Performance Measurement System for Zakat Institutions: Integrating Maqashid Sharia and Sharia Enterprises Theory

Abstract

This study aims to build a performance measurement system of zakat institutions from the perspective of maqashid sharia and sharia enterprise theory. This study embarks from previous studies focusing on the performance measurement methods applied to the zakat institutions. Understanding of maqashid sharia in this paper refers to the concept formulated by Al Ghazali and Ibn Ashur. Their applications in contemporary research can be found in various studies. This paper concludes that performance measurement based on maqashid sharia for Islamic bank can be used by zakat institution, by making various adjustments according to the characteristics of zakat institutions. In addition, this study also designed a performance scorecard to assess the performance of zakat institutions based on the perspective of maqashid sharia and sharia enterprises theory. From the scorecard, the zakat institution can calculate the zakat management index from a broader perspective.

Zakat: changing the framework of giving

“…Similar scenario occurred during the rule of Omar bin Abdul-Aziz when the governor of Egypt wrote to him asking what to do with the zakat funds as no poor or needy was found in Egypt. Omar instructed him to “[b]uy slaves and let them free, build rest areas on the highways and help young men and women to get married” (Ahmed, 2004, p. 31; see also Al-Qaradawi, 2000; Hudayati and Tohirin, 2010; Md Isa, 2011; Nadzri et al ., 2012).…”

Zekatın Kamu Maliyesi Enstrümanı Olarak Değerlendirilmesi

“…The notion of institutionalized zakat in Malaysia was regulated in 1991 (Sarif et al, 2020). In Indonesia, on the other hand, various regulations during the Dutch colonization period and a law draft in 1967, after it has become independent, paved the way for the institutionalization of zakat (Hudayati & Tohirin, 2010). Besides the institutionalization of zakat at the state level in Muslim societies, modern states also collect taxes to ensure the continuity of public expenditures in line with the development of changing world order and the understanding of citizenship.…”

“…In Muslim-majority states in which zakat as a state institution is also established, zakat as the right of the poor over the wealthy is collected by the sovereign state in addition to the compulsory tax. In other words, the zakat of hidden wealth was reintegrated into public finance in the modern state, which was carried out by the individuals after the period of Uthman (Hudayati & Tohirin, 2010). The centralized nature of the modern state and available technological tools have facilitated this opportunity in the contemporary period.…”

“…Emerging Islamic financial sectors also provided governments with public finance instruments such as sukuk, through which public financing would be possible in the global financial markets Islamically (Shaikh, 2015). Furthermore, at the local level, countries such as Malaysia and Indonesia have taken steps to gradually centralize the zakat collection process and integrate them into the public finance structure of the country (Hudayati & Tohirin, 2010).…”

“…After the second part of the 1960s, however, the central government has shown interest in the collection and distribution of zakat and issued several laws (Juwaini, 2017). With the zakat law enacted in 1999, the zakat institutions were transformed into two separate institutions as Badan Amil Zakat (BAZ), which is a state-owned institution, and Lembaga Amil Zakat (LAZ), an institution belonging to the civil society (Hudayati & Tohirin, 2010). However, zakat payment has been a voluntary act in Indonesia (Purbasari & Fauzan, 2018).…”