Enhancing the Role of Zakat Institutions Through Good Corporate Governance for Economic Sustainability: A Case from Majlis Agama Islam Melaka & Pusat Zakat Melaka

Abstract

Zakat institutions play a crucial role within the Islamic financial system to maintain the prosperity in Muslim communities. However, inefficient zakat management and low zakat payment compliance identified as main obstacle faced by the institutions. Thus, good governance implementation is noteworthy to alleviate the problems for long-term economic sustainability. Hence, the purpose of this study is to examine the implementation of good governance framework in zakat institution which comprise of their accountable board and leadership (in zakat administration), information transparency (in zakat institution website), disclosure practices (in financial reporting) and stakeholder management (in zakat distribution practices) of Majlis Agama Islam Melaka (MAIM). This study uses content analysis and descriptive method by analysing information disclosed in MAIM’s 2015 to 2019 annual report and Pusat Zakat Melaka (PZM) website. The result of this study shows that both institutions generally embraced good governance practices but not at their optimum level. There are deficiencies in zakat information on website to demonstrate their validity in ensuring effective and efficient zakat management and distribution. The implication of this study could deliver positive impact in zakat institutions when good governance is being practiced at optimum level and enhance higher zakat compliance in alleviating poverty among Muslim society.