressively adopting strategies to missions to achieve the desired better access integrating sources of goals. Such partnership should knowledge to identify Zakatable sources play a lead role in promoting of funds and targeting specific section in socio-economic development that the society known as Zakat proceeds. is necessary for the knowledge This builds a consensus to increase their economy. interest to collaborate with universities. Similarly, a typical strategic mission of

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universities has moved beyond improve societal socioeconomic traditional teaching and research towards developmental objectives. This will lead better-addressing community challenges to building a useful foundation to and needs contributing directly to growth propose strategic partnership and development. framework. Figure (2) summarizes Accordingly, both institutions common grounds for a successful motivated by such common interests to strategic partnership.

Figure 2. Common Interests

Source: Prepared by Author.

a. Shared goals b. Ethics and values Local communities appreciate Zakat institutions and Universities global SDGs goals announced by are regularly exploring open and the UN, but they also treasure the honest practices accompanied by relationship they have with their ethics, values and transparency own local goals, including Zakat implanting the essences of fairness objectives. To complement these and justice. Their abilities to goals strong strategic partnership establish and promote core ethics should take place to galvanize and and values in their operations and formalize scattered and often processes are based on their isolated attempts. Both Zakat original terms of references. institutions and universities place Universities are core sources of themselves as anchor knowledge and technology while, organizations at local level Zakat institutions are religious- targeting sustainable development based organizations seek to and knowledge transfer that well enforce Shariah guidelines lodging documented in their strategic goals Islamic ethics and moral values and missions including supporting and rules in financial transactions and achieving the nation's and financial management. The development goals while realizing entrusted commitment implies their own strategic objectives. them to become local leaders with Zakat Institutions and Universities Strategic Partnership for Poverty… 81

the ability to perform their research objectives and processes missions and plans across nations, become an important vehicle to regions and at local level. achieve common goals. c. Processes & Networks Development goals have changed THE FRAMEWORK across frontiers prompted Zakat institutions and universities to The success of an effective strategic rethink their objectives, priorities partnership between Zakat institutions and processes. Manyika, et al. and universities inevitably rests on (2013) indicated a shift in the realizing the common goals. This demand for education, training and involves formalizing strategic knowledge drives the customers partnership; resolving challenges and (including poor people) to look for acquiring certain competencies. It more services and innovative depends on mutual recognition of varied products (goods and services). In Zakat issues and process together with accordance, both institutions have universities’ community collaboration to tie research to local goals. To stay focus on crystalizing development needs, utilizing common interests and strategic goals; knowledge economy processes to there is a need to accommodate empowering poor and vulnerable partnership goals within their mission, people. However, building virtual developing necessary approaches to networks and consolidating achieve them.

Figure 3. Zakat Institutions – Universities Strategic Partnership Framework

Source: Prepared by Author.

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Figure 3 summarizes Zakat- to integrate capabilities and incentives universities strategic partnership. Based concurrently with the emerging changes on the above rationale and common in the labour market and community’s interests, it rests on two tiers to achieve goals and needs. its goals, the required improvements and The proposed framework is targeted approaches. Improvement thought to increase penetration and processes include strengthening outreach, unlocking Zakat institutions database and information; raising the and universities potentials leading to awareness of Zakat issues encompassing better resource management, and ways social protection and socioeconomic to improve societal wellbeing. inclusion to enhance local development Penetration, in this sense, will foster new objectives. Simultaneously, community practices that facilitate improvements entail internal cultural values to support knowledge- organization and institutional quality to based growth and sustainable transform essential organizational development. capabilities. Progress on social It promotes capacity building that protection schemes and program need to signifies ethics and values approaches; be carefully revised to accommodate the empowering local organizations, and needed improvements. community members’ capabilities to Targeted approaches follow two tackle poverty and other societal different directions; first, the selected problems. The framework supports research domains develop appropriate knowledge exchange activities, gateways to assess community’s including collaborative research, challenges and emerging economic consultancy, training, risk analysis and activities that Zakatable funds depend resource management and procedures. on, while redefining beneficiaries of Zakat (proceeds identified in the holy Quran). Since universities tend to WHAT STRATEGIC PARTNERSHIP develop high levels of knowledge and FRAMEWORK CAN DO? skills, research themes and processes will produce useful insights to Controlling the joint strategic actions understand community’s social enhances the shift towards a more protection goals. In doing so the strategic approach to realizing practices enrich not only community institutional objectives and a country's participatory research but also valid strategic development goals. It assumes interpretation to their socioeconomics to share risks and benefits in attaining problems. social protection goals that promote Second, approaching internal inclusionary measures accompanying governance is the most crucial element ethics and values and capacity building. in strategic partnership success. The In particular, penetration and outreach framework will instil the essence of will enhance the following outcomes: knowledge management in all Zakat processes (see figure 1). Most Bridging knowledge gap importantly, it develops result-based The proposed framework will bridge the evaluation traditions forcing the knowledge gap which is necessary for processes of knowledge management emerging activities and modern working governance. This implies redesigning lives. The process enriches community social protection schemes and programs development programs, maintaining local accessibility and appropriate education to Zakat Institutions and Universities Strategic Partnership for Poverty… 83

meeting labour market demand. Formal on labour market needs and required agreements with universities to cooperate knowledge and how to share its for long term with Zakat organizations outcomes across society. strengthening decision making processes and exchange more information and get more knowledge that improves outcomes, CONCLUSION processes and fulfilling national and organization’s objectives. This study highlighted the importance of Zakat institutions as an Islamic Better targeted social protection organization to curtail poverty situations components and to achieve social protection goals. It The strategic partnership will presents the role of Universities as a relentlessly advice on whether current powerhouse that generates knowledge as Zakat funds can be better targeted “the enabler to attain sustainable eight proceed” to provide effective development goals. The paper support and fair access and identifies underlines three different forces that lay Zakatable sources of funds in a the foundation of strategic partnership sustainable manner that consolidating between Zakat institutions and social capital and social assets. universities; including the unsatisfactory existing patterns of collaboration; the Improving communication & Networks potentiality of Zakat institutions to reduce the gap between rich and the The proposed strategic partnership poor; and the aptitude of universities to framework builds a robust continual strengthening the current knowledge database that improves the depth and reservoir to eradicate poverty. relevance of decision making. Its It identifies common interests networks frontiers including vertical and ranged from shared development goals; horizontal relationships deepen ethics and values; knowledge processes penetration and outreach stimulating and networks. Accordingly, the paper robust and inclusive local economic proposes a strategic partnership development. This makes antipoverty framework that will reinforce policies more effective. The framework penetration and outreach including; first: considers feedbacks from previous it formalizes strategic partnerships that programs as a key ingredient in institutionalize social problems within designing new programs. universities’ development objectives.

Such collaboration provides a better Tailored Community Programs understanding of poverty and the poor Within the domain of Zakat institutions while it generates a variety of and universities, there are varying differentiated products and services to programs addressing different themes reduce poverty. while targeting various sections in the Second, methodologically, it society. The framework will strengthen alters how institutions approach their existing programs while identifying new societal goals and respond to community ones to tackle specific social problem pressures fulfilling the shared and emerging challenges. This requires socioeconomic values. That the scrutinizing closely Zakat programs dynamism of poverty requires a relying on the nature of its classified and continuous search for assessment and identified activities and beneficiaries. As appropriate means to address its for universities, tailored programs focus components. Third, practical

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implications include; the provision of Nova Science, Publisher, Inc. New tailored programs focusing on York. vulnerable, poor people and certain Brennan, J., King, R., Lebeau, Y. (2004) societal segments. In this sense, the The Role of Universities in framework provides a broader and Transformation of Societies: An integrated practices to help Zakat International Research Project. institutions and universities to achieve Centre For Higher Education their objectives more effectively and Research & Information; ACU. efficiently in releasing their social Broström, Anders, (2010) Firms’ protection programs. Rationales for Interaction with Research Universities and the Principles for Public Co-Funding. REFERENCES Journal of Technology Transfer. Available at Abdelbaki, H. H. (2016) The Impact of SSRN: https://ssrn.com/abstract=1 Zakat on Poverty and Income 640344 Inequality in Bahrain. Review of Clarke, M., Feeny, S. (Eds.) (2007) Integrative Business & Economics Education for the end of poverty Research; Vol. 2, No. 1, pp. 133 - implementing all the Millennium 154. Development Goals; Nova Abreu, M, Grinevich, V., Hughes, A., Science, Publisher, Inc. New Kitson, M., Ternouth, P. (2008) York. Universities, Business and Dahiru, M. A (2016) Glimpses from Knowledge Exchange. The Zakat sector in sub - Saharan Council for Industry and Higher Africa; IIIBF&IBF available at: Education. http://www.iiibf.com/glimpses- Ahmed, F. O., (2009) Zakat Funds and from-zakat-sector-in-sub-saharan- Wealth Creation. Review of africa/ Islamic Economics; 66(3), pp. 577 Dogarawa, A. B. (2009) Poverty – 593. Alleviation through Zakat and Ahmed, R., Othman, A. and Salleh, M. Wagf Institutions: A Case for the (2015) Assessing the Satisfaction Muslim Ummah in Ghana. MPRA level of Zakat Recipients Towards Paper, No. 23191. Zakat Management; Science EL Khuluqo, I. (2016) The Role of Zakat Direct, Procedia – Economics and in National Economic Finance 140 – 151. Development; International Ammani, S.; Abba, S. A.; Dandago, K. I. Journal of Business Economics (2014) Zakat on employment and Law; Vol. 9, No. 5, pp. 214 - income in Muslim majority states 223. of Nigeria: Any cause of alarm; Emmanuelle, F., M. Tomlinson, and R. Procedia Economics and Finance. Walker (2013) Poverty, Banks, C. (Ed), (2016) Global Participation and Choice, Joseph Perspectives on Strategic Rowntree Foundation, Cambridge. International Partnerships: A FAO, IFAD & WFP. (2014) The State of Guide to Building Sustainable Food Insecurity in the World 2014: Academic Linkages; Institute of Economic Growth is necessary but International Education IIE. not sufficient to accelerate Begin, B. et al (2006) Trends in poverty and welfare alleviation issues; Zakat Institutions and Universities Strategic Partnership for Poverty… 85

reduction of hunger and Kanter, R. M., (2013) How Great malnutrition. Rom: FAO. Companies Think differently; Foster, A. (2005) Realizing the Potential: Harvard Business Review onPoint A review of the future role of ISSN 1558-4879. further education colleges. DfES Lane, M., V. (2006) Trends in Poverty publications. Available at and Welfare Alleviation Issues; http://bit.ly/1vUPbSJ. Nova Science Publisher, Inc. New Gahf, M. (2010) Principles of “Figh” York. renewal and of “Ijtihad” in Zakat Perkmann, M., Tartari, V., Mckelvey, institutions and Islamic Banking; M., Autio, E., Sobrero, M. (2013) Israa, International Islamic Academic engagement and Finance; Vol. 1 No. 1. commercialization: A review of Hussain, A. (2015) Can Zakat the literature on university – Institutions Adopt Consumer – industry relations Research; Centric Knowledge Management Policy Vol. 42, pp. 423 - 442. Successfully? In Kaufmann Porter, M. (2007) Colleges and “Handbook of Research on Universities and Regional Managing and Influencing Economic Development: A Consumer Behavior” IGI pp. 508 – Strategic Perspective; 2007 Forum 533. for the Future of Higher Education. IRTI and Thomson Reuter, (2014) Cambridge. Islamic Social Finance Report – Razak, M., Omar, Hashim, M., (2013) 2014. Thomson Reuter. Overview of Zakat Collection in Islamic Development Bank (IDB), Malaysia: Regional Analysis. (2016) Key Development American Journal of Indicators for the IDB Member Contemporary Research, Vol. 3 Countries – statistical Yearbook. No. 8 pp. 140 – 148. No. 36. Saad, R., Abdul Aziz, N. and Sawandi, Jacob, W. J., Sutin, S. E., Weidman, J. C. N. (2014) Islamic accountability and Yeager, J. L. (Eds.) (2015) framework in the Zakat funds Community Engagement in management; Elsevier Ltd, Higher Education: Policy Reforms Procedia – Social and Behavioral and Practice. Sense Publisher. Sciences 164, pp 508 – 515. Johari, F., Ab Aziz, M. R., Ibrahim, M. Said, J. et al (2012) Composite F., Ali, A. F. M., (2013) The Role Performance Measurement for of Islamic Social Welfare (Zakat) Zakat Organizations; British for the Economic Development of Journal of Economics, Finance New Covert. Middle –East Journal and Management Sciences, Vol. 4 of Scientific Research; Vol. 18, No. (1). 3, pp. 330 – 339 Sarea, A. (2012). Zakat as a Benchmark Johari, F., Ab Aziz, M. R., Ali, A. F. to Evaluate Economic Growth: An M., (2014) A Review on Alternative Approach; Literatures of Zakat Between 2003 International Journal of Business – 2013; Liberary Philosophy and and Social Science, Vol. 3 No 18 practice (e-journal). Paper 1175 pp. 242 – 245. http://digitalcommons.unl.edu/lip Shirazi, N. S., (2014) Integrating Zakat hilprac/1175 and Waqf into the Poverty Reduction: Strategy of the IDB

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Member Countries. Islamic UNDP (2011) Beyond Transition: Economic Studies; Vol. 22, No. 1, Towards Inclusive Societies, pp. 79 - 108. Regional Human Development Standing Committee for Economic and Report, UNDP. Commercial Cooperation of the United Nations Children’s Fund (2009) Organization of Islamic UNICEF strategic framework for Cooperation (COMCEC), (2016) partnerships and collaborative CCO Brief on Poverty Alleviation; relationships, UNICEF COMCEC Coordination Office. E/ICEF/2009/10. Standing Committee for Economic and Universities UK (UUK), (2015) The Commercial Cooperation of the Funding Environment for Organization of Islamic Universities 2015: The Economic Cooperation (COMCEC), (2016) Role of UK universities. available Report on the implementation of at: www.universitiesuk.ac.uk the OIC/COMCEC strategy; World Bank (2014) Knowledge in COMCEC Coordination Office, Development Note: Measuring OIC/COMCEC/32-16/D (39). Global Poverty. Washington, DC: Standing Committee for Economic and The World Bank. Commercial Cooperation of the World Bank, (2012) World Organization of Islamic Development Report 2013: Jobs, Cooperation (COMCEC), 2016, Washington, DC. COMCEC Poverty Outlook 2016: World Bank. (2011) The State of World Human Development in OIC. Bank Knowledge: Knowledge for COMCEC Coordination Office. development. Washington, DC: Standing Committee for Economic and The World Bank. Commercial Cooperation of the World Development Indicators (2016) OIC the Statistical, Economic and Featuring the Sustainable Social Research and Training Development Goals, World Bank Centre for Islamic Countries Group, Washington, DC. (SESRIC), (2015) Measurement of Yusuf, S. Nabeshima, K. (Eds) (2007) Poverty in OIC member countries: How Universities Promote Enhancing National Statistical Economic Development; The Capacities; OIC. World Bank, Washington DC. The Islamic Research and Training Institute (IRTI), (2014) Islamic Social Finance Report – 2014; Abu baker Ramadan Mohamed Thomson Reuters. Hussain, Théron, I. B., Anderson, K. (Eds.), Associate Professor, Taibah University, (2014) Knowledge in Action: [email protected], University-Community [email protected] Engagement in Australia; Cambridge Scholars Publishing. Thorpe, R. and Rawlinson (2014) The Role of UK Business Schools in Driving Innovation and Growth in the Domestic Economy, The Association of Business Schools (ABS).

International Journal of Zakat Vol. 4(2) 2019 page 87-100 The Potential of Application of Technology-Based Innovations for Zakat Administration in India

Aishath Muneeza and Shahbaz Nadwi International Center for Education in Islamic Finance (INCEIF)

ABSTRACT

India is the home country for many Muslims and effective management of zakah is essential to the country. In this era of technology, it is imperative to use technology with zakat to ensure that the classical zakat administration approaches are upgraded to the uruf or customary practices of the society. The objective of this paper is to find out the potential of using technology in upgrading zakat administration in India. This is a qualitative approach where the primary sources such as zakat administration laws in India and secondary sources such as journal articles and published reports on the subject are analysed to derive conclusions. The findings of this paper suggest that the innovations such as rice ATMs, mobile applications, applications made with blockchain technology, artificial intelligence and big data can also play a vital role in the effective management of zakat in India. It is anticipated that the outcome of this research will assist the zakat administrators in India to adopt technology in this regard.

Keywords: Artificial intelligence, big Data, fintech, rice ATM, zakat

INTRODUCTION different verses Allah (SW) has mentioned zakat. In al-Quran Zakat has In Islam, Zakat is third pillar of the been described as a way in which the religion Islam. Every Muslim who is redistribution of wealth is practised in capable of paying zakat shall do so an economy considering the rights of without an excuse. In Islam, there are the poor that must be fulfilled by those two types of zakat; which is zakat al-fitr who are financially capable in the and zakat al-maal. Irrespective of the society. country in which a person resides and After Indonesia, India is the the legal system adopted by the country, largest country in terms of Muslim every Muslim is obliged to pay Zakat as population. It is estimated that there are long as the person fulfils the religious 17.18 crore Muslims in India requirements to give it. In simple term, accounting for 14.2 per cent of India’s zakat can be defined as almsgiving. population and there is no exact Zakat literally means to purify or estimate on how much Zakat is increase or grow. This literal meaning of collected in India, with estimates zakat indicates that via zakat a person’s fluctuating between Rs 7,500 crore and wealth can be purified and this lead Rs 40,000 crore annually (Shaikh, one’s wealth to grow and be increased 2019). As such, administration of zakat not only physically, but spiritually as in India is important and there is a need paying zakat leads to increase of to effectively manage zakat. The barakah (blessing) of Allah (SW) in objective of this paper is to suggest the one’s wealth. In the Holy book of ways in which technology could Muslim, Al Quran, more than 30 enhance the administration of zakat in 88 International Journal of Zakat Vol. 4(2) 2019

India. This paper is divided into four than Rs 10,000 as Zakat. Thirty-nine per parts. Followed by this introduction, cent paid Rs 10,000-50,000 (USD?), part two discusses the existing zakat five per cent paid Rs 50,000-Rs 1 administration practices in Indian while (USD?) lakh, and 10 per cent over Rs 1 part three explains the technological lakh and most donations are given by innovations made in different parts of individuals to their own relatives, with the world to administer zakat which 38 per cent saying they preferred paying India could adopt. The final part of the charity to their less well-off relatives paper deals with conclusion. (Shaikh, 2017). Only 16 per cent of respondents paid money to NGOs or community organisations and funding LITERATURE REVIEW an individual’s education was the most preferred form of paying Zakat (Shaikh, Administration of Zakah in India 2017). However, with only 18 per cent In India, there is no central system for paying Zakat for education, the number zakat administration as zakat is a was relatively less (Shaikh, 2017). Over personal matter. As such, in different 50 per cent tended to pay Zakat to the states, there are various private zakat same people, and over 55 per cent managers like NGOs who deal with claimed that the money they gave as zakat or zakat payment and distribution charity to someone did not change the becomes a personal matter handled by life of the family nor were the donors the individuals. interested in finding out whether the In May 2019, it was reported money was being used effectively that there was a survey conducted (Shaikh, 2017). Nearly 47 per cent of across India by the Association of the respondents preferred the money Muslim Professionals (AMP), who sent being given for the educational questionnaires to 4,589 respondents empowerment of the community from across various social strata to (Shaikh, 2017). understand the current practices of AMP is one of the zakat Zakat collection, distribution and its collectors in the country which has impact on Muslim community (Shaikh, more than 75 chapters across the 2019). This survey revealed that 77 per country which is a registered society cent of respondents believe that zakat under Societies Registration Act 1860, has the potential to transform the Maharashtra, Mumbai of which the Muslim community in India and the registration number is. 2011 G. B. B. S. main concern they raised was thought D 3001 (AMP, N/A). AMP has their zakat money is being given for various own zakat fund and they publish the purposes, there is no specific focus and performance of their zakat fund in their the payers of zakat they have concerns official website. The official website on not knowing the impact created in indicates that AMP zakat fund was the sense that they do not know whether created in 2013 to empower the lives of the money they give is having any their people by promoting education & tangible impact on the lives of those self-employment. The information of who received it (Shaikh, 2017). The AMP zakat fund between 2013- 2018 is findings of this survey also revealed that illustrated in table 1. 36 per cent of the respondents paid less

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Table 1. Performance of AMP Zakat Fund between 2013-2018

Source: Official Website of AMP

Table 1 indicates that year by in 2019 will be utilised for the purposed year, the zakat collection of AMP has illustrated in Table 2. been growing and every year AMP AMP also disclosed in their ensures that the zakat collected money official website the bank account to is disbursed. This proves that AMP has which the zakat money could be been conducting initiatives to make deposited and they have disclosed that public aware about the existence of their no administration fee or a cost will be zakat fund and the transparent charged for this. Using this information disclosure made by them may have about AMP zakat fund, it is understood increased the confidence of public in that in India there is a decentralisation entrusting zakat money to them. AMP zakat administration model where has also disclosed their zakat plan for private parties who wish to do so have 2019 in their official website where they the autonomy to deal with it. Other than have stated that the zakat fund collected AMP, there are many other organisations that do zakat

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administration in similar manner which Source: Official Website of AMP are located in different parts of the India such as Zakat Foundation of India which was established in 1997 which is RESULTS & DISCUSSION a non-governmental/non-profit organization which collects and utilizes Use of Technology in Zakat in India ‘zakat’ or charity for socially beneficial In the case of AMP Zakat fund, it is projects in a transparent and organized found that there is no use of technology manner (Zakat Foundation of India, at all in collection or disbursement of N/A). Since there are various zakat fund. The procedure used is organisations managing zakat in India, purely based on a bank transfer made to for the purpose of this paper, AMP will the account or via a cheque sent to the be used for a case study. address provided in the website. This proves that there is scope for application Table 2. AMP Zakat Disbursement Plan of technology by organisations like 2019 AMP in India who deals with Zakat.

This part of the paper will provide the Support A Wherein yearly support of Higher Rs.10,000/- (Rupees Ten type of technology that has been Education – Thousand) is given to students adopted in different parts of the world Empower Lives pursuing Higher Education in which India could adopt in this regard. the fields of Engineering, Medicine, Architecture, etc. 1. Rice ATMs By this endeavour AMP Rice Automated Teller Machines hopes that the worries of the (ATMs) provide rice for needy student getting assistance without the involvement of a would be reduced to some extent and they can focus human similar to how cash is better on their education and dispensed via Bank ATMs. A try to build a good base for portion of Zakat money needs to themselves. be allocated for the poor and there Support A Small Wherein support of is need to ensure that a proper Business – Make Rs.25000/- (Rupees Twent mechanism in a less costly A Happy Family Five Thousand) is given to manner could be made make this any needy Muslim person/ family to start a source of possible. In Malaysia, these Rice income. Through this ATMs have been installed in endeavor AMP firmly hopes mosques (Nordin, 2019) and this that the Zakat Taker of today is indeed something which India becomes the Zakat Giver of shall consider as well. tomorrow. In February 2019, it was Support an AMP has decided to support announced that The Federal Orphan - Shape the educational expenses of a A Life needy orphan child so that the Territories Islamic Religious child is not deprived of even Department (Jawi) hopes to install the basic education for want ‘rice ATM machines’ at 85 of a guardian. Through this mosques in the Federal Territory endeavour AMP intends that to facilitate its 23,000 asnaf or the orphans in the community should not feel left behind or tithe recipients (Bernama, 2019). isolated and the community is It is reported by Bernama (2019) right behind them to support that the cost of this machine is them. RM19,000 (USD?) and is the first in the country and it has two The Potential of Application of Technology-Based Innovations for Zakat… 91

functions, namely to give out rice (Jabodetabek), such as BAZNAS supply in desired quantity and has Office (Kebon Sirih Street No. 57 a donation box to receive funds Jakarta) and nine mosques which from the public. On February are cooperated with BAZNAS. 15th, first rice ATM machine was Each unit of ATM can store up to installed at Al-Akram Mosque in 230 litres rice capacity, which can Kampung Datuk Keramat. fulfil the needs of 120 households. The main purpose of the Then, each unit can be refilled Rice ATMs is to provide eight times per month. It was also assistance to recipients (asnaf / stated that the Rice ATM program beneficiaries of zakat) who are is also in line with the BAZNAS registered as poor for zakat support to continuing SDGs in purpose to collect rice using a order to eliminate the food special card provided to them for shortages for poor people. this purpose. The modus operandi It is essential to understand of these rice ATM’s is that the the way the Rice ATMs work. In user of the ATM machine must Sindonews, it was stated that the tap the special card they have for BAZNAS rice, measuring 60 cm the purpose on the sensor of the x 60 cm x 160 cm, shaped like a machine and then the machine closet box and is very similar to a will dispense 2kgs of through the regular ATM machine and the rice designated collection point in the ATM is equipped with electronic machine which is located in the devices that hybrid network base of the machine. In this modem GSM/satellite as well as special rice ATM machine, those control and monitoring system- who wish to donate money for the based machine to machine (M2M) purpose can also do so by or Internet of Things (IoT). The depositing cash through a slot in machine can remove the rice in a the machine. certain amount automatically and Though this is the first the way it works is that the rice time Rice ATMs are used in out by attaching the card Radio Malaysia, rice ATMs were Frequency Identification (RFID) innovated for zakat purpose by at the sensor card reader on the The National Board of Zakat, device. It was reported that each Republic of Indonesia rice ATM unit has a storage (BAZNAS), and the machine was capacity of 1,000 kg of rice to created by one of alumni of meet the needs for 1,000 Bandung Technology Institute recipients and each unit will be (Institut Teknologi Bandung or recharged as many as eight times ITB). It was reported in the in one month. The cost of official website of BAZNAS on manufacture and maintenance in a 17th January 2017 that the year to Rp30 million per unit and machine in Arthaloka building (in one-time transaction can draw rice Jakarta) is a prototype of ATM from 1 kg and 2 kgs. Rice ATM machines which soon to be cards are issued by the mosques. assembled in ten several location The questions that might points in Jakarta, Bogor, Depok be asked are: why a rice ATM and Tanggerang and Bekasi why not just money? Or why is it

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placed in a mosque; rather than a lifestyle. In some countries such shop or a bank or elsewhere? On as Malaysia mobile apps have 28th February 2019, it was been introduced for ease zakat reported that a mosque in North administration. In June 2018, it Jakarta provides rice machine for was reported in the official the poor and this program to website of Lembaga Zakat provide rice ATMs began on 13th Selangor (LZS) that they had January 2019 where at least 33 introduced mobile apps to urban poor had received four free Penolong Amil Fitrah (PAF) to litres of rice twice a week from make zakat fitrah collection in the machine (The Jakarta Post, Selangor (Lembaga Zakat 2019). It was reported that Barnas Selangor, 2018). It was stated that Sumantri, the head of the Jami this project involved 200 selected Raudlatul Jannah Mosque’s PAF in Selangor and through Welfare Council, said the rice these mobile apps, PAF no longer ATM, which provides charity to uses a coupon of nature as the less fortunate living around evidence of zakat payments, the mosque, operates every instead using mobile apps to issue Wednesday and Sunday. Barnas zakat payments in the field. To has explained the reason behind make this possible, each involved giving rice and the benefit of it as PAF is given an RM50 (USD?) follows: “by giving rice [as smart card, printer and internet charity], we can feed a whole access facility. Zakat producers family. If we give money, Rp only need to provide identification 100,000 [US$7] for example, it cards for information scans for might only be enough for one or storage purposes at LZS and the two persons”. It was also reported PAF will print the receipt once that the reason why Wednesday payment of zakat fitrah is made. and Sunday are chosen is that This application is supported by a these are the days the mosque link to the LZS system and it has conducts religious studies. As number of security features such, there are multiple benefits embedded. Every personal of choosing these days and Barnas information of the zakat payers is has described these benefits as: recorded more efficiently and “they can get multiple benefits. easily into the LZS system and The pahala (reward), the also the payment bills via knowledge and the rice. The immediate withdrawal receipts mosque had given special ATM also increase the trust level of cards to each of the beneficiaries, zakat producers with LZS. The and in order to get the rice, the advantage of using such an app cardholders only have to tap their include reducing the risk of losing cards on the machine, and the rice the physical coupons as physical flows into a container. coupons that need to be taken 2. Mobile Apps anywhere. Today the use of smart mobile 3. Zakat Payment via Payment phones are widespread. Therefore, Gateway from Website the use of a mobile app for Time is money and a convenient convenience has become a mechanism is required to pay The Potential of Application of Technology-Based Innovations for Zakat… 93

zakat money. Having a website to payments will be made in real- provide only information is not time online which is the process enough today and it is imperative of debiting from the payer's bank to have features like making to the payer’s account is being payments via website. It is carried out at that time and the suggested that India could adopt process of issuing a zakat this convenient way of payment of payment receipt will be done zakat. A perfect example of this within 14 working days. could be the case of Malaysia 4. Zakat Via Fintech where Lembaga Zakat Selangor Today, it is an essential to own a has introduced e-zakat pay which mobile phone and as such, is an online zakat payment everyone owns a mobile sim. An method at arrangement could be made with www.zakatselangor.com.my the telecommunication provider (Lembaga Zakat Selangor, N/A). by the zakat administration It is stated that e-zakat pay organization in India to ensure is an online financial transaction that there is a convenient platform that links between banks mechanism to pay zakat. A good to make zakat payment to the example to illustrate how this Lembaga Zakat Selangor. There work could be taken from are number of banks which are Malaysia, where in 2014, it was associated with Lembaga Zakat reported that Celcom Axiata Selangor to carry out this financial Berhad, the first and foremost transaction. It is stated that for mobile telecommunications zakat payment, the payer only provider in the country, facilitated need to visit the e-zakat portal at the Muslim customers to pay for www.zakatselangor.com.my and their zakat fitrah, anytime and click on the E-Zakat Pay payment anywhere through the telco’s M- to pay zakat. However, it is a Fitrah service (CELCOM, 2014). condition precedent for the payer It was stated that the M-Fitrah to have an account at the service was available in three (3) participating bank before payment options; SMS, USSD, proceeding with the payment. WEB and WAP. In this case, the Subsequently, the payer shall telecommunication company was follow the steps given, and an unauthorized collection agent payment of zakat will be for zakat fitrah, offering the M- completed online. There is no Fitrah service to its Muslim registration and payment needed customers in Selangor, Melaka, for using e-Zakat Pay and no Kedah, Perlis, Terengganu, additional charges are taken for Pahang, Sabah and Kelantan. In this service. It is imperative that in M-Fitrah service, customers are e-Zakat Pay, there is no need for required to enter the payer to download any “FITRAH” and application. Everything is taken send it to 21999 or dial *888*33# place from the designated website for the payment of zakat fitrah via and the entire transaction is secure SMS. Next, they will receive a as it is encrypted with 128 Bit reply from 21999 and are required SSL. Also. In e-Zakat Pay, all to send their “,

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Number>, ” to the same number. partnership with a Then a verification message will telecommunication provider and ensue and if the reply is YES, a could offer same services to the thank you message and receipt zakat payers. number for each payment made to 5. Blockchain Applications self and dependents will be sent Research is ongoing to integrate back to the customers. For zakat blockchain technology to zakat. It fitrah payment via WEB Page, is reported that Dr Ziyaad customers can visit Mahomed, Associate Dean of www.thecube.my/mfitrah. executive education and e- Customers will be requested to fill learning at the International in their details and upon Centre for Education in Islamic completing the online form, they Finance (INCEIF), and his team will receive an SMS from 21999 have come up with an Islamic with a pin code; which has to be social financing app that leverages keyed into the page in order to blockchain technology. The complete the submission. For modus operandi of this app has zakat fitrah payment via WAP been summarized by Dr Ziyaad as Page, customers may visit follows according to the edge m.thecube.my/mfitrah and enter markets (2018): “How the app their mobile number before works is very simple. When users clicking the submit button. An turn it on, they are presented with SMS will be sent from 12028 two options: sadaqat (charity) or providing them with an URL link. zakat. If they choose zakat, the Upon selecting the link they will app prompts them to select the be automatically redirected to the school of thought they follow — M-Fitrah page or they may select Shafie, Maliki, Hambali or Hanafi M-Fitrah link from the display — as there are differences of page. Customers are required to opinion. Then, the app asks a few insert their information and will questions such as where they be redirected to the Lifecube would like to see their money go. page. Through either one of the We provide them with a choice of Web Page or Wap Page, projects such as water irrigation, customers will then receive an sanitation, poverty eradication and SMS to confirm their submitted education. After choosing the information and will be required project, they complete their to respond via SMS accordingly. payment using a secure gateway. For those who need to modify Specific projects are listed. And their details, they will be required once the zakat payment has been to respond SALAH and resubmit made, it is registered on a node in their application. Upon the blockchain. Payers will confirmation of details, another receive confirmation of SMS will be delivered to the acceptance. Now, the project has customer to confirm on the their money. When the money has payment and a receipt of payment been fully utilised, the payers will will be sent via SMS.The be notified via the app. Thanks to organizations dealing with zakat the transparency provided by the The Potential of Application of Technology-Based Innovations for Zakat… 95

blockchain, there is more cooperative and nonprofit partners confidence among payers that located in rural areas in Indonesia. their zakat has reached the How this works is summarized in intended recipients” (Noordin, the Figure 1. 2018). This app was developed in With regards to the issue partnership with Dublin-based of exchange fees it was stated that financial technology (fintech) Blossom has consulted with their company AidTech and the internal shariah advisory and they International Federation of Red have been advised that exchange Cross and Red Crescent Societies. fees incurred when converting It was supposed to be launched in from cryptocurrency to local the end of last year, but it is not currency qualify as part of the launched yet. This technology- total zakat payment. Bearing this based innovation promoted in mind, it is stated that Blossom transparency in zakat and sadaqat will try their best to trade the boosting the confidence of crypto in a way that incurs contributors. minimal or no fees. It is essential In May 2018, it was to note that Blossom Finance has reported that by Indonesian based published a working paper on the Blossom Finance that in permissibility of Bitcoin and Ramadan, Blossom Finance is cryptocurrency and has concluded offering a free service allowing that bitcoin qualifies as Islamic Muslims to pay zakat owed money, except where banned by against cryptocurrency holdings local government, but cautions directly using the blockchain and investors against speculation, these payments collected by initial coin offerings (ICOs) and Blossom will go towards orphans investment schemes. Blossom and widows in Sumatra and Finance helps institutions to raise Central Java, Indonesia via cost-effective, Shariah-compliant Blossom’s network of financing from global investors cooperatives and nonprofits using blockchain technology on (Blossom, 2018). It was stated its Smart Sukuk platform. that this service by Blossom is Blossom was founded in 2014 to offered free of charge and no increase the availability of halal payment is charged for using the financial products using service. It is stated in the official technology. Since 2015, Blossom website of Blossom that how this has been helping microfinance service works is Blossom will institutions in Indonesia raise accept payments in funds from international investors cryptocurrency directly via the to fund micro-businesses aimed at Blockchain to a Blossom reducing regional poverty. controlled wallet held at a To make zakat cryptocurrency exchange in administration more efficient and Indonesia. Blossom then converts transparent the use of blockchain the cryptocurrency to Indonesian technology with smart contracts Rupiah and deposits the amount could be used in India as well. into the bank accounts of their

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Figure 1. Blossom’s Procedure to Pay Zakat via CryptoCurrency

Source: Information extracted from the official website of Blossom

6. Artificial Intelligence each type of Zakat they have to The functions performed by pay every year, the system helps humans are being replaced by users to: (1) determine if they are machines and artificial required to give Zakat, (2) intelligence is being utilized in the determine the unique conditions, financial industry now. Another and the amount of each type of innovation we see is zakat Zakat they have to pay every year. chatbots powered with artificial The system was developed based intelligence technology replacing on a rules-based expert system the officers who provide shell. To develop such a system, information about zakat and on information that is attained from a the calculation of it. This could be human expert is represented in the described as an improvised form of rules, such as IF-THEN. version of the simple zakat Then the rules are used to perform calculators we use now. In this operations that lead into achieving regard, Al-Riyami, et. Al. (2014) certain goals. It is stated that after from Sultan Qaboos University of reviewing the Zakat expert Oman have presented in 15th system, the majority of the 20 European Conference on potential users also indicated that Knowledge Management, ECKM the system saves time and effort 2014 a research on zakat expert in searching for information system (ES). They state that ES is related to Zakat's rules. Users also a part of applied artificial indicated that it is very useful for intelligence and the idea of an ES calculating Zakat quickly and is to convert knowledge from accurately, and is very beneficial, human expertise to a convenient, and easy to use for computerized system. The people who have no knowledge objective of their study is to apply about Zakat. Other strengths of expert system technology in the the system are that it is more field of Zakat to assist Muslims in convenient than going to human the decision making of identifying experts and provides a variety of the rules of making Zakat and to Zakat types. assist in complex calculations. In 2017, Pahang Zakat They state that the objective of the Collection Center (PKZ) has also Zakat ES is to specifically help introduced a chatbot called people calculate the amount of ZakatChat (APPAGG, N/A). The Potential of Application of Technology-Based Innovations for Zakat… 97

ZakatChat is an artificial through the BAZNAS website intelligence-based application (baznas.go.id/zakatsekarang) and provided by PKZ to smartphone through the Muzaki Corner users and visitors to PKZ's official application service. An external website to interact and help platform, where the platform answer questions about zakat comes from BAZNAS partners property. It is stated in their who provide special space and official website that ZakatChat options for the community to uses a specially programmed zakat through BAZNAS. Some of search engine technology to the examples for this are the match questions asked with option of zakat and charity available databases. In addition, through kitabisa.com, gojek, ZakatChat also guides users to bukalapak, tokopedia, and others. obtain additional information Apart from this social media from other mediums if the platform to facilitate direct information is not available in the donations through social media is ZakatChat database. made. National Zakat Index (IZN) In 2018, in collaboration is also introduced to measure with PT Artina Digitama zakat. BAZNAS has also a plan to Indonusa (Artdigi), the Baznas of introduce an electronic commerce Indonesia launched a Zakat platform to increase market access Virtual Assistant Chatbot named for mustahik products benefiting "Zaki" for the first time in the productive zakat program. Indonesia (The Jakarta Post, India also can consider 2018). It was reported that Zaki using artificial intelligence to can be accessed on the LINE improvise zakat administration. messenger application under the 7. Big Data name @zakibaznas and in the Zakat information or data near future it will be available on management also face challenges the Facebook Messenger chat as information on zakat including application and the community the payers, distributors, receivers can calculate the amount of zakat and other stakeholders need to be accurately, literacy, and zakat maintained and the volume of education as well as information these data are growing day by on Baznas social and day. Big data can resolve this. Big humanitarian programs. Zaki's data can be described as a features that will be coming soon technology that enable to analyze, include maps of the nearest systematically extract information mosque location, prayer schedule from, or otherwise deal with data reminders to da'wah material. sets that are too large or complex With chatbot technology that is to be dealt with by traditional equipped with Natural Language data-processing application Process, it allows this feature to software. Sulaiman, et.al. (2015) be able to chat with users to has stated that the main difficulty analyze the wishes of the users. in handling large amount of data Apart from the chatbot, BAZNAS is due to the five big data concepts has developed an internal involving volume, velocity, platform, for donation services variety, veracity and value which

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increases rapidly in comparison to generation of humans. As illustrated in the computing resources and zakat this paper, each and every technological administrators are currently facing innovation has its own unique issues with the growing amount of advantages which will definitely assist data on zakat payers, zakat in resolving some of the existing issues. distribution and various zakat There is no lack of Information recipients. They state that technology experts in the country and it overwhelming amount of data is hoped that the findings of this paper must be carefully managed by the will assist organizations like AMP to zakat institutions and the consider using technological appointed zakat fund trustees as innovations to manage zakat. zakat data resides in massive, unstructured information, largely in various forms of numeric, text REFERENCES and imagery, there is a need for zakat institutions to switch to Al-Riyami, A., Al-Harthy, A., Al-Amri, better data management K., & Al-Busaidi, K. A. (2014). mechanism. Their study proposes Zakat expert system. In a big data maturity model to Proceedings of the 15th European gauge the readiness of zakat Conference on Knowledge institutions to embark into the big Management, ECKM 2014 (Vol. data evolution and the proposed 1, pp. 31-38). Academic model also provide the zakat Conferences Limited. institution with more structured Association of Muslim Professionals processes of managing the high (AMP), (N/A), What is AMP, volume of data in order to provide retrieved on 1st June 2019 from better reporting transparency, http://ampindia.org/What_is_AM making well-informed decisions P and instil confidence and trust APPAGG, (N/A), Description from the community on better ZakatChat, retrieved on 1st June zakat management and 2019 from distribution. https://appagg.com/android/books Indeed, big data could be -reference/zakatchat- helpful for zakat administration in 28877078.html?hl=en India too. Bernama (2019), 85 mosques in Kuala Lumpur to have rice ATM machines, retrieved on 1st June CONCLUSION 2019 from http://www.bernama.com/en/news It is evident from this paper that .php?id=1697796 currently the use of technology in zakat Blossom, (2018), Muslims Can Now in administration in India needs to be Pay Zakat in Cryptocurrency, improved. This paper has suggested retrieved on 1st June 2019 from some of the technological innovations https://blossomfinance.com/press/ that could be adopted in this regard. muslims-can-now-pay-zakat-in- Since this is the era of technology, there cryptocurrency is need to adopt technology as the ‘uruf CELCOM, (2014), Press Release: The or customary practices of this Easiest Way to Pay Zakat with The Potential of Application of Technology-Based Innovations for Zakat… 99

Celcom M-Fitrah Service, https://ieeexplore.ieee.org/docume retrieved on 1st June 2019 from nt/7333084/authors#authors https://ocs.celcom.com.my/Web_ The Jakarta Post, (2019), Mosque in Center_Sites/PBO/Files_Corporat North Jakarta provides rice e/Media_Release/2014/2014-July- machine for the poor, retrieved on 17.pdf 1st June 2019 from Lembaga Zakat Selangor, (2018), LZS https://www.thejakartapost.com/n Introduced Mobile Apps to Ease ews/2019/02/28/mosque-in-north- Penolong Amil Fitrah, retrieved jakarta-provides-rice-machine- on 1st June 2019 from for-the-poor.html https://www.zakatselangor.com.m The Jakarta Post, (2018), BAZNAS y/latest-news/lzs-introduced- launches zakat virtual payment mobile-apps-to-ease-penolong- assistant for alms donors, amil-fitrah/?lang=en retrieved on 1st June 2019 from Lembaga Zakat Selangor, (N/A), Pay https://www.thejakartapost.com/a Online, retrieved on 1st June 2019 dv/2018/05/28/baznas-launches- from zakat-virtual-payment-assistant- https://www.zakatselangor.com.m for-alms-donors.html y/pay-online/?lang=en Zakat Foundation of India, (N/A), Noordin, K.A. (2018), Islamic Finance: About Us, retrieved on 1st June Using blockchain to improve 2019 from transparency of zakat process, http://www.zakatindia.org/About retrieved on 1st June 2019 from Us.htmlAl- https://www.theedgemarkets.com/ article/islamic-finance-using- blockchain-improve-transparency- Aishath Muneeza zakat-process INCEIF, Malaysia Nordin, R. (2019), Rice for the needy [email protected]/[email protected] via automated teller machine, om retrieved on 1st June 2019 from https://www.thestar.com.my/metr Shahbaz Nadwi o/metro-news/2019/05/30/rice- INCEIF, Malaysia for-the-needy-via-automated- teller- machine#V31R15q1rFmtUGgz.99 Shaikh, Z. (2019), Zakat can transform Muslim community: Survey, retrieved on 1st June 2019 from https://indianexpress.com/article/c ities/mumbai/zakat-can- transform-muslim-community- survey-5707834/ Sulaiman, H. Cob, Z.C. Ali, N, Big data maturity model for Malaysian zakat institutions to embark on big data initiatives, retrieved on 1st June 2019 from

100 International Journal of Zakat Vol. 4(2) 2019

International Journal of Zakat Vol. 4(2) 2019 page 101-110 A Maqasid and Shariah Enterprises Theory-Based Performance Measurement for Zakat Institution

Ataina Hudayati and Achmad Tohirin Universitas Islam Indonesia

ABSTRACT

This study aims to develop a performance measurement system for zakat institutions from the perspective of maqashid al-Shariah and Islamic enterprise theory. This study embarks from previous studies focusing on the performance measurement methods applied to the zakat institutions. The understanding of maqashid al-Shariah in this paper refers to the concept formulated by Al Ghazali and Ibn Ashur. The basis of selecting so is their widely known concept in the contemporary research. This paper concludes that the performance measurement based on maqashid al-Shariah for Islamic bank can be adopted in zakat institution by making various adjustments according to the characteristics of the institution. In addition, this study also designed a performance scorecard to assess the performance of zakat institutions based on maqashid al-Sharia and Islamic enterprises theory. This scorecard method can calculate the index of zakat management of the related institution from a broader perspective.

Keywords: performance, measurement, maqashid al-Shariah, enterprise theory

INTRODUCTION for 2017 period, only reached 2.9 percent from its potential of Rp. 217 trillion Poverty is a classic problem that (BAZNAS, 2018). Aibak (2015) argued massively occurs in developing country. that one of the reasons for the low Poverty is a complex problem. Poverty concern of the community in paying and its implications can involve all zakat formally to the institution is aspects of human life. To reduce the because the institution’s method of problem of poverty, Islam offers zakat as collection. In some cases, the zakat a comprehensive solution. That is, one of management institution seems to be the reasons for establishing zakat passive in collecting zakat. institution is to improve the effectiveness In order zakat can achieve its of zakat management. In Indonesia, such objectives, the institution must be in government institution is called as the accordance with the objectives of National Boar of Zakat, Republic of Shariah or maqashid al-Shariah. Indonesia (BAZNAS), while those the Maqashid al-Shariah is the basic private ones called Lembaga Amil Zakat paradigm of Islamic economics (LAZ). Both are governed under the low (Muzlifah, 2013). The importance of No. 23 of 2011. maqashid al-Shariah concept has been According to National Zakat addressed by some researchers. In the Statistics 2017 published by BAZNAS, context of zakat institution, Hapsari and the number of zakat institution in Abidin (2016) examined the distribution Indonesia reaches to 603 institutions. of zakat based on the maqashid al- However, the overall percentage of zakat Shariah framework. The same attempt collection in the nationwide of Indonesia was also done Mardiah and Jamil (2016) 102 International Journal of Zakat Vol. 4(2) 2019

who reviewed the effectiveness of the to be a muzakki, even to achieve so distribution of zakat at the Dompet requires an extensive work. Thus, it is Dhuafa (DD) Palembang. The results of interesting to assess the degree to which the study show that through various a zakat institution has been endorsing the programs, DD Palembang has been able concept of maqashid al-Shariah, to promote maqashid al-Shariah in the particularly in the context of Indonesia. local context. In the next section, the theoretical Furthermore, Fitria (2018) explanation is discussed further covering examined the conformity of social the concept of maqashid al-Shariah, the entrepreneurship programs in zakat innovation in the management of zakat institutions using maqashid al-Shariah and the understanding of stakeholder and sampled DD for a case study. The theory. Further, the discussion also work highlighted the significance of the mainly reviewed some relevant previous concept to be employed when analysing studies. The main part of this paper the performance of Zakat institution. In establishes the design of performance like manner, Nugroho & Wahyuni measurement for zakat management. (2019) elaborated upon the necessity of Finally, this paper provides conclusions, maqashid al-Shariah to develop a implications and suggestions. framework for designing and implementing performance measurement. They tested their method LITERATURE REVIEW by measuring the performance of the al- Haromain zakat institution in Malang Maqashid al-Shariah based on the concept of the balanced According to al-Syathibi as quoted by scorecard and the perspective of Aibak (2015), the Shariah actually aims maqashid al-Shariah. These reviewed to realize the welfare of humans in the studies indicated the importance of world and the hereafter. From this basis, considering maqashid al-Shariah when it is clear that in fact the laws were not analysing the performance of Zakat made for the law itself but were made for institution. the purpose of all human being. As elaborated in the above text, Muhammad Abu Zahrah asserted that this study aims to expand the previous the welfare for all human being should studies by constructing more be achieved through individual comprehensive model of performance education, the realization of justice and measurement for zakat institution based welfare of the community (Mohammed on maqashid al-Shariah and Islamic et al. 2008). enterprise theory. This study integrates Al-Ghazali as mentioned in the these concepts for a comprehensive study of Syofyan (2017), stated that the method of measurement. primary purpose of Shariah is to promote Measuring the performance of human welfare, which lies in protecting zakat institutions is important. This is the followings; because in general, the need to assess the a. faith (din), effectiveness and the efficiency of zakat b. life (nafs), institutions is vital for their c. intellectual (aql), improvement. The simplest way to d. progeny (nasl), and evaluate the effectiveness of zakat e. wealth (maal). institutions is by looking at the speed of transformation of converting a mustahik A Maqasid and Shariah Enterprises Theory-Based Performance… 103

Further, Mulyana (2017) c. traditional productive and concluded the concept of welfare in d. creative productive. Islam, which is rooted from Al Ghazali’s Traditional consumptive is the notion of maqashid al-Shariah. In the distribution of zakat to be used directly study, maqashid al-Shariah is believed to by the mustahik, to meet their daily be the most comprehensive concept of needs. The creative consumptive is the welfare. That is because the concept not distribution of zakat which is manifested only covers the elements of material in other forms of the original goods, but needs but also moral and spiritual still in the consumptive category, for aspects. Thus, it what differs from the example zakat is distributed in the form concept of welfare which is promoted by of school tools or scholarships. the western concept, which only focuses Furthermore, traditional on the material aspects. productive zakat is the distribution of Based on the above explanation, zakat given in the form of productive it is clear that maqashid al-Shariah has goods such as buying goats, cows, not only the dimension of the worldly commercial equipment and so on. aspect but also the hereafter. Finally, creative productive zakat, which is the distribution of zakat which is made Innovation in zakat management in the form of business capital. Komariyah (2013) explained the main According to Muhammad & purpose of zakat is to realize justice. Mas’ud (2005) as quoted in Ningrum Therefore, zakat is required in narrowing (2016), productive zakat is the giving of economic inequality in the society, by zakat enabling the recipients to sustain distributing it specifically to certain the property from the received zakat. In groups who we call them as Mustahiks other word, productive zakat is zakat (zakat recipients). As prescribed in al- where the assets or zakat funds given to Qur'an, zakat is distributed to eight Mustahik are not directly spent but it ashnafs, which are; converts into a capital like asset. This is a. Fakir (the poor), done to strengthen their businesses b. Amil (now can be described as capacity and capability. By musthaik those who work in Zakat being enhanced their capacity and institution), capability, their business will be able to c. Muallaf (those who revert to generate more income and profit. Islam) Finally, they can fulfil their needs d. Slaves, sustainably. e. People who are in debt, There are four models of f. Fisabilillah and productive zakat distribution g. The wayfarer. (Muhammad, & Mas’ud, 2005). First, There are many innovations in budget surplus model. In this model, management of zakat to increase the zakat is partly distributed and the rest is benefit of zakat to the society. One of used for productive projects. Second, in them is the concept of productive zakat. kind model. It is a system of zakat According to Aibak (2015), zakat distribution where zakat funds are not distribution can be classified into four; distributed in the form of money but are a. Zakat distributed traditionally for given in the form of production consumption, equipment. Third, the revolving fund b. reative consumptive, model. This model provides loans to the mustahik in the form of qardhul hasan 104 International Journal of Zakat Vol. 4(2) 2019

financing. The mustahik is to return the Based on the Abu Zahrah initial amount of loan. concept, Mohammed et al. (2008) designed a technical performance Shariah enterprises theory measures for Islamic banks. The work This theory was developed by done by Mohammed et al. (2008) has significantly influenced scholarly Triyuwono (2001). The idea that profit- oriented or stockholders-oriented in discussion on measuring the conventional companies are seen to be performance of Islamic banks. For not the right orientation for Islamic example; the recent study done by companies. To replace the concept of Hudaefi & Noordin (2019); Kholid and stockholders-oriented, the author Bachtiar (2015), and among others, are suggested the use of Shariah enterprises the example of how the work of theory which is oriented to zakat (zakat- Mohammed et al. (2008) has credited the oriented), oriented to preservation of novelty to the general discourse of Islamic economics. nature (natural environment) and oriented to stakeholders. Furthermore, Mohammed et al. Furthermore Triyuwono (2001) (2015) developed further the explained that the orientation of zakat performance measurement for Islamic banks with employing the five elements means that the company will strive to achieve the optimum realization of zakat of al-Ghazali’s maqashid al-Shariah. (both material and value). Then the These including preserving; a. Religion, environment and stakeholder-oriented has the implication that Shariah b. Life, organizations must have a concern to c. Intellect, distribute the “welfare” (added value) d. Progeny, and that has been successfully created to e. Wealth. nature and stakeholders. This Shariah In designing performance ratios, enterprises theory has been used by Mohammed et al. (2015) employed the Hermawan & Rini (2016) to analyze the concept of maqashid of Al Ghazali with effectiveness of the management of the concept of maqashid of Ibn Ashur as zakat institutions. In their research, explained in Table 1. Hermawan & Rini (2016) claimed that Thus, from the above the sampled zakat institution had elaboration, it is rationale to develop the performed its obligations to God, and to performance measurement based on stakeholders. However, for obligations maqashid al-Shariah in the context of to nature and employees have not been zakat institution. fully met. Maqashid al-Sharia on Management of Maqashid-Based Performance Zakat Measurement Model for Islamic Banks Mardiah and Jamil (2016) examined the Mohammed, et al. (2008) developed suitability of zakat distribution program performance measurements based on of DD Palembang with the concept of al- Abu Zahrah’s maqashid al-Shariah. Ghazali’s maqashid al-Shariah. These include; The results of the studycan be a. individual education, seen in Table 2. The researchers b. establishing justice, and concluded that with the programs c. public interest. implemented, DD Palembang has been A Maqasid and Shariah Enterprises Theory-Based Performance… 105

able to promote the five objectives of a. Economy; Shariah. b. Social and humanity; c. Health; d. Education; and MAQASHID AL-SHARIAH-BASED e. Preaching. METHOD OF MEASUREMENTS FOR ZAKAT INSTITUTIONS The distribution of zakat in BAZNAS must be considered in Benefit of Zakat for Mustahik accordance with the maqashid al- Shariah. The first stakeholder of zakat institution is mustahik. Mustahik will receive great Benefit of zakat for Muzaki benefits from zakat institutions depending on the quality of zakat For muzaki, zakat is the implementation distribution system. of one of the pillars of Islam. Therefore, Rahmawati (2011) argued that in by carrying out the obligation of zakat, the view of Islamic economics, the muzaki has performed the first goal of maqashid al-Shariah, which is to distribution system is part of economic activity that has a strong influence on the preserve religion. In addition, zakat distribution of people's welfare. serves to purify property. Therefore, by Distribution system according to Islam is paying zakat, muzaki has achieved the fifth element of maqashid al-Shariah, a rule that cannot be separated from the provisions of maqashid al-Shariah. which is to preserve property. On this Therefore, there are two things that must point, it can be understood that zakat be considered in an effort to improve institution has assisted muzaki in welfare, they are; achieving two objectives of Shariah, a. Reducing the gap between which are preserving religion and community groups by opening preserving wealth. jobs, and Zakat institution must help b. Providing direct assistance to the muzaki to pay zakat correctly and poor, so that they can improve properly. Therefore, the zakat needs to their quality of life. be socialized with Shariah rules to determine the amount of assets that are According to Shariah, mustahiks zakat-able. Knowledge and who are staying around zakat institutions understanding of the assets owned such must get first priority to receive zakat. as income, living expenses, debts owned, Once all the designated mustahik receive primary and non-primary needs must be zakat, then the remaining zakat can be known and considered. In addition, allocated to other regions. In addition, socializing zakat to muzaki, the benefits zakat managers also need to consider the received by muzaki may enhance the form of zakat distribution whether zakat muzaki easiness for paying their zakat. will be distributed in the form of Aibak, (2016) in a study traditional consumptive, creative conducted at BAZNAS Tulungagung, consumptive, traditional productive or provided an explanation on how zakat creative productive. institutions can improve services to Amymie (2017) explained the muzaki so that muzaki will be easier, programs carried out by BAZNAS can comfortable and willing, to pay zakat. be classified based on sectoral grouping, Zakat paid by employee in Tulungagung namely; regency is collected by the zakat unit 106 International Journal of Zakat Vol. 4(2) 2019

which is usually called as Unit Penerima payment system of zakat institution Zakat (UPT). Following this, UPT complies with Shariah rules, it will be proceeds the collected zakat to possible for amil to obtain the five BAZNAS. maqashid al-Shariah as explained before. The benefits received by amil Benefit for Amil from zakat institutions are greatly Amil has the responsibility to manage influenced by the level of public trust on zakat. With this responsibility, amil has the zakat institutions. One important sacrificed his time and energy to manage aspect affecting the level of public trust zakat institutions. Through their on zakat institutions is the accountability expertise, which requires formal and of zakat institutions. This is part of the informal education, amil has worked for findings of study done by Ikhwanda & a significant contribution to the success Hudayati (2019). of the zakat institution. Because of the The findings of the study imply that zakat institutions need to improve contributions they have made, amil has the right to receive rewards for what they their accountability to gain trust from the give. public. By enhancing trust from the In addition, most amil zakat public, zakat institutions will be able to develop and continue functioning working in zakat institutions are employees of zakat institutions. Perhaps effectively as a trusted institution. In the income from the zakat management addition to accountability, public trust is also influenced by the degree of organization is the only salary they receive. Therefore, the welfare of amil transparency, professionalism and needs further attention, so that amil will competency of zakat institutions in get benefits, especially to get the fifth managing zakat. element of Maqashid al-Shariah; increase prosperity through wealth Benefit for nature/environment improvement. Shariah enterprises theory of Triyuwono Nevertheless, improving (2001) stated that organizations based on prosperity is not the only amil objective. Islamic principles must provide benefits Amil also has the right to get other to all stakeholders, both direct and maqashid al-Shariah elements that are indirect stakeholders, and provide preserved for their religion, life, intellect benefits to nature. Nevertheless, the and descent. To preserve religion, zakat results of a study conducted by institutions may design programs such as Hermawan & Rini (2016) stated that religious lectures, congregational zakat institutions have not fully been prayers and various other activities. To able to provide benefits to nature even protect amils’ children, the scholarship though responsibilities to other program is an appropriate alternative. stakeholders have been fulfilled. Provision of amil salaries needs to be considered carefully, because Shariah Performance measurement system for rules limit amil rights to a maximum of zakat institution 1/8 of the amount of zakat received. Developing a quantitative performance Accordingly, amil welfare improvement measurement system is critical, so that can be attained by taking funds from an index can be produced to measure the other sources, for example unrestricted performance of zakat institutions. This infaq or funding assistance from the state study suggests zakat institution to adopt budget or regional budget. If salary A Maqasid and Shariah Enterprises Theory-Based Performance… 107

the performance measurement financial statements of zakat institutions scorecard. This method is designed as a whole. It is important to be noted following Mohammed et al. (2008) with that the weakness of the performance some adjustments and contextualisation measurement is not considering whether to the nature of zakat institution. the zakat institution has fulfilled its The authors of this paper are of obligations to all stakeholders. the view that the performance To make practical contributions measurements proposed by Mohammed to zakat institutions, this study designed et al. (2008) are more appropriate for a more comprehensive performance measuring performance at the overall measurement scorecard that can be organizational level. This is due to the applied at the organizational level as well data used to measure performance ratios as the organizational unit level described are taken from the annual reports and in Table 3.

Table 1. Al-Ghazali and Ibn Ashur Maqashid al-Shariah

Maqashid Sharia Al Ghazali Maqashid Sharia Ibn Ashur Preservation of religion/faith Freedom of faith. Preservation of life/soul Preservation of human dignity. Protection of human right. Preservation of intellect/mind Propagation of scientific thinking. Avoidance of brain drain. Preservation of progeny Care of family. Preservation of wealth Wellbeing of society. Minimising income and wealth disparity.

Source: Adapted from Mohammed et al. (2015)

Table 2. Maqashid Sharia and Type of Program in Dompet Dhuafa

Maqashid Sharia Al Ghazali Program/Activities Preservation of religion/faith Amazing Muslimah. Ramadhan. Preservation of life/soul Health Services Mustahik Empowerment Home based clinic Preservation of intellect/mind Educational Scholarship Preservation of progeny Indonesia Creative Orphans Preservation of wealth Farmer Empowerment Livestock’s Empowerment and Beneficiaries Incubator

Source: Mardiah & Jamil (2016).

108 International Journal of Zakat Vol. 4(2) 2019

Table 3. Performance Measurement Scorecard for Zakat Institution

Program Maqashid al-Shariah Index/ Financial Benefit Index/ Activitiy MS1 MS2 MS3 MS4 MS5 Item Muzaki Mustahik Amil Nature Society Item 1 A 1 1 0 1 1 0.8 1 0 1 0 0 0.4 2 B 0 1 1 1 1 0.8 0 1 0 0 1 0.4 3 C 1 1 0 0 1 0.6 1 1 1 1 1 1 4 D 0 0 1 1 1 0.6 1 0 1 0 0 0.4 5 E 1 1 0 1 1 0.8 1 0 0 0 0 0.2

Index/Item 0.60 0.80 0.40 0.80 1.00 Maqashid Index 0.72 Benefit Index 0.48

Performance Index 0.6

Source: computed by Authors.

CONCLUSION 3) Performance measures that integrate the concepts of This study has discussed previous maqashid al-Shariah, and Shariah research related to performance enterprises theory (SET) as measurement based on maqashid al- exhibited in Table 3, that Shariah in general context of Islamic identifies the programs carried out banking and linking it to the context of by zakat institutions to meet zakat institutions. The results of the maqashid al-Shariah and fulfilled existing scholarly works were found that their obligations to all interested significant efforts have been made to parties and stakeholders. develop the concept of performance The performance measurement measurement, including for zakat based on maqasid al-Shariah as institutions. To complement what has developed in this study is relevant to been designed by previous research, this zakat stakeholders. Zakat institutions study designed a performance may employ the developed benchmark to measurement scorecard which function communicate their performance on is to complement the existing maqasid al-Shariah, so that their efforts performance measurements. The in actualising so is measurable. discussion in this paper leads to conclude that, the performance measurement techniques in zakat institutions consist of REFERENCES at least: 1) Performance measurements that Aibak, K. (2015). Zakat dalam perspektif identify the allocation of maqashid al-syariah. Ahkam: resources for each element of the Jurnal Hukum Islam, 3(2), 199- maqashid al-Sharia; 218. 2) Performance measurement that Aibak, K. (2016). Pengelolaan zakat identifies the allocation of dalam perspektif maqashid al- resources to each stakeholder; A Maqasid and Shariah Enterprises Theory-Based Performance… 109

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