The National Zakat Index (NZI)

for Indonesia Zakat Revival

Nana Mintarti
Comissioner of BAZNAS 2015 -2020

1
 Introduction
• Zakat in Indonesia has dynamically developed along with the times. The
development of zakat in Indonesia increased significantly when the Zakat Act No.
38/1999 was launched. However, a major change in the regulatory framework
occured on the replacement of Zakat Act No. 38/1999 with the Zakat Act No.
23/2011.
• The regulations and other derived policies on the management of zakat in Indonesia
namely, the Zakat Act No. 23/2011, PP No. 14/2014, and the Presidential Decree
(Inpres) No. 3/2014.
• As the basis of entire zakat operation in Indonesia, the Zakat Act No. 23/2011 aims
to “improve the effectiveness and efficiency of the management of zakat services,
and optimise the benefits of zakat for public welfare and poverty alleviation”
(Articles 3).
2
 Introduction
• With an authority based on the Act No.23/2011 and other derived policies, The
Indonesia National Board of Zakat (BAZNAS) has an important role in the zakat
management in Indonesia.
• BAZNAS has been chosen as an independent body responsible to the President
through the Minister of Religious Affairs.
• BAZNAS had been given two main obligations: (1) to manage entire zakat system
including planning, implementation, controlling the process of collection,
distribution and use of zakat and reporting the operational performance of zakat
management and (2) to coordinate all zakat institutions in the country.
• Zakat institutions in Indonesia consist of BAZNAS, BAZNAS Province, BAZNAS
Regency/City and LAZ (certified-non government amil zakat institution).

3
 Introduction
• As a coordinator of all zakat institutions in Indonesia, BAZNAS need a
measuring tools to evaluate the performance of zakat in the
aggregate by using comprehensive indicators.
• The existence of this measurement is very important in determining
the successful achievement of zakat development nationally.
Furthermore, by knowing this, it can be used in measuring to what
extent zakat contributes to the national economic development.
• To date, both in Indonesia and international level, there are no
standard measuring tools to evaluate the performance of zakat in the
aggregate.
4
 Literature Review – Previous Studies
No. Index Variable Author

1. Zakat Effectiveness Index (ZEIN) 1. Number of Recipients Abdullah, et al

Effectivity of government expenditures on poverty 2. Expenditure of Recipients (2012)
alleviation by the amount of zakat 3. Government spending on Poverty Alleviation

2. Maqasid al Shariah based Development Index 1. Wealth Protection Ali and Hasan
Socio-economic development in line with 2. Life Protection (2014)
Maqasid al Shariah 3. Intellect Protection
4. Faith Protection
5. Posterity Protection

3. Maqashid based Performance Evaluation Model 1. Freedom of Faith Mohammed, et al

Performance of Islamic banks based on Maqasid 2. Preservation of Human Right (2015)
al Shariah 3. Propagation of Scientific Thinking
4. Care for Family
5. Minimizing Income and Wealth Disparity
6. Well-being of Society

5
 Literature Review – Previous Studies
No. Index Variable Author

4 CIBEST 1. Material Value Beik and Arsyianti

Zakat impact on poverty and welfare, includes: - Income (2016)
Welfare Index, 2. Spiritual Value
Material Poverty Index, - Prayer
Spiritual Poverty Index, and - Fasting
Absolute Poverty Index - Zakat and Infaq
- Household Environment
- Government Policy Environment

5. Zakat Index (ZIx) 1. Input Noor, et al

Multidimensional performance measurement of - Asnaf (2015)
zakat organizations - Staff Organization
2. Process
- Staff
- Management
3. Output
- Types of Program
- Types of Distribution
4. Outcome
- Asnaf Upgraded
- Public Perception
- Governance
6
 National Zakat Index
• Hence, Centre of Strategic Studies BAZNAS has initiated to conduct a study in
formulating National Zakat Index (NZI).
• NZI is being prepared as a measuring tool that is designed for the purpose to
evaluate the development of the zakat at the aggregate level (national and
province).
• NZI is projected to be an indicator that can provide an information on the role of
zakat to the zakat recipients’ welfare, and also indicate at what extent zakat
institutions have been developed, from internal of the institution, public
participation, until the support provided by the government.
• NZI is expected to become a measurement standard which can be applied by the
regulator, zakat institutions, as well as the public in evaluating zakat development
nationally.
• NZI has been disseminated formally to the public in December 13th, 2016
7
 Research Method : MIXED METHOD

• NZI was developed by using Mixed Method, which is a

methodology that integrates quantitative and qualitative
method.
• Qualitative methods was used in compiling NZI components.
 Desk Study, FGD, and Expert Judgement
• Quantitative method was used in forming the estimation
model of NZI calculations.
 Multi-Stage Composite Index
8
The Preparation Methods of NZI

• Collecting and FGD and Expert • After the FGD process

analyzing the literature Judgement and expert judgement,
and previous studies the team conducted a
• Formulating the review process to
• FGD I: discusssing the sharpen the
components of the
concept and composition components of NZI
index based on the
of NZI • Formulating the final
dimensions - indicators
- variables • FGD II: sharpening the concept and calculation
dimensions, indicators, and of NZI
variables
• Expert Judgement:
determine the weighted
score of the selected
variables
Desk Study Formulation Model

9
 Guideline Principle: SMART

In determining these Specific

measurements, NZI
established guidelines that Measurable
became a reference in
designing the index, which Index
Applicable
is abbreviated as SMART Measurement

Reliable

Timely

10
 NZI Components (1)

The obtained components of NZI were

generally formed by two dimensions, which Regulation
are macro and micro dimension

Macro Government Budget

Allocation for Zakat

Database of Official
Zakat Institutions,
Numbers of Muzakki
and Mustahik
NZI

Institutional Aspect of
Zakat

Micro

Impact of Zakat
 NZI Components (2)
Macro dimension reflects on how
the role of government and society
in contributing the development of
zakat institution. This dimension has
three indicators.
Macro
Regulation
The total numbers of
official zakat institutions,
muzakki and mustahik.
Government Budget
Allocation for Zakat
The ratio of the number
of registered individual
Database of Official muzakki to the number of
Zakat Institutions, households nationwide
Numbers of Muzakki
and Mustahik
The ratio of the number
of registered corporate
muzakki to the number of
national business entities
NZI Components (3)

Collection

Management
Institutional
Aspect of Zakat
Distribution

Reporting
Micro

Prosperity Index
(CIBEST Model)

Education and
Impact of Zakat Health
(Modified HDI )

Self-Reliance
 Weighted Score for Components
Weighted
Dimension Indicator Weighted score Variable Weighted score
score
Regulation (X11) 0.30 Regulation 1.00

Government budget (X12) 0.40 Government budget 1.00

The total numbers of official

zakat institutions, muzakki and
Macro (X1) 0.40 0.33
Database of Official Zakat mustahik.
Institutions, Numbers of (X131)
0.30
Muzakki and Mustahik
Individual Muzakki ratio (X132) 0.33
(X13)

Corporate Muzakki ratio (X133) 0.33

Collection (X211) 0.30

Institutional Aspects of Management (X212) 0.20

0.40
Zakat (X21) Distribution (X213) 0.30
Reporting (X214) 0.20

Micro (X2) 0.60 Material dan Spiritual (CIBEST)

0.40
(X221)

Impact of Zakat (X22) 0.60 Education and Health (HDI

0.40
Modified) (X222)

Self-Reliance (X223) 0.20

 Index Calculation Procedure

Multiplying the index

Making the likert scale obtained on each
Calculating the index
score within the range variable with respective
from 1 to 5 of each variable weights to derive the
index on the indicator.

Multiplying the index obtained on Multiplying the index obtained on each

each dimension with respective indicator with respective weights to
weights to obtain a National Zakat obtain an index on the dimensions of
index macro and micro
 Index Calculation Formula
• The first section, creating the likert scale score within the range from one to five,
where the score of 1 (one) describes the worst condition, and 5 (five) describes the
excellent condition. Scoring is made to overall constituent variable index.
• The second section, calculating the index of each variable. The formula for calculating
the index on each variable can be seen as below:

Where,
= index variable i = maximum score

= value of the actual score variable i = minimum score

16
 Index Calculation Formula
3. The third stage, multiplying the index obtained on each variable with the
respective weights to derive the index of the indicators. Formula :
X13 = 0.33X131 + 0.33X132 + 0.33X133

where,
X13 : Indicator index of database of zakat institution
X131 : Variable index of total number of official zakat institutions
X132 : Variable index of individual muzakki ratio against the number of households
X133 : Variable index of corporate muzakki ratio against the total number of
national business entities
 Index Calculation Formula
4. The fourth stage, multiplying the index obtained on each indicator with respective
weights in order to obtain the index of macro and micro dimention
X1 = 0.30X11 + 0.40X12 + 0.30X13
where,
X1 : Index of macro dimension
X11 : Indicator index of regulation
X12 : Indicator index of government budget support
X13 : Indicator index of database of zakat institutions

X2 = 0.40X21 + 0.60X22
where,
X2 : Index of micro dimension
X21 : Indicator index of institutional
X22 : Indicator index of zakat impact
 Index Calculation Formula

5. The last stage is multiplying the index obtained on each dimension with respective
weights to obtain a National Zakat index, which is:

IZN = 0.40X1 + 0.60X2

where,
IZN : National Zakat Index
X1 : Index of Macro Dimension
X2 : Index of Micro Dimension
 The Score of Likert Scale
1. Macro Dimension
No Variable
1 2
The implementation of
zakat act and the
availability of its
Government supporting regulations at
1
regulation the national level as well
as the availability of state
regulation about zakat in
<25% of the provinces
The availability of state
State regulation regulation about zakat at
2 (to measure at province level and <25% at
province level) district level in those
province
Government Government budget ratio
3 budget allocation to operational cost of
for BAZNAS BAZNAS is <20%
(1= Very weak, 2= weak, 3= neutral, 4= strong, 5= very strong)
The implementation of
zakat act and the
availability of its
supporting regulations at
the national level as well
as the availability of state
regulation about zakat in
25% of the provinces
The availability of state
regulation about zakat at
province level and at least
25% at district level in
those province
Government budget ratio
to operational cost of
BAZNAS is at least <20%
Criteria
3 4
The implementation of
zakat act and the
availability of its
supporting regulations at
the national level as well
as the availability of state
regulation about zakat in
50% of the provinces
The availability of state
regulation about zakat at
province level and at least
50% at district level in
those province
Government budget ratio
to operational cost of
BAZNAS is at least <30%
The implementation of
zakat act and the
availability of its supporting
regulations at the national
level as well as the
availability of state
regulation about zakat in
75% of the provinces
The availability of state
regulation about zakat at
province level and at least
75% at district level in
those province
Government budget ratio
to operational cost of
BAZNAS is at least <50%
5
The implementation of
zakat act and the
availability of its supporting
regulations at the national
level as well as the
availability of state
regulation about zakat in all
provinces
The availability of state
regulation about zakat at
province level and at all
district/cities in those
province
Government budget ratio
to operational cost of
BAZNAS is at least <75%
 State government
State government budget State government budget State government budget State government budget State government budget
budget allocation for
4 ratio to operational cost of ratio to operational cost of ratio to operational cost of ratio to operational cost of ratio to operational cost of
BAZNAS (to measure BAZNAS is <20% BAZNAS is at least <20% BAZNAS is at least <30% BAZNAS is at least <50% BAZNAS is at least <75%
at province level)

Total numbers of Have all of database regarding

Database of total numbers of Have one of database Have two of database Have all of database
official zakat numbers of official zakat
official zakat institutions, regarding numbers of official regarding numbers of official regarding numbers of official
5 institutions , institutions, muzakki, and
muzakki, and mustahik per zakat institutions, muzakki, zakat institutions, muzakki, zakat institutions, muzakki,
muzakki, and mustahik per institution as
institution is unavailable and mustahik per institution and mustahik per institution and mustahik per institution
well as its portray
mustahik

The ratio of the

number of registered
The ratio of registered The ratio of registered
individual muzakki to
The ratio of registered The ratio of registered individual muzakki against individual muzakki against The ratio of registered
6 the number of individual muzakki against individual muzakki against individual muzakki against
national household national household
households national household <1% national household 1-3,9% national household >10%
nationwide 4-6,9% 7-10%

The ratio of the The ratio of registered The ratio of registered

number of registered corporate muzakki to the corporate muzakki to the
number of business entities number of business entities
corporate muzakki The ratio of registered The ratio of registered The ratio of registered
1-1,9% 2-2,9%
to the number of corporate muzakki to the corporate muzakki to the corporate muzakki to the
7
1. Micro Dimension
Criteria
No Variable (1= Very weak, 2= weak, 3= neutral, 4= strong, 5= very strong)
1 2 3 4 5

1 Collection Growth (YoY) <5% Growth (YoY) 5-9% Growth (YoY) 10-14% Growth (YoY) 15-19% Growth (YoY) >20%

Have at least one of Have at least two of Have at least three of

SOP zakat management, documents from these documents from these documents from these SOP zakat management,
strategic planning, ISO required documents; SOP required documents; SOP required documents; SOP strategic planning, ISO
certification / quality zakat management, zakat management, zakat management, certification / quality
2 Management
management, and the strategic planning, strategic planning, strategic planning, management, and the
annual working program ISO/quality management, ISO/quality management, ISO/quality management, annual working program
are unavailable and the annual working and the annual working and the annual working are available
program program program

ACR <20% ACR 20-49%
SP>12 months SP 9 - 12 months
EP >15 months EP 12-15 months
3 Distribution*
Budget allocation for DP at
No budget allocation for least
Da’wah program 0.1 - < 2.5 % from total
distribution budget
ACR 50-69%
SP 6 - < 9 months
EP 9 - < 12 months
Budget allocation for DP at
least
2.5 - < 7.5 % from total
distribution budget
ACR 70-89% ACR ≥90%
SP 3 - < 6 months SP <3 months
EP 6 - < 9 months EP <6 months
Budget allocation for DP at Budget allocation for DP at
least least
7.5 - < 10 % from total >= 10 % from total
distribution budget distribution budget

Have audited financial Have audited financial

Have audited financial
Have financial report which report with qualified report with unqualified
Do not have any financial report with unqualified
4 Reporting is not audited by opinion, adversed opinion, opinion, Sharia audit
report opinion and periodic
independent auditor and disclaimer report, and periodic
 Prosperity index Index value
5 Index value 0 – 0.20 Index value 0.21 – 0.40 Index value 0.41 – 0.60 Index value 0.61 – 0.80
CIBEST (W) > 0.80

Index value
6 Modified HDI Index value 0 – 0.20 Index value 0.21 – 0.40 Index value 0.41 – 0.60 Index value 0.61 – 0.80
> 0.80

Have either a permanent Have a permanent job,

Do not have any Have an irregular job Have either a permanent
7 Self-Reliance job or business entity, business entity, and
job/business job or business entity
and saving saving

Explanation:
ACR = Allocation to Collection Ratio, SP = Social Program (Consumptive Program), EP = Economic Program (Productive Program), DP = Da’wah Program
 Conclusion
• The NZI is still at early stage that may require improvement in its concept and
formula. However it is a new breakthrough in the standard of measurement of
the performance of zakat system and institution.
• The NZI will be implemented in the year 2017 so the performance of national
zakat system can be measured objectively.
• The NZI is designed spesifically for Indonesia context, which maybe different
from other countries. The presence of such an index, nevertheless, is important
as a tool that can convince public to fulfill their zakat obligation through
institution of amil.
• All suggestions for further improvement of NZI are greatly appreciated. Center
of Strategic Studies (Puskas) as research arm of BAZNAS is ready for deeper
discussion for NZI enhancement.
24
Thank You