Naziruddin Abdullah

Technology innovation affects both the public and private non-financial sectors, the zakat institution (Islamic social finance) included. The institution uses an online system to communicate with zakat payers and zakat recipients to ensure its effectiveness in terms of collection and distribution. This research focuses on the adoption of a technique known as AD/AC and ZP/ZR, which is mainly utilized by partially and non-privatized State zakat institutions in Malaysia. To this end, three (3) techniques pertaining to appraising the performance of Malaysia’s Zakat institutions in managing Zakat funds were established. The analysis also includes the adverse impact of Covid-19 pandemic on the performance of zakat collection of the respective zakat institutions in Malaysia. In this relation, a quantitative approach was adopted using the primary and secondary data collected from JAWHAR and various states’ zakat institutions. By utilizing a technique of online data collection and applying the AD/AC as well as ZP/ZR methods, the performance of Malaysia’s zakat institutions is appraised. Furthermore, with the help two (2) ratios and eight (8) scenarios the performance of the innovative technique of AD/AC and ZP/ZR for zakat collection and disbursement, efficiency and sustainability of zakat institutions in Malaysia were evaluated. The results show that most zakat institutions, particularly those that deal with zakat payments, have begun to use the technique AD/AC and ZP/ZR within their organizations. The performance of zakat institutions in all states in terms of zakat distribution and disbursement do not have a consistent trend for the period 2016-2020. However, there is still a dearth of technology being used for zakat disbursements and fund reporting. From the observed data, with 2016 being the exception, for each remaining year, a state in Malaysia is ranked as the best technology performer or the most efficient. Selangor - fully privatized state (2017), Pulau Pinang - fully privatized state (2018), Federal Territory - partially privatized state (2019) and Negeri Sembilan-partially privatized state (2020) are the most efficient for the respective year. The sustainability of each zakat institution in Malaysia in the presence of Covid-19 pandemic was ascertained as well. Interestingly, contrary to the efficiency result, all non-privatized states (Kedah, Sabah and Kelantan) and one partially privatized state (Negeri Sembilan) were sustainable in coping with Covid-19 pandemic, while all fully privatized states (Selangor and Pulau Pinang) were not. Overall, it was conjectured that the technique AD/AC as well as ZP/ZR would help to improve the operations of zakat institutions to become more efficient and successful in distributing zakat fund to the poor. However, as zakat collecting and distribution involved millions of records, its management is still debatable by all parties.