zakat malaysia
TRANSCRIPT
Seminar on Accountability and Transparency of Zakat Institutions
Current Development in Zakat Institutions
Presented at International Institute of Advanced Islamic Studies
Assoc Prof Dr Abd Halim Mohd NoorDirector, CIPSF9th August 2016
TABLE OF CONTENT
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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• INTRODUCTION
• MANAGING ZAKAT FUND
•ZAKAT INSTITUTIONS IN MALAYSIA
•ZAKAT COLLECTION-DISTRIBUTION GAP
•CONCLUSIONS
• Prophet (Pbuh) as narrated by Ibn Umar:
• Islam is based on five principles: "to testify that there is no god but Allah and that Muhammad is His Prophet, to offer the regular prayers, to pay zakat (obligatory charity), perform hajj and to observe the fast during the month of Ramadan."
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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Concept of Primary and Secondary Accountability in Zakat Management
Zakat Management
Allah
Zakat Recipients
(Accountee)
Zakat Payers
(Accountee)
Primary
accountability
Secondary
accountability
Secondary
accountability
PRINCIPLES DISTRIBUTION OF ZAKAT
Rightful recipients
PrioritizationDistributing as soon as possible
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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RIGHTFUL RECIPIENTS
“The alms are only for
the poor, the needy, and those who collect them, and those whose hearts are to be reconciled (mu'allaf), and to free the captives and the debtors, and for the cause of Allah, and for the wayfarers;
a duty imposed by Allah. Allah is Knowing, Wise”
• Surah al-Taubah (9): 60
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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PRIORITY IN DISTRIBUTION
•NEED–Distribution based on need. It includes the poor, needy,
slaves, debtors and ibn sabil.
•NURTURING & ENCOURAGEMENT–Distribution based on nurturing and encouragement of
religious beliefs and morals. It includes convert and fi-sabilillah.
• INCENTIVES & MOTIVATION–Distribution based on incentives and motivation such as
amil.
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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PRINCIPLES OF MANAGING ZAKAT FUND
GOVERNANCE
ASNAF REQUIREMENT
ORGANIZATION
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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PRINCIPLES OF MANAGING ZAKAT FUND: ORGANIZATION
Trust
All proceeds of zakat is a trust in the hands of management that must be distributed to the recipients
Inclusive
The collection of zakat to be distributed to all rightful recipients/asnaf
Fair
The proceeds should be distributed fairly to all asnaf. However, for any fund that is not spent, the fund can be transferred to other asnaf, in order of importance.
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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PRINCIPLES OF MANAGING ZAKAT FUND: ASNAF REQUIREMENT
Haddul kifayah
Zakat should be given at a rate sufficient to every individual in the asnaf.
Selected
The collection of zakat is for certain groups as determined by Islamic law to the eight asnaf of zakat
Immediately
Amil or organization shall immediately implement the distribution after it identify valid recipients.
Preference
The distribution of zakat to be implemented according to priorities of the fakir, the poor and amil.
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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PRINCIPLES OF MANAGING ZAKAT FUND: GOVERNANCE
Control
All distribution of zakat to be done with careful monitoring and control.
Accountable
Amil is responsible for zakat collected and distributed
Transparent
The collection of zakat and zakat distribution to be set and audited
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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• Measuring performance broaden concept of accountability in NPO
• Commitment to accountability and transparency is important in gaining public trust and confidence
• A transparent institution disclose their performance and efficiency to stakeholders
Zakat Institutions Organizational Structure
Perlis, Johor, Terengganu, Kedah,
Perak, Kelantan
Baitulmal
Collection
Distribution
FT, Melaka, NS, Pahang
Baitulmal
Distribution
Corporate Zakat
Collection
Selangor, Penang, Sarawak, Sabah
Corporate Zakat
Collection
Distribution
ZAKAT COLLECTION IN MALAYSIA, 1991-2010
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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FACTORS INFLUENCING ZAKAT COLLECTION
• Awareness on paying zakat
• Zakat on income
• Tax rebate
• Professional approach towards the management of zakat collection
• Modernization and corporatization
ZAKAT DISTRIBUTION IN MALAYSIA
• Retention of zakat fund
• Zakat organizations on average distributed 77% of their zakat fund i.e. 23% of zakat fund were not distributed within the same year (2003-2010)
• Erratic pattern in disbursing zakat fund among states.
• Asnaf fisabilillah received the highest portion
ISSUES IN EFFECTIVENESS OF ZAKAT ORGANIZATIONS
• Requires analyses from several dimensions.
• Zakat Collection
• Zakat Distribution
• Impact of zakat on asnaf
• Outcomes of program
• Non recipients of zakat fund (NRZF)
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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• Problems of perception of zakat institutions
• Performance of ZIs differed among states – is it due to organizational structure?
• Problem of understaffing
• All ZIs have audited financial reports (pg 108)
• All ZIs have good financial control practices
• Fiduciary responsibility – Financial control and effective management of resources are crucial areas for non-profit organization governance
No
.
States Transparency checklist Total
points
Grade
Administrat
ive official
B S Au AR I A
c
CI C S
1. NS / / / / / x x / / 8 B
2. Kedah / / / / / / /
2002-
2014
/ / 10 A+
3. Pahang / / / / / / x / / 9 A-
4. Perlis / x / /
Not
deta
il
/
Not
detai
l
/
x x / 7 B-
5. Johor / / / /
Not
deta
il
/
Not
detai
l
x x / / 8 B
6. Melaka / / x /
Not
deta
il
/
x x / / 7 B-
7. Penang / / / / / x x / / 8 B
8. Perak / / / / / x x / / 8 B
9. Kelantan / / / /
Not
deta
il
/
Not
detai
l
/ x / / 9 A-
10. Sarawak / / /
Not
deta
il
/
Not
detai
l
x x / / 8 B
11. FT / / / / / / /
2007-
2014
/ / 10 A+
12. Selangor / / / / / / /
2011-
2014
/ / 10 A+
13. Sabah
Website is
under
constructio
n
- - - - - - - - - - -
14. Terenganu / / / /
Not
deta
il
/
Not
detai
l
x x / / 8 B
Audit : 6 ZI
Annual
Report: 3 ZI
have annual
report on
websites
ZAKAT COLLECTION-DISTRIBUTION GAP (ZCD)
• Simple indicator of zakat fund management.
• Persistent existence of ZCD gap is a probable indication of a weakness in the distribution system of zakat.
• Continuation of gap raised the questions of :
– poverty,
– missed economic and education opportunities,
– inadequate assistance,
– denied access to zakat funds, among others.
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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GAP IN ZAKAT COLLECTION &
DISTRIBUTION (2009-2013)
2009 2010 2011 2012 2013
Zakat Collection
1,968,871,789.60 1,363,772,680.87 1,922,863,408.05 1,641,119,093.83 2,258,024,426.94
Zakat
Distribution1,020,752,116.58 1,176,487,211.95 1,498,236,592.73 1,338,348,220.32 1,687,713,262.45
Undistributed
948,119,673.02 187,285,468.92 424,626,815.32 302,770,873.51 570,311,164.49
%
48.16 13.73 22.08 18.45 25.26
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Source: PPZ (2015)
Incidence of Poverty in Malaysia (2002-2012)
2002 2004 2007 2009 2012
Malaysia 6.0 5.7 3.6 3.8 1.7
Ethnic:
Bumiputera 9.0 8.3 5.1 5.3 2.2
Chinese 1.0 0.6 0.6 0.6 0.3
Indians 2.7 2.9 2.5 2.5 1.8
Others 8.5 6.9 9.8 6.7 1.5
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Source:http://www.epu.gov.my/
DIFFERENCE IN STATISTICS OF HARDCORE
POOR AND POOR IN MELAKA
Data eKasih Zakat Applications (2013)
Hardcore poor Poor Out of Poverty TOTAL
0 1210 8531 9741
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Hardcore Poor TOTAL
260 8424 8684
Statistics of Hardcore Poor and Poor in Melaka from eKasih
Statistics of Zakat Recipients (Hardcore Poor and Poor) in Melaka
FACTORS INFLUENCING ZCD GAP
• Paying zakat at the end of the year. Significant percentage of collection were collected in the final weeks of a year.
• Proposed distribution budget consistently lower than actual collection
• Inability of some sections or departments within zakat organizations to fully utilize the allocated fund
• Understaffing
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IMPLICATIONS OF ZCD GAP
• Issues of trust and rights of the asnaf to zakat fund set aside for them.
• Denying the access to fund affects asnaf, most of whom are vulnerable and marginalized sections of the ummah.
• Contributes to the existence of NRZF i.e. rightfully asnaf denied to zakat fund,
• Inadequate assistance, missed economic and education opportunities among the asnaf. These will lead to asnaf lingering in vicious cycle of poverty at the expense of zakat fund not being made accessible to them.
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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Enhancing Zakat Distribution
Ensuring zakat fund distributed
within a specified
time period
Identifying the eligible recipients obtain zakat
Ensuring zakat fund properly allocated to just program
Ensuring zakat fund is effectively used
Current Development in Zakat Governance
• Zakat Core Principles – Proposed Core Principles for Effective Zakat Supervision –IRTI, BAZNAS, BI, representatives from ZIs –PPZ, LZS, CIPSF
• International Standard for Zakat Management – World Zakat Forum
RECOMMENDATIONS & CONCLUSIONS
• Improved budgeting procedures for zakat fund distribution
• Introduce 5 year budget distribution plan
• Advance from Baitulmal and other sources for any temporary deficits
• Improved delivery system
• Improved governance
ZCD Gap, World Zakat Forum, Bogor, Indonesia, 19-21 July, 2011
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