Towards A Digitalized Collaborative Zakat Management System for Accelerating Good Governance Practices in the New Normal

Abstract

Many countries around the world are slowly beginning to move from managing the COVID-19 crisis to recovery and reopening of economies. In Malaysia, the government has launched various initiatives with the main aim to empower people, propel business and stimulate the economy. However, the socio-economic shock brought by COVID-19 pandemic is of the magnitude that the world has not experienced in decades. Hence, government alone cannot address the enormous challenge without collaborating with the diverse and inclusive stakeholders. As one of the collaborators, zakat institution is well positioned to play a significant role in this transformation. However, in meeting the demand for this role, zakat institutions need to adapt to the major shifts in many aspects of the pre pandemic way of doing things. One significant shift started at the beginning of the pandemic in Malaysia where many industries experience sharp increase in the adoption of digital channels. This is expected to accelerate and moving forward the government is providing help in moving towards more comprehensive adoption of digitalization. Given the current scenario, this paper proposes a model based on digitalization of collaborative zakat management for Pusat Pungutan Zakat, Wilayah Persekutuan (PPZ-MAIWP). The model provides a starting point in understanding the capability required to move towards more comprehensive digitalization of services provided by PPZ-MAIWP. The digitalization model is based on a collaborative effort between PPZ-MAIWP and other organisations in distributing zakat for empowerment initiatives. Using a developed impact assessment prototype system, this paper will provide a simulation results where PPZ-MAWIP will be able to short list organisations based on accumulated highest score received for the following components: governance structures, capability to deliver initiatives effectively and clarity of targeted socio-economic impact. Once the organisations are short listed, PPZ will then call for an online meeting with the selected organisations before making the final decision. The use of the digital model allows PPZ-MAIWP to make decisions faster, more objective and adapt to remote workplace. In addition, the selection criteria can also be used subsequently by PPZ-MAIWP to monitor the progress of the initiatives and also for the selected organisations to report on their progress. This forms part of the risk management process and in turn enhances effective delivery of sustainable empowerment initiatives funded by zakat fund. It is also an important mechanism to facilitate timely reporting on the social economic impact delivered that is crucial in enhancing stakeholders’ engagement and trust. Hence, this system accelerates good governance practices throughout the zakat distribution ecosystem. The model and the simulation presented can also act as a starting point in operationalisation of more comprehensive digitalization by PPZ in the new normal. Overall, the new normal provides substantial opportunities for PPZ to accelerate adoption of digitalization and good governance practices throughout the zakat ecosystem.