Evaluation of the Efficiency and Productivity of Zakat Institutions in Poverty Alleviation: An Indonesia-Malaysia Study

An Indonesia-Malaysia Study

Abstract

This study aims to evaluate the efficiency and productivity levels of zakat institutions in Indonesia and Malaysia. The Data Envelopment Analysis (DEA) and Malmquist Productivity Index (MPI) methods are employed to assess efficiency and productivity over the research period from 2017 to 2023. The sample includes 10 zakat institutions from Indonesia and 4 zakat institutions from Malaysia. The study utilizes secondary data obtained from the financial reports of the respective zakat institutions. The input variables considered are operational costs, employee expenses, and total assets, while the output variables are zakat receipt and zakat disbursement.The findings indicate that the efficiency levels of zakat institutions fluctuated throughout the study period. Notably, Malaysian zakat institutions exhibited higher efficiency levels compared to their Indonesian counterparts. However, in terms of productivity, Indonesian zakat institutions outperformed those in Malaysia. Additionally, the Covid-19 pandemic significantly impacted the productivity and efficiency of these institutions. The analysis further reveals that zakat disbursement and zakat receipt are identified as the primary source of inefficiency. This study provides recommendations for regulators, zakat managers, and researchers to explore further strategies to enhance the efficiency and productivity of zakat collection institutions.