Does Zakat Improve Welfare in Indonesia?

Abstract

This study aims to analyze the effect of zakat distribution in five priority sectors of BAZNAS consisting of humanity, education, economy, health, and religion on the Islamic Human Development Index (IHDI), which includes Non-Material Welfare (NMW) and Material Welfare in Indonesia. This study uses zakat distribution and IHDI values ​​during the period 2019–2023, using Ordinary Least Square (OLS) regression through EViews 12 software. The results of the analysis show that zakat distribution in the economic sector has a significant effect on MW. Meanwhile, zakat distribution in the health, humanity, education, and religion sectors does not have a significant effect on NMW due to less than optimal program implementation, lack of holistic program integration, and a focus that is more theoretical than practical empowerment. Meanwhile, economic programs increase MW through productive economic empowerment. This study emphasizes the importance of a comprehensive zakat program with a preventive education approach, long-term empowerment, and cross-sector collaboration to maximize the contribution of zakat to NMW and MW so that it can improve welfare in Indonesia.

Keywords: Zakat Distribution, Baznas Priority Sector, Material Welfare, Non Material Welfare, IHDI