The Effectiveness of Zakat Fund Distribution in Alleviating Poverty (A Case of Zakat Institutions in Indonesia)

Abstract

This research aims to determine the effectiveness of the zakat fund distribution of Indonesia’s zakat institutions in alleviating poverty. This study used secondary data from the zakat institution's annual reports and website information for  2022. The object of this research is only national zakat institutions that have issued annual reports and functional websites used as research objects. Among the 91 zakat institutions, only 14 national zakat institutions meet the requirements as research samples. The research used content analysis as the analysis method. The results of this study show that all zakat institutions have implemented programs to alleviate poverty effectively. This institution prioritizes consumption, social, health, and education programs. Only a few zakat institutions implement housing programs and house renovations which are also part of the basic needs because of the limited funds. Zakat institutions have provided additional expertise through skills and leadership training. Even zakat institutions have built a local economy. No zakat institution has developed a mustahiq network, creating an enterprise zone and regional investment. Due to data limitations, this research is only able to explain 14 national zakat institutions' management distribution which had published annual reports and other information on their websites. The government, muzaki, and, academics could use this research finding to support zakat institutions so that these institutions can increase their contribution to alleviating poverty. The government should pay attention to zakat institutions by building a regulatory framework that triggers the development of these institutions.

Keywords: Poverty, Consumption, Education, Investment, Zakat

DOI: 10.7176/RJFA/14-6-04

Publication date:March 31^st 2023