World Zakat Performance Index: A Conceptual

Framework

ISBN: 978-623-6614-83-9

Foreword from the WZF Secretary General

Foreword from the WZF Executive Secretary
Foreword from the Head of WZF Research and
Development

Author: WZF Research and Development in

Collaboration with BAZNAS Center of Strategic
Studies

Editors:
Secretary General of the WZF
Deputy Secretary General of the WZF
Executive Secretary of the WZF

Publisher:
Center for Strategic Studies – National Board of
Zakat (Puskas BAZNAS)
Gedung Kebangkitan Zakat Jl. Matraman Raya
No 134 Jakarta
Phone Fax +6221 3913777 Mobile +62812-
8229-4237
Email: puskas@baznas.go.id ;
www.baznas.go.id; www.puskasbaznas.com

Cover Design and Layout: Hidayaneu

Farchatunnisa, S.E

Copyrights are protected by the Constitution

Reproduction of this paper in any form and
manner is prohibited without the written
permission of the publisher.
i
 DRAFTING TEAM
Advisors : Dr. Zainulbahar Noor, M.Ec
Dr. Irfan Syauqi Beik
Dr. Ayub Miah
Dr. Saleh Ali Alawaji
Dr. Elnur Salihovic
Tn. Haji Zakaria Othman
Yasmina Francke
Muhammad Lawal Maidoki
Ahmed Abdulla

Supervisors: Dr. Muhammad Hasbi Zaenal

Dr. Muhammad Choirin

Lead Researcher: Abdul Aziz Yahya Saoqi, M.Sc

Researcher: Arwa V Rarasocta, SKPm

Astika Rahmah Ghanny, SE
Hidayaneu Farchatunnisa, SE

ii
 FOREWORD FROM
THE SECRETARY GENERAL OF
WORLD ZAKAT FORUM

Assalamualaikum Warohmatullohi Wabarokatuh

Bismillahirahmanirahim,

Ensuring the good performance of zakat institutions has become a crucial issue
in zakat management as it has a significant impact on both the public’s trust
in and their perception of zakat institutions.

As the biggest international zakat forum in the world, with 40 member

countries around the globe, the World Zakat Forum (WZF) has taken the issue
seriously by appointing its subsidiary, WZF Research and Development, to
develop a measurement tool to evaluate the performance of zakat institutions
among its members.

Alhamdulillah, with Allah’s permission, in 2021, WZF Research and

Development collaborated with the BAZNAS Center for Strategic Studies on
the successful development of a conceptual framework, namely the World
Zakat Performance Index (WZPI), to assess the performance of zakat
management at both the macro level (country) and micro level (zakat
institution).

It is our hope that the WZPI will become a primary reference for all zakat
stakeholders, including the relevant authorities, in the establishment of a
reform agenda for improving zakat management in their respective countries.
Moreover, I truly believe that the WZPI will lead to the standardisation of zakat
performance evaluation under the WZF.

Finally, I would like to express my gratitude to all parties involved in the

development of this research. I hope all our efforts in the advancement of
iii
zakat management in Indonesia will obtain blessings and rewards from Allah
SWT.

Wassalamualaikum Warahmatullohi Wabarokatuh

Dr. Zainulbahar Noor, M.Ec

WZF Secretary General

iv
 FOREWORD FROM
THE EXECUTIVE SECRETARY OF
WORLD ZAKAT FORUM

Assalamualaikum Warahmatullahi Wabarakatuh

Bismillahirahmanirahim,

WZF has a significant responsibility in directing the world zakat movement to

achieve a good level of performance. Therefore, the WZF has made this a priority
agenda for execution this year to support the improvement of zakat development
globally. Hence, we accorded WZF Research and Development the task of
exploring and constructing a relevant measurement tool to assess the world zakat
performance.

We are elated to be launching the World Zakat Performance Index (WZPI)

book as one of the research products completed by WZF Research and
Development this year. We firmly believe that the WZPI can serve as a standard
measurement tool for WZF member countries to further evaluate the
performance of zakat management in their respective countries on a scientific
basis.
We expect that during this year, the WZPI could be implemented in WZF
member countries so that we can obtain a preliminary result for the performance
level of zakat management globally. This will enable WZF to formulate a data-
driven policy to further assist in the improvement of zakat management in its
member countries.
As a form of communal responsibility, we are very open to all constructive
criticism and suggestions to perfect our research in accordance with the needs
of the people.

Wassalamualaikum Warahmatullahi Wabarakatuh

Dr. Irfan Syauqi Beik

WZF Executive Secretary
v
 FOREWORD FROM THE HEAD
OF WZF RESEARCH AND
DEVELOPMENT

Assalamualaikum Warahmatullahi Wabarakatuh

The ability to measure the performance level of zakat management is crucial for
further zakat development. However, only a few scholarly attempts in the world
have focused their research on the construction of a tool for assessing zakat
management performance. Hence, this year, WZF Research and Development
conducted an initiative to create a measurement tool for evaluating zakat
management performance around the world, namely the World Zakat
Performance Index (WZPI).
The WZPI aims to provide clear guidelines for zakat authorities and zakat
institutions operating under the WZF on how to evaluate their performance
based on their zakat legal framework, zakat supervision, zakat reporting, zakat
collection and zakat distribution. In undertaking this, they will obtain a clear
understanding of their performance, especially in relation to the five areas
mentioned above.
Nevertheless, to ensure the quality of the WZPI, WZF Research and
Development collaborated with the BAZNAS Center of Strategic Studies, which
has a long record in zakat research, including the Zakat Core Principles, the
National Zakat index of BAZNAS and much more. Therefore, WZF Research and
Development feels confident that the WZPI can be used as a robust measurement
tool in the evaluation of zakat performance.
Lastly, the WZPI is a living document that may evolve according to the
necessities of future zakat development. As such, we are very open to any
feedback and suggestions for improving the WZPI. Thank you.

Wassalamualaikum Warahmatullahi Wabarakatuh

Dr. Muhammad Hasbi Zaenal

Head of WZF Research and Development
vi
 TABLE OF CONTENTS

DRAFTING TEAM .......................................................................................................................... ii

FOREWORD FROM THE SECRETARY GENERAL OF WZF ..................................................................iii
FOREWORD FROM THE EXECUTIVE SECRETARY OF WZF ................................................................ v
FOREWORD FROM THE HEAD OF WZF RESEARCH AND DEVELOPMENT..........................................vi
TABLE OF CONTENTS................................................................................................................... vii
LIST OF FIGURES ...........................................................................................................................ix
LIST OF TABLES............................................................................................................................. x
EXECUTIVE SUMMARY .................................................................................................................xi
1. INTRODUCTION .................................................................................................................... 2
1.1. Background ................................................................................................................... 2
1.2. Research Purposes ......................................................................................................... 3
2. LITERATURE REVIEW .............................................................................................................. 5
2.1. Definition of Zakat ......................................................................................................... 5
2.2. Zakat Management Practice in Selected WZF Member Countries...................................... 6

2.2.1. Zakat Management in Indonesia .............................................................. 6

2.2.2. Zakat Management in Malaysia ................................................................ 8
2.2.3. Zakat Management in Saudi Arabia .......................................................... 9
2.2.4. Zakat Management in Sudan ................................................................. 10
2.3. Performance Indicators of Zakat Management .............................................................. 11

2.3.1. Zakat Core Principles .............................................................................. 11

2.3.2. Zakat Performance Index ........................................................................ 13
2.3.3. BAZNAS National Zakat Index................................................................. 14
2.3.4. BAZNAS Shariah Compliance Index ........................................................ 15
3. DATA AND METHODOLOGY ............................................................................................... 19
3.1. Type and Source of Data .............................................................................................. 19
3.2. Research Method ......................................................................................................... 19
4. RESULTS AND DISCUSSION .................................................................................................. 23
4.1. Dimensions and Variables ............................................................................................. 23
4.2. Weighting of Dimensions and Variables ........................................................................ 26
4.3. Stages of Measurement ............................................................................................... 27
vii
4.4. Assessment Criteria of the WZPI ................................................................................... 30
5. CONCLUSION ..................................................................................................................... 33
5.1. Summary ..................................................................................................................... 33
5.2. Recommendations ....................................................................................................... 33
References ................................................................................................................................. 35
Attachment ................................................................................................................................ 38

viii
 LIST OF FIGURES

Figure 1. The Model of Zakat Management in Indonesia .............................................. 7

Figure 2. The Model of Zakat Management in Malaysia ................................................ 8
Figure 3. The Model of Zakat Management in Saudi Arabia.......................................... 9
Figure 4. The Model of Zakat Management in Sudan ................................................. 10
Figure 5. The ZCP Supervisory Standard in Zakat Management ................................... 12
Figure 6. The ZCP Operational Standard in Zakat Management .................................. 12
Figure 7. The Dimensions of the Zakat Performance Index .......................................... 13
Figure 8. The Dimensions and Variables of the BAZNAS National Zakat Index ............. 15
Figure 9. The Dimensions and Variables of the BAZNAS Shariah Compliance Index ..... 16
Figure 10. The Sekaran Indexation Method ................................................................ 20
Figure 11. Dimensions and Variables of the WZPI ....................................................... 23

ix
 LIST OF TABLES

Table 1. Dimensions and Variables of the Zakat Performance Index ............................ 14

Table 2. Dimensions and Variables of the World Zakat Performance Index .................. 24
Table 3. The Weighting Results for the WZPI Dimensions and Variables ...................... 26
Table 4. Scoring Intervals for the Shariah Compliance Categories ............................... 31

x
xi
 EXECUTIVE SUMMARY

The World Zakat Performance Index (WZPI) is a scientific measurement tool developed by
World Zakat Forum Research and Development in collaboration with the BAZNAS Center
of Strategic Studies. The WZPI is capable of accurately identifying the performance levels
of zakat supervision and internal management based on five dimensions and nineteen
variables.

World Zakat Performance

Index

Legal Framework Zakat Supervision Zakat Reporting Zakat Collection Zakat Disbursement

Presence of Legal Supervisory Financial Collection Disbursement

Framework Approach Statements Management Management

Permissible
Activities Supervisory Financial Allocation to
Collection Growth
Regulation Techniques & Tools Transparency Collection Ratio

Licensing Criteria Supervisory Risk Managament

Annual Report Assessment Report
Reporting in Collection

Risk Management
Zakat Literacy
on Disbursement

Muzaki Database Mustahik Database

The arrangement of the dimensions and variables was developed through a series
of focus group discussions (FGDs) with experts, practitioners and academicians in Islamic
social finance, specifically in zakat, from various zakat institutions and international
universities around the globe. The methodology used was the mixed-methods approach,
comprising both quantitative and qualitative methods. The qualitative approach
employed in the development of the WZPI was based on content analysis of relevant
literature and the FGDs with academicians, experts and zakat practitioners.
xii
 Moreover, the quantitative approach used in the study entailed indexation
calculations based on the Sekaran method (2003) and a Multi-Stage Weighted Index
developed by Puskas BAZNAS (2017), the latter of which calculates the index through a
series of procedures and stages beginning with the measurement of each variable or
element i of each dimension until the index value has been obtained.

𝐼𝑛𝑑𝑒𝑥𝑡𝑜𝑡𝑎𝑙 = ∑ ((𝑊𝐷𝑖 × 𝑊𝑉𝑛𝑖 × 𝑆𝑛𝑖 ) ÷ 𝑘 )

𝑛

With the following annotations:

𝐼𝑛𝑑𝑒𝑥𝑡𝑜𝑡𝑎𝑙 : Total score of Index
𝑊𝐷𝑖 : Weighted value of dimension i
𝑊𝑉𝑛𝑖 : Weighted value of variable n of dimension i
𝑆𝑛𝑖 : Average value of Likert scale of the indicator for variable n of dimension i
𝑘 : Total of Likert scales used

In aiming to determine the assessment criteria for the result of the WZPI
measurement, the study further developed a standard for assessing the result of the
measurement based on a standard determined by the experts’ judgement, as follows:

Scoring Interval Category Rating Explanation

A country or zakat institution is not compatible
0.00 – 20 Poor D
with the indicators of the WZPI.
A country or zakat institution does not meet
21 – 40 Unsatisfactory C the essential criteria of the WZPI due to severe
shortcomings.
A country or zakat institution does not meet
41 – 60 Moderate B several essential criteria of the WZPI with mild
shortcomings.
A country or zakat institution does not meet
all essential criteria of the WZPI but the overall
61 – 80 Satisfactory A
effectiveness is sufficiently good, and no
material risks are left unaddressed.
A country or zakat institution is considered
81 – 100 Excellent AA compliant with all essential criteria in the WZPI
with no significant deficiencies.
xiii
1
 1. INTRODUCTION

1.1. Background
Over the last decade, zakat administration worldwide has made tremendous progress.
According to data from the World Zakat Forum (WZF), since its establishment, country
membership has increased rapidly, from 10 members in 2010 to 40 in 2021. As such, it
is anticipated that the future of zakat management will face many complexities and
challenges.

However, despite the enormous growth of zakat institutions, the collection of

zakat funds remains far from achieving its full potential. Referring to a study from the
Islamic Research and Training Institute (IRTI) of the Islamic Development Bank (IsDB), the
global potential of zakat collection stands at approximately US$50 billion to US$600
billion annually, whilst the total amount of zakat funds collected is around US$10 billion
to US$15 billion per year. Therefore, there is a vast gap between the potential amount
and the total amount actually being collected.

Many studies have cited a lack of supervision and poor governance as the primary
factors that contribute to the low collection of zakat funds. Hence, to overcome this, in
2017, the WZF and its members and stakeholders created the Zakat Core Principles (ZCP),
the aim of which is to encourage zakat institutions worldwide to ensure a minimum
supervisory and governance approach in zakat management.

Over the last three years, the ZCP have been knowingly accepted and implemented
in the member country of WZF. Since then, many zakat institutions in WZF member
countries have experienced a progressive improvement in their supervisory and
governance level. However, further assessment is required to check both the progress
and the level of refinement. Therefore, the WZF, through its Research and Development
Unit, needs to develop a relevant measurement tool that appraises and evaluates the
performance of zakat administration in the WZF member countries.
2
 Thus, the WZF Research and Development Unit is currently designing a scientific
measurement framework, namely the World Zakat Performance Index (WZPI). The
purpose of developing the WZPI is to identify zakat management performance based on
relevant variables, including supervisory control and the internal organisation of zakat
administration in a country. It is hoped that the WZPI will become an appropriate and
reliable measurement tool for evaluating the world zakat performance across WZF
member countries.

1.2. Research Purposes

Based on the above ideas, this study on the WZPI aims to achieve the following:

a. To explore the theoretical framework of zakat management performance in terms

of both supervisory control and internal zakat management.
b. To determine relevant indicators for evaluating the performance of zakat
management in WZF member countries.
c. To provide a robust measurement tool for the WZF and its member countries to
evaluate the performance of zakat management at both the global level and in
their respective countries.

3
4
 2. LITERATURE REVIEW

This section will explore several theoretical discussions related to world zakat
management, including zakat from the point of view of Islamic jurisprudence, global best
practice in zakat management and the development of performance measurement in
zakat management.

2.1. Definition of Zakat

Qardhawi (1973) splits the definition of zakat into two parts, containing both the
terminology of zakat and the epistemology of zakat. According to its terminology, zakat
means an-nama wa zada wal barakatu wat-thaharatu, which means to grow, to add, to
bless and to purify. Based on the epistemology, Qardhawi (1973) defines zakat as:
. ‫تطلق عل الحصة المقدّرة من المال الّتي فرضها هللا للمستحقين‬
“Zakat is a phrase which regards a portion of wealth that is mandatory to be given to
the mustahiq.”

Therefore, zakat is perceived as a portion of wealth that has been determined by

Allah ‫ ﷻ‬to be given to specified groups, according to the Al-Quran and as mentioned in
Surah At-Taubah Verse 103:

ِ‫ٱَّلل‬ َ ‫ب َو ۡٱل َٰغَ ِر ِمينَ َوفِي‬

َّ ‫سبِي ِل‬ ّ ِ ‫علَ ۡي َها َو ۡٱل ُم َؤلَّفَ ِة قُلُوبُ ُه ۡم َوفِي‬
ِ ‫ٱلرقَا‬ َ َ‫ين َو ۡٱل َٰعَ ِملِين‬
ِ ‫س ِك‬َ َٰ ‫ص َد َٰقَتُ ِل ۡلفُقَ َرآ ِء َو ۡٱل َم‬
َّ ‫۞إِنَّ َما ٱل‬
‫ع ِلي ٌم َح ِكيم‬ َّ ‫ٱَّللِ َو‬
َ ُ‫ٱَّلل‬ ِۗ َّ َ‫ض ٗة ِ ّمن‬َ ‫سبِي ِۖ ِل فَ ِري‬َّ ‫َو ۡٱب ِن ٱل‬

“Zakah expenditures are only for the poor and for the needy and for those employed to
collect [zakah] and for bringing hearts together [for Islam] and for freeing captives [or
slaves] and for those in debt and for the cause of Allah and for the [stranded] traveller –
an obligation [imposed] by Allah. And Allah is Knowing and Wise.”

Hafidhuddin (2002) defined zakat as a portion of wealth with several conditions,

which Allah SWT has determined as mandatory for the proprietor to distribute to those
who are entitled to receive zakat, and this also has several conditions. Moreover, zakat is
also translated as meaning purify, growth, increase and blessing. Therefore, zakat purifies
5
a person and their wealth, gains growth in their good deeds, increases their wealth and
brings blessing to them (Hasan, 2008).

Zakat is mentioned in the Quran as many as 82 times; it is also mentioned in the

hadiths that are further developed by the ijtihad of Moslem scholars, which in turn are
deemed mandatory for the Moslems to fulfil (Ali, 2006). The following are verses of the
Quran that relate to the command of zakat, as contained in Q.S. Al-Baqarah (2:43) and
Q.S. At-Taubah (9:103).

َّ َٰ ‫ٱلزك ََٰوةَ َو ۡٱر َكعُواْ َم َع‬

٤٣ َ‫ٱلر ِكعِين‬ َّ ‫َوأَ ِقي ُمواْ ٱل‬
َّ ْ‫صلَ َٰوةَ َو َءاتُوا‬

Which translates to: “Establish Salât-Prayer, and give Zakât, and bow down with those
who bow down.” Q.S. Al-Baqarah (2:43)
ٓ
ُ ۡ‫َوٱلَّذِينَ َءا َمنُواْ ِم ۢن َبعۡ ُد َوهَا َج ُرواْ َو َٰ َج َهدُواْ َم َع ُك ۡم فَأ ُ ْو َٰلَئِكَ ِمن ُك ۡۚۡم َوأ ُ ْولُواْ ۡٱۡل َ ۡر َح ِام َبع‬
‫ض ُه ۡم أَ ۡولَ َٰى‬
٧٥ ‫ع ِلي ۢ ُم‬ َ ٍ‫ٱَّلل ِب ُك ِّل ش َۡيء‬
َ َّ ‫ٱَّلل ِإ َّن‬ ِ َ‫ض فِي ِك َٰت‬
ِ ۡۚ َّ ‫ب‬ ٖ ۡ‫ِب َبع‬

Which translates to: “Take from their wealth ˹O Prophet˺ charity to purify and bless them,
and pray for them—surely your prayer is a source of comfort for them. And Allah is All-
Hearing, All-Knowing.” Q.S. At-Taubah (9:103)

2.2. Zakat Management Practice in Selected WZF Member

Countries
The practice of managing zakat funds varies among Muslim countries. The differences
are influenced by several factors including differing regulations, government format,
geographical location and the size of their respective Muslim populations. This part will
explain further the current practice of zakat administration in different Muslim countries
notably in WZF member countries such as Indonesia, Malaysia, Saudi Arabia and Sudan.

2.2.1. Zakat Management in Indonesia

As the country with the largest Muslim population in the world, the practice of zakat
management in Indonesia began in a structured and systematic manner after a
reformation phase in 1999. In that year, the new Indonesian government issued
regulation number 38 of 1999 governing the management of zakat funds in Indonesia
(Nurhayati et al., 2019). Furthermore, in 2011, the government issued a new zakat
6
management regulation that is more specific regarding the involvement of the
government zakat institution (BAZNAS) in managing zakat funds in Indonesia.

The regulation grants authority to BAZNAS with regard to the coordination and
regulation of zakat administration nationally. BAZNAS is thus responsible for collecting,
managing and distributing zakat funds to eligible groups at the national level. Within the
vast territory of Indonesia, the regulation also enabled the establishment of BAZNAS in
every province, district and city in order to aid the central BAZNAS in collecting zakat
funds in all regions of Indonesia. In addition to collect zakat payments by employees in
state companies, BAZNAS formed a Zakat Collection Unit (UPZ) in every state company.
These UPZ only help BAZNAS in collecting zakat funds and have no authority to distribute
zakat. In general, the management of zakat in Indonesia is illustrated in Figure 1.

Corporate/Individual Muzaki

Ministry of Religious Affairs Government Zakat Agency

(BAZNAS)

Zakat Collection Unit (UPZ) Private Zakat Agency (LAZ)

Project/Program

Mustahik/Beneficiaries

= coordination/report function
= direct relationship

Figure 1. The Model of Zakat Management in Indonesia

Source: National Zakat Act of the Republic of Indonesia (2011), drawn by author

The regulation in Indonesia also allows private institutions to establish zakat

institutions in the form of a private zakat agency (LAZ). As such, LAZ is a zakat institution
7
formed independently by the community or a foundation. According to the applicable
regulation, LAZ has a duty to assist BAZNAS in collecting, reporting, managing and
distributing zakat funds to eligible groups. Like BAZNAS, LAZ also has representative
offices at the provincial, district and city levels throughout Indonesia. In brief, we can
conclude that the management of zakat in Indonesia has been arranged in a structured
and systematic manner as stated in the law, where the collection, management and
distribution is carried out centrally by BAZNAS and assisted by private zakat institutions.

2.2.2. Zakat Management in Malaysia

The systematic management of zakat in Malaysia was established earlier than in Indonesia.
The Malaysian government officially regulated zakat management in 1991 with the
issuing of zakat regulation. As we can see in Figure 2, the management of zakat in
Malaysia is decentralised in that full management authority is accorded to each state but
remains supervised by one body, namely the State Islamic Council in each region of the
federal government of Malaysia (Shahril et al., 2016).

Corporate or Individual Muzaki

State Zakat Collection State Islamic

Centre Council

Program/Project

Mustahik/Beneficiaries

= supervisory function
= direct relationship

Figure 2. The Model of Zakat Management in Malaysia

Source: Mhd Shahril et al. (2016), drawn by author

Based on the figure above, every state government in Malaysia forms a zakat
institution that is supervised by the respective religious council. The state zakat institution
is responsible for the collection, management and distribution of zakat funds through a
8
zakat programme. The state zakat institution is not permitted to distribute zakat funds to
other states except in certain circumstance (Amiruddin, 2015).

2.2.3. Zakat Management in Saudi Arabia

Saudi Arabia is known as a country that implements shariah rules, including in its
regulations for zakat fund management. Under the government system of the
monarchical kingdom, the King of Saudi Arabia issued decree of the King (Royal Court)
number 17/2/28/8634 dated 29/6/1370 H concerning shariah laws, which also regulates
the obligation to pay zakat in the Saudi Arabia jurisdiction (Hasanah, 2014). The
management of zakat in Saudi Arabia is carried out progressively and centrally under the
direct control of the finance ministry through a special department, namely the General
Authority of Zakat and Tax (GAZT) (Nasar, 2012).

Corporate or Individual
Muzaki

Ministry of Finance The General Authority of

Zakat and Tax

Ministry of Social The Directorate of Social

Affairs Security

Beneficiaries

= indirect relationship
= direct relationship

Figure 3. The Model of Zakat Management in Saudi Arabia

Source: Nasar (2012); Hasanah (2014); Amirudin (2016), drawn by author

GAZT was formed by the government of Saudi Arabia in 1951. GAZT has special
authority to collect zakat as well as taxes from all Saudis and foreigners who are living in
Saudi Arabia. The majority of zakat donors in Saudi Arabia are private donors or pure
government joint venture corporations. Meanwhile, government-owned companies are
9
not subject to zakat because all profits are intended for the public interest. Foreign
companies are only required to pay taxes.

A unique aspect of the management of zakat in Saudi Arabia is that it follows a

similar system to that used for tax management. Saudi Arabians who have paid zakat are
exempt from paying taxes. Instead of distributing zakat directly to the mustahik, GAZT
transfers the zakat fund to the Ministry of Social Affairs and Labor. Then, through its
directorate, the Directorate of General of Social Security, the ministry distributes zakat
funds to the zakat beneficiaries.

2.2.4. Zakat Management in Sudan

As an Islamic state, the structured management of zakat in Sudan began in 1984 with
the issuance of zakat management laws that were later renewed by a new law in 2001.
The management of zakat in Sudan is carried out centrally by the Zakat Chamber of
Sudan with supervision from the Higher Council of Zakat Management (Sari, 2017).
Practically, the management of zakat in Sudan is described in Figure 4.

Corporate or Individual
Muzaki

Ministry of Finance Tax Department

Higher Council of Zakat Zakat Chamber of Sudan Beneficiaries

Ministry of Finance Finance and Economic

Planning Department

Finance and Economic

Planning Department

= Supervision/ indirect relationship

= direct relationship/ direct distribution

Figure 4. The Model of Zakat Management in Sudan

Source: Uswatun (2014), drawn by author
10
 The unique feature of zakat management in Sudan is that the Zakat Chamber
delegates authority for collecting zakat funds to the tax department of the finance
ministry due to its similarities to tax management in Sudan. In terms of the distribution
activities, the Zakat Chamber also delegates its role to the Ministry of Finance’s Economic
and Financial Planning Department. Again, this reflects the fact that the management of
zakat in Sudan is equated with tax management (Hasanah, 2014).

As in Indonesia, the Sudanese government established a Zakat Chamber in every

province in Sudan. However, the difference is that the law does not allow private
institutions in Sudan to establish zakat institutions. The entire management of zakat is
carried out centrally by the State, which conducts everything from the collection and
management to the distribution of zakat funds.

2.3. Performance Indicators of Zakat Management

This section will discuss the performance indicators of zakat management used by several
countries to appraise and evaluate the performance of zakat management. The discussion
includes an introduction to the Zakat Core Principles (ZCP) that have become a global
zakat performance parameter, the application of a Zakat Performance Index in Malaysia,
the BAZNAS National Zakat Index, and the BAZNAS Shariah Compliance Index.

2.3.1. Zakat Core Principles

In early 2017, BAZNAS and The Central Bank of Indonesia, along with IRTI-Islamic
Development Bank, initiated and launched a comprehensive zakat document, namely the
Zakat Core Principles (ZCP). The document aimed to provide minimum standards for zakat
institutions in correctly managing zakat funds based on shariah laws and ideal practices
in zakat management.

Generally, the ZCP consists of 18 standards, which are categorised into two main
aspects: supervisory standards and zakat operational standards (BI, BAZNAS & IRTI-IsDB,
2016). The supervisory standards (1-7) comprise the objective, independence and power
standard, permissible activities, licensing criteria, the zakat supervisory approach, zakat
supervisory techniques and tools, zakat supervisory reporting, and the corrective and
sanctioning powers of the zakat supervisor.
11
 Supervisory
Standard

Corrective and
Objectives, Zakat Supervisory
Permissible Zakat Supervisory Sanction of
Independence, Licensing Criteria Techniques and
Activities Approach Powers of Zakat
and Powers Tools
Supervisor

Figure 5. The ZCP Supervisory Standard in Zakat Management

Source: Zakat Core Principles, 2017

ZCP standards in operational zakat management are contained in ZCP 8 to ZCP

18 and cover the following: good amil governance, collection management,
disbursement management, country and transfer risks, reputation and muzaki loss risk,
disbursement risk, operational risk, shari’ah control and internal audit, financial reporting
and external audit, disclosure and transparency, and abuse of zakat services.
Good Amil
Governance

Collection
Management

Disbursement
Management

Country and
Transfer Risks
Zakat Operational Standard

Reputation and
Muzaki Loss Risk

Disbursement Risk

Operational Risk

Shari'ah control &

Internal Audit

Financial Reporting
& External Audit

Disclosure &
Transparency

Abuse of Zakat
Services

Figure 6. The ZCP Operational Standard in Zakat Management

Source: Zakat Core Principles, 2017

12
2.3.2. Zakat Performance Index
The Zakat Performance Index (ZPI) was established in 2015 by a Malaysian researcher.
The ZPI aims to provide a measurement tool for use by zakat institutions in Malaysia in
evaluating performance based on the indicators it contains. The ZPI consists of four main
dimensions: Input, Process, Output and Outcome.

Input

Zakat
Outcome Performance Process
Index

Output

Figure 7. The Dimensions of the Zakat Performance Index

Source: (Noor et al., 2015) drawn by author

In the first dimension, Input, the ZPI covers three important variables, namely the
criteria of the recipients, qualified staff and management of the zakat institution. The
second dimension, Process, comprises two main variables: staff (programme monitoring
& work process) and the management process of the zakat institution. Output, as the
third dimension, covers the type of programmes, types of distribution and the distribution
ratio. The final dimension of Outcome covers the number of asnaf upgraded, level of
public confidence, governance and transparency.
13
 Table 1. Dimensions and Variables of the Zakat Performance Index

Dimension Variables

Input Criteria of Recipients, Qualified Staff and Management

Process Staff (Monitoring of Programmes, Work Process), and Management

Output Types of Programmes, Type of Distribution (Productive and Non-productive) and

Distribution ratio

Outcome Number of Asnaf Upgraded, Level of Public Confidence, Governance, Transparency

Source: Noor et al., 2015

2.3.3. BAZNAS National Zakat Index

Zakat administration in Indonesia has undergone huge development since 1999.
Presently, Indonesia has more than 500 zakat institutions nationally. As the zakat
regulator, The National Board of Zakat of the Republic of Indonesia (BAZNAS) developed
a measurement tool for assessing the performance of zakat institutions in Indonesia – the
BAZNAS National Zakat Index (NZI) – in 2016. The NZI covers two main dimensions,
namely the macro and micro dimensions.

The macro dimension consists of three variables and three indicators: regulation,
government support for the zakat operational budget, and the database of zakat
institutions, muzaki and mustahik. Specifically, the database of zakat institutions, muzaki
and mustahik comprises three main indicators: the number of official zakat institutions,
muzaki and mustahik; the ratio of the number of individual muzaki to the number of
national households, and the ratio of the number of muzaki business entities to national
enterprises.

The micro dimension consists of two variables (institutional and the impact of
zakat). The institutional variable is represented by the collection, management,
distribution and reporting indicators. While the impact of the zakat variable is measured
using the performance of the CIBEST Welfare Index, a modified version of the Human
Development Index and the independence of beneficiaries.
14
 Figure 8. The Dimensions and Variables of the BAZNAS National Zakat Index

Source: (Puskas BAZNAS, 2020a)

2.3.4. BAZNAS Shariah Compliance Index

It is essential that zakat administration acts in compliance with shariah. BAZNAS,
therefore, has developed an indicator and tool of measurement for assessing the level of
shariah compliance in zakat management in Indonesia, namely the Zakat Shariah
Compliance Index. The Shariah Compliance Index consists of four dimensions:
management of the zakat institution, the collection of zakat funds, the distribution of
zakat funds, and the legal aspect of the zakat institution.
15
 Shariah Compliance Index for
Zakat Institutions

Zakat
Management Zakat Collection Zakat Regulations
Distribution

Shariah Laws Zakat Asnaf Category

ZMI Legality
Socialisation Standards

Shariah Duration of Zakat

Supervision Zakat Objects
Distribution

Matters related ZIS and DSKL Distribution

to Amil deposit Priorities

Distribution
Transparency
Mechanism

Amil Rights

Figure 9. The Dimensions and Variables of the BAZNAS Shariah Compliance Index
Source: (Puskas BAZNAS, 2020b)

The Management dimension comprises four variables: the general shariah

regulations (Shariah laws); the shariah supervision board; amil-related aspects, specifically
regarding professionalism; and the transparency practices of the zakat institution, which
are measured using the Zakat Management Institution Transparency Index Puskas
BAZNAS. The second dimension, Zakat Collection, consists of three variables: socialisation
or zakat campaigning; zakat objects, for which zakat institutions are encouraged to have
both external and internal standards regarding the minimum value and standards for
zakat for various objects; and the status of the temporary depositing of the funds and
their shariah bank accounts for zakat, infak and shadaqah funds (ZIS), including other
social religious funds (DSKL), within the zakat institution.

The third dimension, Zakat Distribution, consists of the following five variables:
standards for the categories of asnaf; the duration of consumptive and productive zakat
distribution, based on the time interval from the fund deposit to the time of distribution
16
of the funds; distribution priorities; the mechanism of zakat fund distribution; and the
standards in determining the amil rights, which are determined by the zakat institution.
The final dimension is Zakat Regulations, which identifies the shariah compliance of the
zakat institution towards the regulations through the operation legality variable of the
zakat management institution (OPZ).

17
18
 3. DATA AND METHODOLOGY

3.1. Type and Source of Data

Primary data was used in the development of the concept and indicators of the World
Zakat Performance Index (WZPI). According to Walliman (2006), primary data is data that
comes from the first source and represents the reality of the object being studied through
a series of activities such as observations or interviews. The development of the WZPI thus
utilised primary data through the observation of existing regulations and focus group
discussions (FGDs) with experts, academicians and zakat practitioners.

Within the FGD process, the research involved ten sources comprising
academicians, experts and practitioners with a deep and strong understanding of zakat
management both in theory and practice. Furthermore, the sources involved in the
research were required to hold a minimum position as the head of a division, up to that
of a director. The academic discussants were from the University of Illinois (United States
of America), University Sains Islam Malaysia, University of Technology Mara and the
University of Indonesia. Moreover, the practitioner and expert discussants comprised top
leaders of the World Zakat Forum.

3.2. Research Method

A mixed-methods approach was selected as the research method for use in developing
the concept and indicators of the WZPI, comprising both quantitative and qualitative
approaches. Mixed-methods research was first introduced scientifically by Jick (1979) in
the journal article Mixing Qualitative and Quantitative Methods: Triangulation in Action.
In this, Jick explained that social research requires the use of more than one approach
(triangulation) in the form of both qualitative and quantitative methods in order to obtain
and validate the answers and results of complex social research.

The qualitative approach taken in this research as part of the development of the
concepts and indicators of the Shariah Compliance Index consisted of content analysis
19
techniques for the existing zakat regulations and through FGDs with the academicians,
experts and zakat practitioners.

Furthermore, in developing the WZPI’s dimensions, variables and indicators, a

method developed by Sekaran (2003) was used to observe the current problem or
situation, which was then classified into several dimensions. These dimensions were then
translated into several specific elements so that the problem being observed could be
measured accurately.
Problem being
observed

Dimension A Dimension B Dimension C

Element A.1 Element B.1 Element C.1

Element A.2 Element B.2 Element C.2

Element A.i Element B.i Element C.i

Figure 10. The Sekaran Indexation Method

Source: Sekaran (2003), drawn by author
Therefore, to analyse and observe the characteristics of shariah compliance in a
zakat management institution, the Sekaran (2003) Indexation Method was used to
identify further characteristics, which were then translated into several relevant and
specific dimensions and elements, or variables.
Furthermore, during the measurement of each dimension and variable of the
WZPI, the research used the Multi-Stage Weighted Index as a measurement method, as
developed by Puskas BAZNAS (2017). This ensured the index was measured in a
procedural and multi-staged manner, beginning with the measurement of each variable
or element, up to the dimension stage, in order to obtain the index value. The research
20
also employed the Likert scale, as first developed by Rensis Likert (1932), to observe the
magnitude of the behaviour being studied.

Mathematically, the Multi-Stage Weighted Index is formulated as follows:

𝑖

𝐼𝑛𝑑𝑒𝑥𝑡𝑜𝑡𝑎𝑙 = ∑ ((𝑊𝐷𝑖 × 𝑊𝑉𝑛𝑖 × 𝑆𝑛𝑖 ) ÷ 𝑘 )

𝑛

With the following annotations:

𝐼𝑛𝑑𝑒𝑥𝑡𝑜𝑡𝑎𝑙 : Total Index Value
𝑊𝐷𝑖 : Weighted value for dimension i
𝑊𝑉𝑛𝑖 : Weighted value for variable n of dimension i
𝑆𝑛𝑖 : Average Likert value of an indicator of variable n in dimension i

𝑘 : Total Likert scales used

21
22
 4. RESULTS AND DISCUSSION

4.1. Dimensions and Variables

This section will discuss the results of the discussions with the experts, academicians and
practitioners regarding the development of the WZPI indicators. These consist of five
dimensions and thirteen variables, as shown in the following diagram:

World Zakat Performance

Index

Legal Framework Zakat Supervision Zakat Reporting Zakat Collection Zakat Disbursement

presence of legal Supervisory Financial Collection Disbursement

framework Approach Statements Management Management

Permissible
Activities Supervisory Financial Allocation to
Collection Growth
Regulation Techniques & Tools Transparency Collection Ratio

Licensing Criteria Supervisory Risk Managament

Annual Report Assessment Report
Reporting in Collection

Risk Management
Zakat Literacy
on Disbursement

Muzaki Database Mustahik Database

Figure 11. Dimensions and Variables of the WZPI

The five dimensions of the WZPI are Legal Framework, Zakat Supervision, Zakat
Reporting, Zakat Collection and Zakat Disbursement. There are three variables within the
Legal Framework dimension: the presence of a legal framework for the zakat or charity
organisation, the permissible activities regulation on zakat or charity activities, and
licensing criteria and standards in the zakat or charity organisation. The second
23
dimension, Zakat Supervision, as the zakat supervisory dimension, consists of three
variables: the supervisory approach to the charity organisation, the techniques and tools
in supervising zakat or charity organisations, and the availability of reporting standards
for zakat or charity supervision.

Moreover, the Zakat Reporting and Zakat Collection dimensions consist of three
and five variables respectively. Zakat Reporting is represented by the presence of financial
statements, financial transparency, as represented by the presence of audited financial
statements, and the availability of a zakat annual report. Whilst the performance of Zakat
Collection in the WZPI is represented by the presence of operational standard procedures
for the management of zakat collection, the annual growth of zakat collection, the
implementation of a risk management framework for zakat collection, the level of
community zakat understanding, which is measured by the modified BAZNAS zakat
literacy index, and the availability of a muzaki or donor database.

The final dimension of Zakat Disbursement consists of five variables: the presence
of operational standard management for zakat disbursement, the ratio of allocation to
collection for zakat, the availability of mustahik assessment reports, the standard of risk
management in zakat disbursement, and the mustahik or beneficiary database.

Table 2. Dimensions and Variables of the World Zakat Performance Index

Dimension Foundation Variable Indicator

The presence of zakat or
The presence of a
charity regulation in a
Legal Framework
country that is issued by
(X1.1)
the relevant authorities
Zakat Core
Principles, The presence of
Legal Framework Permissible
BAZNAS permissible activities
(X1) Activities
National regulation for the zakat or
Regulation (X1.2)
Zakat Index charity institution
The availability of
Licensing Criteria licensing criteria
Regulation (X1.3) regulation for the zakat or
charity institution
Zakat Core The zakat or charity
Zakat Supervision Principles, Supervisory supervisor has a clear
(X2) BAZNAS Approach (X2.1) framework or process for
Shariah assuring zakat
24
 Dimension Foundation Variable Indicator
Compliance management is fully
Index compliant with legal
requirements
The zakat or charity
supervisor has supervisory
Supervisory
techniques and tools to
Techniques and
evaluate the performance
Tools (X2.2)
of the zakat/charity
institution
The zakat/charity
supervisor collects and
Supervisory
reviews the zakat/charity
Reporting (X2.3)
institution’s performance
and publishes the results
Financial The presence of audited
Statements (X3.1) financial statements
BAZNAS
Zakat Reporting Financial The regular publication of
National
(X3) Transparency (X3.2) a financial report
Zakat Index
Annual Report The presence of an annual
(X3.3) zakat report
Collection The availability of
Management standard procedures for
(X4.1) the management of zakat
collection
Zakat Core
Principles, Collection Growth The annual growth of
BAZNAS (X4.2) zakat collection
Zakat Collection National Collection Risk The presence of standard
(X4) Zakat Index, Management procedures for risk
Zakat (X4.3) management in zakat
Performance collection
Indicator
Zakat Literacy
The level of zakat literacy
(X4.4)
Database of Muzaki The availability of a
(X4.5) muzaki database
Disbursement The availability of
Zakat Core Management standard procedures for
Principles, (X5.1) the management of zakat
Zakat Disbursement
BAZNAS disbursement
(X5)
National Allocation to The ratio between the
Zakat Index Collection Ratio zakat collection fund and
(X5.2) zakat disbursement fund
25
 Dimension Foundation Variable Indicator
Assessment Report The presence of an
(X5.3) assessment report on
zakat disbursement
Risk Management The presence of standard
on Disbursement procedures for risk
(X5.4) management in zakat
disbursement
Mustahik Database The presence of a
(X5.5) mustahik database

4.2. Weighting of Dimensions and Variables

This chapter discusses the weighting of each dimension and variable in the WZPI. The
discussions with the experts, academicians and zakat practitioners produced several
results. The overall result shows that Legal Framework was given a total weighting of
10% out of a total of 100%. The Zakat Supervision and Zakat Reporting dimensions
obtained weightings of 10% and 20% respectively. While the Zakat Collection and Zakat
Disbursement dimensions were both given weightings of 30%.

Table 3. The Weighting Results for the WZPI Dimensions and Variables

Dimension Weighting Variable Weighting

The presence of a Legal Framework 30%
(X1.1)
Legal Framework Permissible Activities Regulation 50%
10%
(X1) (X1.2)
Licensing Criteria Regulation (X1.3) 20%
TOTAL 100%
Supervisory Approach (X2.1) 30%
Supervisory Techniques and Tools 30%
Zakat Supervision
10% (X2.2)
(X2)
Supervisory Reporting (X2.3) 40%
TOTAL 100%
Financial Statements (X3.1) 50%
Zakat Reporting Financial Transparency (X3.2) 20%
20%
(X3) Annual Report (X3.3) 30%
TOTAL 100%
Collection Management (X4.1) 20%
Collection Growth (X4.2) 40%
Zakat Collection
30% Collection Risk Management (X4.3) 10%
(X4)
Zakat Literacy (X4.4) 10%
Database of Muzaki (X4.5) 20%
26
 Dimension Weighting Variable Weighting
TOTAL 100%
Disbursement Management (X5.1) 20%
Allocation to Collection Ratio (X5.2) 15%
Zakat Disbursement Assessment Report (X5.3) 30%
(X5) 30% Risk Management on Disbursement 15%
(X5.4)
Mustahik Database (X5.5) 20%
TOTAL 100% TOTAL 100%

For the first dimension, the experts, academicians and zakat practitioners agreed
on a weighted value of 30% for the presence of a legal framework, 50% for the presence
of permissible activities regulation, and 20% for the presence of licensing criteria
regulation. Furthermore, for the second dimension, the variables of supervisory approach
and supervisory techniques and tools both obtained a weighting of 30%, while
supervisory reporting was given a weighting of 40%.

For the third dimension, the variable of financial statements gained a weighting
of 50%, with 20% for financial transparency and 30% for annual zakat report. Moreover,
for the fourth dimension, Zakat Collection, the variable of collection management gained
a weighting of 20%, growth of zakat collection obtained 40%, risk management for
zakat collection and zakat literacy were both accorded 10%, and database of muzaki had
a weighting of 20%.

Lastly, for the fifth dimension, that of Zakat Disbursement, the variable of
disbursement management obtained a weighting of 20%, the allocation to collection
ratio variable had a weighting of 15%, the assessment report of zakat disbursement had
the highest weighting value at 30%, risk management for zakat disbursement obtained
15%, while the final variable, the mustahik database, obtained a weighting of 20% out
of a total 100%.

4.3. Stages of Measurement

The measurement process for the WZPI employs the Multi-Stage Weighted Index. The
process consists of various stages, beginning with the measurement of each variable and
dimension and ending when the overall value of the index has been obtained.
Mathematically, the stages of the measurement are illustrated as follows:
27
 1. The measurement results of the Likert scale for each variable in the WZPI are as
follows:

𝑊𝑍𝑃𝐼𝐷1 = ((𝑆11 × 𝑊𝑉11 × 𝑊𝐷1 ) + (𝑆12 × 𝑊𝑉12 × 𝑊𝐷1 ) + ⋯ + (𝑆1𝑖 × 𝑊𝑉1𝑖 × 𝑊𝐷1 )) ÷ 5

𝑊𝑍𝑃𝐼𝐷2 = ((𝑆21 × 𝑊𝑉21 × 𝑊𝐷2 ) + (𝑆22 × 𝑊𝑉22 × 𝑊𝐷2 ) + ⋯ + (𝑆2𝑖 × 𝑊𝑉2𝑖 × 𝑊𝐷2 )) ÷ 5

𝑊𝑍𝑃𝐼𝐷3 = ((𝑆31 × 𝑊𝑉31 × 𝑊𝐷3 ) + (𝑆32 × 𝑊𝑉32 × 𝑊𝐷3 ) + ⋯ + (𝑆3𝑖 × 𝑊𝑉3𝑖 × 𝑊𝐷3 )) ÷ 5

𝑊𝑍𝑃𝐼𝐷4 = ((𝑆41 × 𝑊𝑉41 × 𝑊𝐷4 ) + (𝑆42 × 𝑊𝑉42 × 𝑊𝐷4 ) + ⋯ + (𝑆4𝑖 × 𝑊𝑉4𝑖 × 𝑊𝐷4 )) ÷ 5

𝑊𝑍𝑃𝐼𝐷5 = ((𝑆51 × 𝑊𝑉51 × 𝑊𝐷5 ) + (𝑆52 × 𝑊𝑉52 × 𝑊𝐷5 ) + ⋯ + (𝑆5𝑖 × 𝑊𝑉5𝑖 × 𝑊𝐷5 )) ÷ 5

With the following annotations:

𝑾𝒁𝑷𝑰𝑫𝟏 : The total value of the index in the first dimension of the WZPI
𝑆11 : The Likert scale score obtained for the first variable in the first
dimension
𝑊𝑉11 : The weighting given to the first variable in the first dimension
𝑆12 : The Likert scale score obtained for the second variable in the
first dimension
𝑊𝑉12 : The weighting given to the second variable in the first
dimension
𝑆1𝑖 : The Likert scale score obtained for the i variable in the first
dimension
𝑊𝑉1𝑖 : The weighting given to the i variable of the first dimension
𝑊𝐷1 : The weighting given to the first dimension

𝑾𝒁𝑷𝑰𝑫𝟐 : The total value of the index in the second dimension of the
WZPI
𝑆21 : The Likert scale score obtained for the first variable in the
second dimension
28
𝑊𝑉21 : The weighting given to the first variable in the second
dimension
𝑆22 : The Likert scale score obtained for the second variable in the
second dimension
𝑊𝑉22 : The weighting given to the second variable in the second
dimension
𝑆2𝑖 : The Likert scale score obtained for the i variable in the second
dimension
𝑊𝑉2𝑖 : The weighting given to the i variable in the second dimension
𝑊𝐷2 : The weighting given to the second dimension

𝑾𝒁𝑷𝑰𝑫𝟑 : The total value of the index in the third dimension of the WZPI
𝑆31 : The Likert scale score obtained for the first variable in the third
dimension
𝑊𝑉31 : The weighting given to the first variable in the third dimension
𝑆22 : The Likert scale score obtained for the second variable in the
third dimension
𝑊𝑉32 : The weighting given to the second variable in the third
dimension
𝑆3𝑖 : The Likert scale score obtained for the i variable in the third
dimension
𝑊𝑉3𝑖 : The weighting given to the i variable in the third dimension
𝑊𝐷3 : The weighting given to the third dimension

𝑾𝒁𝑷𝑰𝑫𝟒 : The total value of the index in the fourth dimension of the
WZPI
𝑆41 : The Likert scale score obtained for the first variable in the
fourth dimension
𝑊𝑉41 : The weighting given to the first variable in the fourth
dimension
𝑆42 : The Likert scale score obtained for the second variable in the
fourth dimension
𝑊𝑉42 : The weighting given to the second variable in the fourth
dimension
𝑆4𝑖 : The Likert scale score obtained for the i variable in the fourth
dimension
𝑊𝑉4𝑖 : The weighting given to the i variable in the fourth dimension
𝑊𝐷4 : The weighting given to the fourth dimension

𝑾𝒁𝑷𝑰𝑫𝟓 : The total value of the index in the fifth dimension of the WZPI
𝑆51 : The Likert scale score obtained for the first variable in the fifth
dimension
29
 𝑊𝑉51 : The weighting given to the first variable in the fifth dimension
𝑆52 : The Likert scale score obtained for the second variable in the
fifth dimension
𝑊𝑉52 : The weighting given to the second variable in the fifth
dimension
𝑆5𝑖 : The Likert scale score obtained for the i variable in the fifth
dimension
𝑊𝑉5𝑖 : The weighting given to the i variable in the fifth dimension
𝑊𝐷5 : The weighting given to the fifth dimension

2. The sum of the index of each dimension of the WZPI is mathematically formulated
as follows:

𝑊𝑍𝑃𝐼𝑡𝑜𝑡𝑎𝑙 = 𝑊𝑍𝑃𝐼𝐷1 + 𝑊𝑍𝑃𝐼𝐷2 + 𝑊𝑍𝑃𝐼𝐷3 + 𝑊𝑍𝑃𝐼𝐷4 + 𝑊𝑍𝑃𝐼𝐷5

With the following annotations:

𝑊𝑍𝑃𝐼𝑡𝑜𝑡𝑎𝑙 : The total value of the World Zakat Performance Index

𝑊𝑍𝑃𝐼𝐷1 : The value of the first dimension of the index
𝑊𝑍𝑃𝐼𝐷2 : The value of the second dimension of the index
𝑊𝑍𝑃𝐼𝐷3 : The value of the third dimension of the index
𝑊𝑍𝑃𝐼𝐷4 : The value of the fourth dimension of the index
𝑊𝑍𝑃𝐼𝐷5 : The value of the fifth dimension of the index

4.4. Assessment Criteria of the WZPI

In aiming to determine the assessment criteria for the result of the WZPI measurement,
the study established a standard for assessing the measurement result based on the
standard determined by the experts’ judgement. This section discusses the scoring criteria
for the WZPI measurement result.
30
 Table 4. Scoring Intervals for the Shariah Compliance Categories

Scoring Interval Category Rating Explanation

The indicators of the WZPI cannot be applied
0.00 – 20 Poor D
to the country or zakat institution.
A country or zakat institution does not meet
21 – 40 Unsatisfactory C the essential criteria of the WZPI due to severe
shortcomings.
A country or zakat institution does not meet
41 – 60 Moderate B several essential criteria of the WZPI with mild
shortcomings.
A country or zakat institution does not meet
all essential criteria of the WZPI but the overall
61 – 80 Satisfactory A
effectiveness is sufficiently good, and no
material risks are left unaddressed.
A country or zakat institution is considered
81 – 100 Excellent AA compliant with all essential criteria in the WZPI
with no significant deficiencies.

The WZPI uses a scoring scale of 0.00–100, where 0.00 is the lowest score and
100 indicates the highest score. The WZPI contains five scoring categories: a score in the
range of 0.00–20 is categorised as poor and has a D rating, indicating that the country
or zakat institution is not compatible with the indicators of the WZPI. A score in the range
of 21–40 is considered unsatisfactory and corresponds to a C rating, indicating that the
country or zakat institution does not meet the essential criteria of the WZPI due to severe
shortcomings.

A score in the range of 41–60 is considered to be moderate and has a B rating,

which indicates that the country or zakat institution fails to meet several essential criteria
of the WZPI but with only mild shortcomings. Meanwhile, a score in the range of 61–80
is considered to be satisfactory or an A rating, indicating that while the country or zakat
institution does not meet all essential criteria of the WZPI, the overall effectiveness is
sufficiently good and no material risks are left unaddressed. Lastly, a WZPI score in the
range of 81–100 is considered excellent, with an AA rating, which shows that the country
or zakat institution is considered compliant with all essential criteria in the WZPI with no
significant deficiencies.
31
32
 5. CONCLUSION
This section provides a brief conclusion of the study on the World Zakat Performance
Index (WZPI). Furthermore, it delivers relevant recommendations for zakat policymakers,
notably of the World Zakat Forum, in terms of supervising and improving the quality of
zakat management.

5.1. Summary
Tremendous progress in the development of zakat has been made under the World Zakat
Forum (WZF). Presently, the WZF organises 40 zakat institutions from different countries;
however, further complexity is anticipated with regard to zakat administration under the
WZF. Currently, priority is given to improving the performance of zakat administration in
the WZF member countries. The WZF, therefore, through its subsidiary unit, namely the
WZF Research and Development, has developed a measurement tool in the form of the
World Zakat Performance Index (WZPI) to investigate the performance of zakat
administrations in WZF member countries.

The WZPI aims to identify the level of zakat supervision and zakat institution
performance in a country and consists of five main dimensions and thirteen variables. The
dimensions are as follows: Legal Framework, Zakat Supervision, Zakat Reporting, Zakat
Collection, and Zakat Disbursement. The method of calculation used for the WZPI is
adopted from the BAZNAS National Zakat Index in the form of the Multi-Stage Weighted
Index. Furthermore, the WZPI contains criteria for assessment, categorised into five
scoring intervals with five different levels of rating and more importantly, the study of
WZPI has been approved by the Secretary General and the Deputy Secretary General of
the WZF. Hence, the WZPI is a tool that enables a comprehensive assessment of the
performance of zakat administration at both the macro (country) and micro (zakat
institution) levels notably in the WZF member countries.

5.2. Recommendations
The study also provides the following relevant recommendations for all zakat stakeholders
including the WZF, zakat institutions under the WZF, and academicians:
33
1. The WZF is recommended to utilise the WZPI for standardising the performance
evaluation of the zakat institutions under its jurisdiction. Hence, the WZF could
establish a data-based policy to improve the performance level of zakat institutions
in all its member countries.
2. Zakat institutions around the globe could utilise the WZPI to independently assess
their regular performance and condition, particularly with regard to supervision
and internal management performance.
3. The study also recommends that academicians make the WZPI the main reference
for evaluating the performance of zakat institutions at the domestic or global level
and develop it in accordance with the needs of zakat institutions in the future.

34
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37

World Zakat Performance Index Likert Scale
Dimension
Variable
1 (Bad)
The presence of a The country, state, religious -
legal framework for council or local community
the zakat/charity does not have a legal
organisation framework for zakat or
charity supervision
The presence of The country, state or - -
permissible religious council has a legal
activities in framework for zakat/charity
Legal zakat/charity management but it does not
Framework regulation clearly regulate zakat/charity
permissible activities
The presence of The country, state, religious -
licensing criteria council or local community
regulation for does not have a legal
zakat/charity framework for zakat/charity
institutions supervision (does not
have/unclear)
Supervisory The zakat/charity supervisor -
Approach does not have a clear
framework or process for
Zakat
ensuring that zakat
Supervision
management is fully
compliant with legal
requirements
Attachment
Scale
2 (Poor) 3 (Fair) 4 (Good) 5 (Excellent)
- - The country, state, religious
council or local community has
a legal framework for zakat or
charity supervision
- The country, state or religious
council has a legal framework
for zakat/charity management
which clearly regulates
zakat/charity permissible
activities
- - The country, state or religious
council or local community has
a legal framework for
zakat/charity supervision which
clearly states the licensing
criteria or parameters for zakat
operations
- - The zakat or charity supervisor
has a clear framework or
process for ensuring zakat
management is fully compliant
with legal requirements
Dimension Scale
Variable
1 (Bad) 2 (Poor) 3 (Fair) 4 (Good) 5 (Excellent)
Supervisory The zakat or charity - The zakat or charity - The zakat or charity supervisor
Techniques and supervisor does not have supervisor has has supervisory techniques and
Tools supervisory techniques and supervisory techniques tools to evaluate the
tools to evaluate the and tools to evaluate the performance of the zakat/
performance of the performance of the charity institution and
zakat/charity institution zakat/charity institution implements them regularly
Supervisory The zakat/charity supervisor - The zakat/charity - The zakat/charity supervisor
Reporting does not collect and review supervisor collects and collects and reviews the
the zakat/charity reviews the zakat/charity zakat/charity institution's
institution's performance institution's performance performance and publishes the
report results publicly
Financial Financial statements are not - Financial statements are - Financial statements are
Statements available available but unaudited available and audited
Zakat Financial Financial reports are not - Financial reports are not - Financial reports are published
Reporting Transparency published published periodically regularly
The presence of an An annual report is not - - - An annual report is available
Annual Report available
Zakat Collection Not available - A standard procedure for -
Management zakat collection A standard procedure for zakat
management is available collection management is
but uncertified available and certified
Zakat Collection Zakat collection growth of - Zakat collection growth - Zakat collection growth is
Zakat Growth 0-9% of 10%-20% >20%
Collection Risk Management Not available - A standard procedure for - A standard procedure for risk
in Zakat Collection risk management in management in zakat
zakat collection is collection is available and
available but uncertified certified
Zakat Literacy Index Low level (Score: 0-60) - Moderate level (Score: - High level (Score: 81-100)
61-80)
 Dimension Scale
Variable
1 (Bad) 2 (Poor) 3 (Fair) 4 (Good) 5 (Excellent)
Donor or Muzaki Not available - A database of muzaki or - A database of muzaki or
Database donors is available but donors is available and updated
not updated
Disbursement A standard procedure for - A standard procedure for - A standard procedure for zakat
Management zakat disbursement is not zakat disbursement is disbursement is available and
available available but uncertified certified
Allocation to The allocation to collection The allocation to The allocation to The allocation The allocation to collection
Collection Ratio ratio is <20% (not effective) collection ratio is collection ratio is to collection ratio is equal to or greater than
between 20% and between 50% and 69% ratio is between 90% (highly effective)
49% (below (fairly effective) 70% and 89%
expectation) (effective)
The Presence of a Not available - -
Zakat A report is available but A report is available and
Zakat Impact
Disbursement not published published
Assessment Report
Risk Management Not available - A standard procedure for - A standard procedure for risk
in Zakat risk management in management in zakat
Disbursement zakat disbursement is disbursement is available and
available but uncertified certified
Mustahik or Not available - A database of mustahik - A database of musathik or
beneficiaries or beneficiaries is beneficiaries is available and
database available but not updated
updated
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