Malaysia Endorses Baznas as Model for Alms Management

Jakarta, Indonesia – In a powerful endorsement of innovation in alms management, Malaysian Religious Affairs Minister Mohd Na’im Mokhtar praised Indonesia’s National Alms Agency, Baznas, as a global model at the World Zakat and Waqf Forum (WZWF) Annual Meeting and Conference 2024. With a digital approach to zakat (Islamic alms), Baznas exemplifies a new era of Islamic philanthropy aimed at poverty alleviation, social welfare, and economic equity.

Baznas’s impact has been transformative, showing how digital systems can modernize centuries-old charitable practices, bringing Islamic alms collection and distribution to underserved communities. Mokhtar described Baznas as a “blueprint for effective zakat management” that other countries can adapt to improve economic stability and social well-being.

Baznas as a Model for Alms Management?

Established with a mission to address economic disparity through zakat, Baznas has built a robust digital infrastructure that enables efficient and transparent collection, management, and distribution of funds. Traditional zakat practices were often decentralized and lacked consistent accountability, but Baznas’s model has shifted the paradigm, focusing on scalable digital solutions that align with contemporary needs.

The agency’s digital systems simplify contributions, making it easy for donors to fulfill their religious obligation. Using online platforms and mobile apps, Baznas ensures zakat reaches communities with urgent needs, including areas of healthcare, education, and food security. This streamlined process has strengthened public trust, with contributors able to see real-time impacts and understand exactly where their donations go.

The Importance of Zakat

Zakat, one of Islam’s five pillars, requires eligible Muslims to contribute a portion of their wealth each year to assist the less fortunate. The purpose is to redistribute wealth and ensure the equitable provision of resources within society. Given this fundamental role, zakat management is crucial to achieving socioeconomic balance, especially in countries with large Muslim populations and significant income disparities.

Minister Mokhtar pointed out that countries like Malaysia could benefit from a system modeled on Baznas. “If we embrace digital zakat systems, we can maximize the reach and impact of these funds, creating a ripple effect in the fight against poverty,” he said. In Malaysia, where income inequality remains a concern, a Baznas-inspired model could prove essential in achieving long-term poverty reduction goals.

Baznas’s Digital Success

Baznas’s digitization efforts are yielding unprecedented results. As of November 2024, Baznas surpassed its annual target, collecting Rp1 trillion (US$63.4 million) compared to the previous year’s Rp882 billion. This achievement is attributed to the agency’s multifaceted strategy, including public education on zakat, optimized fundraising operations, and a commitment to transparency.

Rizaludin Kurniawan, Deputy for Collection at Baznas, stated that the agency’s success stems from continuous improvement in zakat literacy and technological innovation. “We’ve focused on ensuring that the public understands the power of zakat and on providing a system that makes giving straightforward and secure,” Kurniawan said. By implementing digital tools, Baznas has created an ecosystem where donors can engage more actively, bolstered by clear reporting and feedback loops.

Alms Management

Digital platforms are changing the landscape of alms management, allowing organizations like Baznas to offer convenient donation options, real-time tracking, and data-driven insights. With mobile penetration on the rise—Indonesia has over 100 million internet users, and Malaysia’s internet penetration exceeds 89%—digital systems for alms collection are increasingly accessible.

Baznas’s success reflects a trend towards “Islamic fintech,” where financial technology meets religious obligations. By collaborating with fintech companies and developing secure mobile apps, Baznas has made it possible for Muslims from any socio-economic background to participate in zakat. These platforms offer donors information on the areas most in need, track the progress of initiatives, and provide transparency that traditional systems lack.

In the broader context, the global Islamic fintech market is expected to grow substantially, with estimates suggesting it could exceed $2 trillion by 2025. Islamic finance experts believe digital zakat could be a crucial driver in this growth, enabling more efficient alms distribution.

Baznas As a Model

Baznas’s approach doesn’t just focus on immediate relief but also fosters long-term economic resilience. Through its targeted zakat distribution, Baznas supports sectors that build community capacity, such as education, health, and skills training. By addressing basic needs and enabling self-sufficiency, zakat recipients can contribute positively to society, promoting a cycle of growth and well-being.

This structured approach to poverty alleviation aligns with sustainable development goals (SDGs) and reflects Islam’s holistic view of social welfare. Minister Mokhtar emphasized that while zakat’s primary purpose is to alleviate poverty, it also cultivates social harmony and reduces the strain on government welfare programs.

By targeting the most vulnerable and delivering essential services, Baznas is creating tangible social value. The organization has extended healthcare assistance to over 500,000 individuals, provided scholarships for 25,000 students, and supplied housing support to thousands of low-income families, illustrating how zakat can directly improve quality of life.

A Regional Opportunity

Malaysia’s interest in the Baznas model reflects a strategic approach to addressing its own welfare and poverty-related challenges. Malaysia has an established Islamic finance industry, but social safety nets could be further strengthened through improved zakat systems. Adopting a Baznas-like approach could allow Malaysia to integrate zakat into its broader social and economic policies.

Mokhtar’s praise for Baznas highlights a growing trend among Muslim-majority countries to embrace digital zakat. Malaysia’s own zakat collection in 2023 amounted to over $700 million, yet the country continues to explore how technology could amplify these contributions. Malaysian policymakers are particularly interested in Baznas’s digitized model, which could offer a more systematic and traceable method for zakat distribution.

Experts believe that if Malaysia adopts elements from the Baznas model, it could unlock new efficiencies in zakat administration, helping the country provide essential services to underserved communities. This move could be instrumental in achieving Malaysia’s Vision 2030, a national development plan that emphasizes economic equality and sustainable growth.

The Cornerstone of Baznas’s Success

Trust is essential for any charitable institution, especially when dealing with public donations. Baznas’s emphasis on transparency has bolstered public confidence, establishing the agency as a professional and reliable institution. With digital tools, Baznas can provide clear reports, ensuring donors know exactly how and where funds are being used.

In countries where corruption and misuse of charitable funds have occasionally undermined public confidence, Baznas’s model offers a roadmap for restoring trust. Baznas’s digital-first approach ensures that every transaction is tracked, reducing opportunities for fraud and promoting accountability. This level of transparency has fostered a robust donor base, which in turn supports the agency’s poverty alleviation efforts.

Baznas’s Digital Transformation

Baznas’s success offers valuable lessons for countries with significant Muslim populations. By adopting digital systems, these nations can improve zakat collection rates, streamline distribution, and enhance the effectiveness of welfare programs. The model is particularly relevant for regions in Southeast Asia and the Middle East, where zakat is a critical tool for social safety nets.

For example, Brunei and Singapore have shown interest in similar digital zakat systems, recognizing the potential for enhanced transparency and impact. These nations are exploring partnerships with Islamic fintech firms to develop customized platforms, aiming to replicate Baznas’s success on a smaller scale.

Potential for a Global Zakat Model

The success of Baznas suggests a compelling vision for a global zakat model that leverages technology to unify and streamline alms collection across borders. Such a model could facilitate resource-sharing among Muslim-majority countries, ensuring zakat reaches communities with the greatest needs, regardless of national boundaries.

Several international organizations, including the Islamic Development Bank (IsDB), have expressed interest in supporting cross-border zakat initiatives. The IsDB has proposed a global zakat platform that would enable Muslim communities worldwide to contribute seamlessly to poverty alleviation efforts in underserved regions. This platform would draw inspiration from Baznas’s model, using data analytics and mobile technology to distribute funds effectively.

Could Baznas Inspire?

Minister Mokhtar concluded his remarks at the WZWF conference with a call to action for the international community to consider Baznas as a model for alms management. “We have the tools and knowledge to create a truly equitable society,” he stated. “Baznas has shown us that technology can be a force for good, and now it’s up to us to make it a reality.”

Looking ahead, Baznas is exploring potential collaborations with other countries to share best practices in zakat management. These partnerships could set the stage for a global alms management system that emphasizes transparency, efficiency, and social impact. By pooling resources and knowledge, countries could ensure that zakat fulfills its mission to reduce poverty, stimulate economic activity, and foster social cohesion.

The Baznas Model Globally

While the Baznas model offers numerous advantages, scaling it globally would require careful consideration of cultural, economic, and regulatory factors. Countries vary in terms of zakat administration laws, tax policies, and digital infrastructure, all of which would influence how Baznas’s approach could be implemented elsewhere.