Understanding of Zakat Mechanism in a Non-Profit Organization - “Health And Nutrition Development Society (HANDS) as Case Study”

Abstract

Zakat is a strong pillar in Islam. The billions of rupees zakat and charities in Pakistan are managed by charitable organizations. HANDS is one of the largest organization of Pakistan which collects and manages the zakat funds as per Shariah system with the consultation of shariah advisors. HANDS utilizes its zakat fund in health, livelihood, education, infrastructure and WASH through systematic and transparent method. HANDS has developed and implemented 12 community and facility-based projects in 10 districts of Sindh and Punjab province during the year July 2020 to June 2021. HANDS has conducted zakat survey in 1712 villages of 450 Union Council with 3.2 million population to utilize HANDS zakat funds and track the eligibility of beneficiaries. A Zakat tool was developed and staff was trained to collect the information of respondents. Sampling techniques (shariah and scientific) was adopted to identify the respondents. Total 6593 respondents were identified for interview through random sampling. Data collection was done in June 2020 by the district teams.  As a result, Muslim were identified at 91.1% and side were 1.4% of respondents.   Zakat eligibility in education was 81.2%, in health at 85.4%, at livelihood at 89.2% and at infrastructure and WASH department eligibility was 95%. In June 2020 total annual budget was allocated for implementation was 159.4 million, total 145.8 million was allocated from zakat as per ratio and 13.6 million from donation and other sources. Total expenses were 142.2 million calculated in June 202. HANDS as a model organization in respect of zakat utilization mechanism for welfare organizations. Shariah compliance, robust audit system and research-based validation mechanism are catalyst for the quick transformation of HANDS into a shariah compliant zakat management institution. NGOs should turn their interest to mobilize zakat in a right and Islamic direction for poverty alleviation and human development.