03_EJIF European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 31 Cross-Country Comparison of Zakat Management Model for Economic Resilience: Insights from Indonesia and Malaysia Aryadimas Suprayitno1*, Widya Sartika Hasibuan2 1* Department of Islamic Economics, Master of Science in Islamic Economics Program, Universitas Airlangga, Indonesia. Corresponding Author: aryadimassuprayitno@gmail.com ORCID 0009-0006-2872-1151 2 Development Economics Study Program, Universitas Sumatera Utara, Indonesia. ORCID 0009-0007-6144-9492 Received: 27/05/2025 Accepted for publication: 24/10/2025 Published: 15/12/2025 Abstract The negative economic growth observed in Indonesia and Malaysia has led to the classification of both nations as experiencing an economic recession. This situation arises from a reduction in total household expenditure, despite an increase in zakat collection. The management of zakat in Indonesia and Malaysia, in light of the economic recession, is implemented through various programs. This research aims to conduct a comparative examination of zakat management in Indonesia and Malaysia during economic downturns, with a particular emphasis on policy responses to the recession triggered by COVID-19. Subsequently, this investigation employs a qualitative descriptive methodology grounded in secondary data sourced from zakat institutions, governmental reports, and scholarly literature. The findings elucidate four notable distinctions in zakat management between Indonesia and Malaysia: the focus on resource allocation, the prioritization of beneficiaries, the sustainability of impact, and the originality of programs. Indonesia focuses on directing zakat towards economic initiatives, whereas Malaysia places greater importance on its distribution for consumptive purposes. Indonesia has delineated six priority clusters of mustahik affected by the COVID-19 pandemic, whereas Malaysia has categorized only three priority clusters of mustahik. Malaysia employs a unique methodology, characterized by a thorough focus on distributing consumptive zakat to meet pressing household needs. The execution of the program is expected to enhance overall household consumption, thereby aiding in the recovery from economic recession by restoring public purchasing power. This study advances the framework for zakat distribution, contributing to informed decision-making in the realm of policy development during economic crises. This research provides a comprehensive analysis of the allocation of zakat funds as a mechanism for social safety and economic resilience, highlighting exemplary practices from Indonesia and Malaysia, two leading Muslim-majority countries. Keywords: Zakat; Zakat Management; Zakat Distribution; Zakat Governance; Government Policy; Comparative Analysis. European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 32 1. Introduction The COVID-19 pandemic profoundly impacted the global economy, resulting in a decline in economic growth that varied according to the financial resilience of households (McKibbin & Fernando, 2023). Communities facing economic challenges tend to be more vulnerable to the repercussions of the epidemic compared to their wealthier counterparts. Barro & Sala-i-Martin (2004) contend that one can assess the economic performance of nations by juxtaposing their growth rates. The COVID-19 pandemic has had a significant impact on global economic growth. In 2023, Indonesia and Malaysia distinguished themselves as leading nations within Southeast Asia in the State of Global Islamic Economy (SGIE), with Malaysia achieving the top position and Indonesia attaining third place. Figure 1 below exemplifies the economic growth trajectories of Indonesia and Malaysia. Figure 1. Economic Growth in Indonesia and Malaysia Source: World Bank In the two years preceding the pandemic, Indonesia and Malaysia demonstrated steady economic advancement; however, they faced a notable decline in 2020. The COVID-19 pandemic in 2020 led to a notable economic decline, as evidenced by Indonesia's contraction from 5.02% in 2019 to -2.07%, while Malaysia experienced a drop from 4.41% to -5.46%. In the following year, both countries experienced a gradual recovery, achieving a 3% growth rate in 2021. Indonesia has maintained a growth rate of 5% through 2024, akin to levels observed a decade prior, suggesting that it has not yet surpassed the middle- income trap. Conversely, Malaysia demonstrated fluctuating effects during the post-recovery period, surging to 8.86% in 2022, followed by a decrease to 3.56% in 2023, and then experiencing a resurgence to 5.11% in 2024. The notable decline in economic growth rates in Indonesia and Malaysia in 2020 has been officially recognized, with both countries now classified as experiencing economic recession (Baharuddin, 2021; Lativa, 2022). According to Gaski (2012), a recession is characterized by a sustained decline in GDP over two consecutive quarters, resulting in negative economic growth. An economy that heavily depends on the global market is prone to experiencing periods of economic decline. Modrek et al (2013) posited that a reduction in household expenditure serves as a significant driver of economic downturn. Figure 2 illustrates the patterns of household consumption in Indonesia and Malaysia. 2018 2019 2020 2021 2022 2023 2024 Indonesia 5,17 5,02 -2,07 3,70 5,31 5,05 5,03 Malaysia 4,84 4,41 -5,46 3,32 8,86 3,56 5,11 -8,00 -6,00 -4,00 -2,00 0,00 2,00 4,00 6,00 8,00 10,00 Ec on om ic G ro w th (% ) European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 33 Figure 2. Household Consumption in Indonesia and Malaysia Source: Badan Pusat Statistik dan Department of Statistics Malaysia Household consumption, which affects the evaluation of economic growth, experienced a significant decline in 2020. In 2018 and 2019, consumer expenditure in Indonesia and Malaysia was elevated, but it plummeted quickly during the initial phases of the COVID-19 pandemic. Indonesian household consumption decreased from 5.16% in 2019 to -2.67% in 2020. Malaysia likewise had a more pronounced decrease, from 7.69% to -3.94%. The reduction in home consumption during the COVID-19 pandemic prompted the government to implement measures, including the provision of social assistance, to stimulate household spending (Georgarakos & Kenny, 2022). This stimulus progressively increased consumption levels in both nations in 2021, reaching 2.01% and 1.79%, respectively. The increase in the three years following the pandemic demonstrates that household consumption in both nations responded robustly to post-pandemic circumstances, driven by consistent growth. Zakat, a fundamental tenet of Islam, significantly contributes to the equitable allocation of resources to individuals in need, particularly in supporting household expenditures during times of crisis. Throughout the pandemic, zakat serves not merely as a tool for immediate assistance to mustahik (zakat beneficiaries) but also as a strategy to foster enduring economic recovery. The proficient management of zakat ensures its distribution to support affected individuals and families, thereby aiding their survival and facilitating their reintegration into a productive society. The importance of professional zakat governance, which focuses on empowering mustahiq through sustainable production, could be an effective approach in the pursuit of poverty eradication (Herianingrum et al., 2023). Zakat Mal, unlike Zakat Fitrah, has a broader scope and significant potential as a productive instrument for economic development (Farouk et al., 2018; Kahf, 1989; Khasandy & Badrudin, 2019). Zakat Fitrah is consumptive and periodic in nature, limited to fulfilling basic needs during Eid al-Fitr, whereas Zakat Mal can be utilized for empowerment programs such as microenterprise financing, skills training, and strengthening food security (Widiastuti, Auwalin, et al., 2021; Widiastuti et al., 2022). This positions zakat not only as a social instrument but also as a mechanism for long-term economic empowerment (Prawoto & Basuki, 2024; Safitri et al., 2024). By allocating zakat to initiatives that empower mustahiq, such as skills training or micro-enterprise support, zakat transcends mere temporary help and functions as a mechanism to bolster the economic autonomy of recipients. This approach will have a more lasting impact and reduce reliance on social aid, thereby expediting economic recovery and progressively lowering poverty rates. Compared to taxation, zakat holds an advantage in its religious legitimacy, which encourages higher compliance among muzakki, as well as its clear allocation to the eight asnaf, thereby directly targeting the poor and vulnerable groups (Nayak & Hegde, 2023). In the context of economic recovery, zakat functions as an automatic stabilizer because resources transferred from higher-income groups are 2018 2019 2020 2021 2022 2023 2024 Indonesia 5,14 5,16 -2,67 2,01 4,96 4,94 5,11 Malaysia 7,98 7,69 -3,94 1,79 11,32 4,65 5,11 -6,00 -4,00 -2,00 0,00 2,00 4,00 6,00 8,00 10,00 12,00 14,00 Ho us eh ol d Co ns um pt io n (% G DP ) European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 34 allocated to mustahik with a higher marginal propensity to consume (MPC), thereby enhancing aggregate consumption, strengthening purchasing power, and ultimately supporting sustainable economic recovery (Obeidat, 2024). Consequently, zakat collection may be designated for particular beneficiaries due to its classification in the faith. The following Figure 3 illustrates zakat collection data in Indonesia and Malaysia from 2015 to 2022. Figure 3. Zakat Collection in Indonesia and Malaysia Source: National Zakat Statistics BAZNAS and Annual Report of the Malaysian Zakat Collection Centre The collection of zakat in Indonesia and Malaysia, including Zakat Mal and Zakat Fitrah, had an upward trend from 2015 to 2021. The continuous rise in zakat collection during the pandemic can be explained by its dual nature as both a religious obligation and a voluntary act of solidarity. This strong philanthropist tendency is largely shaped by Islamic principles, which emphasize that charitable giving serves as a means to avert potential adversities (Faza & Indriani, 2022). Unlike discretionary charitable giving, zakat is a compulsory duty for Muslims whose wealth meets the nisab threshold, which ensures a relatively stable inflow of funds even during economic downturns. This mandatory character sustains compliance and explains why zakat payments increased despite declining household spending in 2020. At the same time, the COVID-19 crisis heightened social awareness and moral responsibility (Ali et al., 2021; Nihlén Fahlquist, 2021), motivating many muzakki (payers) to increase their contributions beyond the minimum requirement. Thus, while precautionary savings behavior contributed to reduced private consumption, zakat payment remained resilient due to its theological legitimacy and the perceived urgency to support vulnerable groups affected by the crisis. The pandemic also underscored the role of zakat in strengthening economic resilience. By transferring resources from higher-income groups, who typically have a lower marginal propensity to consume, to mustahik (recipients), who tend to spend additional income immediately, zakat served as an automatic stabilizer. This redistribution not only alleviated poverty but also sustained aggregate demand, thereby mitigating the contraction in household consumption. This investigation builds upon the work of Nofianti et al (2024), which analyzed cash waqf management across Indonesia, Malaysia, and Turkey. However, their study lacks a specific framework model that visualizes the distribution of zakat. Furthermore, although zakat significantly contributes to bolstering economic resilience, especially in times of crisis, there exists a notable scarcity of scholarly attention directed towards comparative studies of zakat management strategies among nations that share similar religious demographics yet possess divergent institutional frameworks. A distinctive model that has been previously established is halal food security grounded in waqf; however, it remains uncertain whether this approach can ensure 2018 2019 2020 2021 2022 2023 Malaysia 651.228.032 682.200.000 756.000.000 821.740.348 928.302.963 1.031.310.36 Indonesia 8.113.410.67 10.227.943.9 12.510.541.9 14.118.192.8 22.485.332.0 32.321.191.7 0 5.000 10.000 15.000 20.000 25.000 30.000 35.000 0 200.000 400.000 600.000 800.000 1.000.000 1.200.000 In B ill io n ID R In T ho us an d M YR European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 35 resilience during periods of economic upheaval (Hasibuan & Lubis, 2024). Conversely, the investigation conducted by Bilo & Machado (2020) focuses on a comparative analysis of Jordan and Sudan in relation to social protection, a matter of micro-level significance, while this study aspires to engage with more expansive, macro-level issues. Many current investigations predominantly concentrate on individual nation case studies or broad assessments of zakat efficacy, failing to connect these analyses to macroeconomic indicators, such as household consumption and economic growth. Recent research conducted by Shikur et al (2025) delves into the intricate micro-level dynamics of zakat payment behavior in Ethiopia. This methodology was subsequently expanded upon by Chy (2025), who provided a detailed analysis of the criteria for zakat empowerment within the UK context. In parallel, Jamaludin et al (2025) investigated various aspects of public trust in organizations responsible for zakat administration. In contrast, many previous studies explored the viability of integrating blockchain technology within the framework of zakat governance (Hassan et al., 2022; Kassim et al., 2023; Santoso et al., 2020; Susanto et al., 2025). Although these studies contribute to local understanding, they are constrained by their singular emphasis on national contexts and their inadequate exploration of zakat as a tool for economic resilience during global crises, including the COVID-19 pandemic. This research examines the disparity by analyzing the methods through which Indonesia and Malaysia, two predominantly Muslim nations with distinct zakat management frameworks, can effectively distribute zakat to mitigate the economic consequences of the COVID-19 recession. This research identifies strategic variances and policy advancements, facilitating the formulation of strategies for zakat institutions to enhance the effectiveness of Islamic social finance in crisis management. This research also introduces frameworks that various zakat institutions may implement as effective risk management approaches. 2. Literature Review 2.1 Role of Zakat in Resilience The Zakat Foundation of America defines zakat as “increase,” or in growth. The word also connotes “blessings” (barakah), “purification” (taharah), or “commendation” (mad). Zakat is named as such for three spiritual reasons reflected in the Arabic word: (1) God promises the blessing of “growth” in the wealth of any who pay from their money and property the charity He has obliged; (2) the Zakat-Charity “purifies” its giver of sin; and (3) Zakat may suggest ‘sweetening,’ implying that wealth on which Zakat has not been duly paid remains bitter in this life and the Hereafter. Furthermore, it is essential to comprehend the notions of "Muzakki" and "Mustahik”. Muzakki (a Zakat payer) is an individual who contributes Zakat funds and Mustahik (a Zakat receiver) is an individual who fulfills one of the eight conditions for asnaf (Zakat recipients) as defined by Islam. The criteria encompass individuals lacking wealth (Fakir), those whose income is inadequate for daily necessities (Poor), enslaved individuals (Riqab), individuals burdened by substantial debts they cannot repay (Gharim), recent converts to Islam (Mualaf), individuals engaged in righteous endeavors for the sake of God (Fi Sabilillah), travelers (Ibnu Sabil), and officials responsible for zakat administration (Amil Zakat) (Kahf, 1989; Widiastuti et al., 2022). Zakat serves as a crucial mechanism for alleviating poverty by providing financial assistance to individuals in need (asnaf), thereby empowering them to meet their essential needs and improve their economic situation. This contribution not only mitigates the immediate financial strain but also enhances individuals' economic agency, cultivating enduring economic resilience. Herianingrum et al (2024) elucidate the effective utilization of zakat as a mechanism for alleviating poverty in Indonesia, thereby showcasing its potential to bolster economic resilience through empowerment. Furthermore, zakat plays a pivotal role in fostering sustainable economic development by promoting social equity and mitigating income inequalities. Initiatives bolstered by zakat, particularly those focused on enhancing the welfare of farmers and fostering financial inclusion within agricultural domains, fortify the economic underpinnings of communities and facilitate sustainable development over time. Mongkito et al (2025) highlight that the function of zakat in enhancing farmers' welfare contributes to the development of more stable agricultural economies, which are essential for fostering sustainable communities. Zakat serves a crucial function in promoting economic development and stability. Historically, the adept management of zakat has been associated with notable economic advancement, exemplified during the governance of Caliph Umar Ibn Abdul Azis. The effective allocation of zakat during that time played a significant role in fostering economic prosperity and ensuring stability. Contemporary research, European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 36 including findings by Sarea (2020), indicates that zakat has the potential to invigorate aggregate production and bolster GDP growth, thereby improving overall economic resilience by providing stability during times of crisis. The correlation between zakat and the United Nations' Sustainable Development Goals (SDGs) reinforces its significance in fostering enduring economic sustainability. Initiatives such as the Ummah Economic Development Zone (ZPEU) in Malaysia amalgamate zakat with contemporary technological advancements and strategic collaborations to foster socioeconomic sustainability. According to Majid et al (2024) these initiatives, zakat has the potential to advance the Sustainable Development Goals while enhancing the resilience of local economies, especially within the framework of community development. Furthermore, zakat facilitates the flow of wealth and mitigates the tendency to hoard, thereby fostering ethical investment practices. Through the facilitation of investments in the halal sector and the promotion of ethical business practices, zakat fosters consumer trust and bolsters the development of industries that adhere to the principles of Islamic finance. Hak et al (2024) examine the ways in which zakat has influenced the expansion of the halal industry in Indonesia, highlighting its significance in promoting ethical economic practices that enhance economic resilience. 2.2 Comparative Models of Zakat Governance The governance of Zakat varies across nations, influenced by their distinct socio-economic, political, and cultural landscapes. In Malaysia, a centralized model of zakat governance is employed, incorporating technology to enhance transparency and efficiency in the zakat collection and distribution processes. Nofianti et al (2024) observe that while Malaysia has established a centralized system bolstered by extensive regulations, a significant challenge persists in the form of legal inconsistencies across states, potentially obstructing the uniform implementation of waqf nationwide. This model demonstrates efficiency in the management and distribution of waqf; however, it is imperative to address the legal disparities among states to facilitate effective waqf management universally. Conversely, Turkey embraces a decentralized framework propelled by the involvement of non-governmental organizations and active community engagement. This model provides enhanced adaptability for local communities to administer waqf. However, it encounters obstacles related to standardization and uniform oversight. Putriani et al (2020) underscore that although decentralization fosters opportunities for community-driven initiatives, there is a pressing need for enhanced monitoring mechanisms to guarantee accountability and efficiency in the management of zakat nationwide. Indonesia employs a hybrid model that integrates governmental oversight with the active participation of the private sector in managing zakat. Yahya (2020) observes that although this model facilitates enhanced local adaptability, Indonesia encounters considerable difficulties in harmonizing diverse zakat institutions and fostering public confidence in zakat administration. One of the initiatives aimed at enhancing zakat governance in Indonesia involves incorporating technology within zakat institutions, as examined by Widiastuti et al (2021)[author]. It is proposed that augmenting the technological capabilities of zakat institutions may significantly enhance transparency and efficiency in the management of zakat throughout Indonesia, thereby directly influencing the elevation of public trust. Meanwhile, throughout the Gulf region, zakat administrations prioritize fostering confidence in the distribution of zakat funds to avert connections with terrorist activities, hence rendering transparency imperative (Al-Shamali & AlMutairi, 2022). Prior to Bahrain, Zakat may be expedited during an economic recession to mitigate its effects by facilitating debt repayment, enhancing output, increasing employment, and boosting revenue (Abdelbaki, 2013). Moreover, Uzbekistan is considering the incorporation of zakat incentives into its taxation framework to mitigate tax evasion and enhance the significance of zakat institutions in the national economy. Asadov et al (2024) suggest that integrating zakat incentives into the tax framework could enhance the contribution of zakat to economic development while simultaneously addressing the issue of tax evasion. This further underscores the necessity of a methodical approach to public education regarding zakat obligations, which is essential for the effective implementation of this system. 2.3 Zakat and Consumption in Islam The term zakat, when examined etymologically, encompasses three distinct meanings: blessing, development, and cleansing. The notion of zakat is delineated in Surah At-Taubah, verse 103, which asserts: “Take zakat from their wealth, to purify and European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 37 sanctify them, and pray for them.” Certainly, your supplication bestows upon them a profound sense of peace within their hearts. Allah possesses the attributes of being All-Hearing and All-Knowing. Thus, Zakat manifests as a significant socio- economic practice of devotion, playing a crucial role in the community's economic development (Muhamad, 2020). The income from Zakat can be categorized into six distinct forms of wealth. The obligatory forms of zakat include gold and silver, agricultural products, commercial goods, livestock, discovered items, and resources extracted from mining operations. The implementation of zakat can potentially harmonize with various governmental or international efforts, such as the Sustainable Development Goals (SDGs), as long as it conforms to the eight Asnaf Zakat. Surah At-Taubah, verse 60, articulates that zakat is designated solely for the poor, the needy, those who administer it, individuals whose hearts are to be reconciled (new converts), for the emancipation of slaves, for those burdened by debt, for the cause of Allah, and for the traveler, as a mandate from Allah. Allah possesses complete knowledge and profound wisdom. The method for assessing zakat management could be executed through the lens of Maqashid Syariah (Hapsari & Abidin, 2016). The congruence of zakat initiatives with Maqashid Syariah could establish a foundation for the distribution of zakat aimed at achieving collective well-being. The consumption theory in Islam, as articulated by Metwally and Ausaf, posits that the Marginal Propensity to Consume (MPC) among mustahik is greater than that of muzaki. The Marginal Propensity to Consume (MPC), Average Propensity to Consume (APC), and overall consumption within the Islamic economy are observed to be elevated in comparison to those in the conventional economy (Tika Widiastuti et al., 2022). Within the framework of Islamic consumption, zakat influences the consumption patterns of both muzakki and mustahik. The curve representing the consumption function within the Islamic context is illustrated in Figure 4 below. Figure 4. Consumption Curve for Muzakki and Mustahiq Source: Lisnawati (2019) The figure illustrates that the consumption level (MPC) of mustahik surpasses that of muzakki. The economy of the mustahik has been enhanced through the provision of zakat (Lisnawati, 2019). The requirement of zakat ensures that the income of the muzakki is not entirely allocated for personal consumption, but is also disseminated to the mustahik via zakat mechanisms. The role of consumption within the framework of Islam is articulated as follows (Hapsari & Abidin, 2016): The equation for the consumption of Muzakki can be expressed as C = C0 + b(Y - Z). The consumption of Mustahik can be expressed as C = Z = C0. Muzakki Consumption (C1) Mustahiq Consumption (C2) Yield (Y) Consumption (C) European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 38 The consumption equation of muzakki elucidates that the income obtained has been subjected to zakat deductions prior to its allocation for consumption purposes. The reliance of mustahik on zakat is predicated on the premise that their needs remain unmet. Research has consistently shown that lower-income demographics, including those who are financially disadvantaged, exhibit a greater marginal propensity to consume compared to their higher-income counterparts. Individuals belonging to middle- and higher-income brackets typically exhibit a diminished marginal propensity to consume, as they are more inclined to allocate a portion of their increased earnings towards savings or investments. Evidence from South Korea indicates that as the transfer size increased, the marginal propensity to consume (MPC) decreased, implying that households with higher incomes were less inclined to utilize the additional funds (Beik et al., 2023, 2024) Zakat offers strategic benefits compared to subsidies in terms of economic development and social resilience, especially in Muslim-majority nations (Tika Widiastuti et al., 2022). Zakat, as a religious duty, possesses significant moral credibility and fosters voluntary community involvement, rendering it a viable financial resource that does not impose on the state budget. In contrast to subsidies, which rely on fiscal policy and are susceptible to political influence, zakat is administered by community- based institutions, resulting in more precise and effective distribution. Moreover, zakat possesses not only consumptive attributes but also transformative potential through initiatives that empower recipients, fostering economic independence and reducing reliance. During crises such as the COVID-19 pandemic, zakat can serve as a tool for local economic resilience, bolster social solidarity, and enhance public accountability through transparent methods rooted in spiritual and social principles. 3. Methodology This research employs a descriptive qualitative methodology alongside a comparative framework to examine the distinctions in zakat management practices between Indonesia and Malaysia in the context of the economic downturn induced by COVID- 19. Data were sourced from official zakat institutions, such as Badan Amil Zakat Indonesia (BAZNAS Indonesia) and Majlis Agama Islam Wilayah Persekutuan in Malaysia, as well as national statistics, zakat agency reports spanning from 2015 to 2024, academic journals, and government policy documents. The validity of the data was confirmed through the use of audited reports from esteemed authorities and by implementing data triangulation, which involved cross-referencing with peer-reviewed literature and official statistics. Indonesia and Malaysia were selected due to their shared characteristics as nations with a predominant Muslim population, each having well-established zakat institutions and notable governmental involvement in the realm of Islamic social finance. Both nations experienced similar macroeconomic disturbances during the COVID-19 pandemic, characterized by declines in household consumption and increases in unemployment rates. Nevertheless, they illustrate varying models of zakat governance; Indonesia utilizes a hybrid state-private framework, while Malaysia embraces a more centralized and corporatized structure. This juxtaposition presents a significant opportunity to assess the influence of diverse institutional frameworks on the effectiveness of zakat management during periods of economic turmoil. The analysis employs a descriptive-comparative methodology, incorporating data reduction that aligns with the research focus. It categorizes information into four key aspects: fund distribution focus, mustahik priority, program impact sustainability, and the unique approaches of each country. Data is presented through tables and diagrams, leading to conclusions drawn from a comparative examination of zakat management practices and their relationship with household economic resilience. This analysis utilizes two fundamental macroeconomic indicators: economic growth and household consumption. The data on economic growth are obtained from the World Bank and various national statistical agencies, while the information on household consumption is sourced from Statistics Indonesia and the Department of Statistics Malaysia. The examination centers on the zakat management framework within Islamic social finance, including distribution methodologies, forms of support, and trends of empowerment or consumption aimed at mustahik. European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 39 4. Result and Discussion 4.1 Zakat Management in Indonesia during the COVID-19 Pandemic The administration of zakat in Indonesia is systematically structured into five fundamental sectors: economics, education, humanitarian initiatives, social services, and religious outreach. The National Amil Zakat Agency (BAZNAS) is the exclusive institution established by the Indonesian government, as per Presidential Decree No. 8 of 2001, tasked with collecting and distributing Zakat, Infaq, and Sedekah (ZIS) on a national scale. The legal framework was further enhanced through the enactment of Law Number 23 of 2011 concerning Zakat Management, which solidified BAZNAS's position as the authoritative entity for national zakat administration. BAZNAS functions as a non-structural government agency, operating autonomously while maintaining accountability to the President via the Minister of Religious Affairs. Consequently, BAZNAS, in partnership with the government, holds the responsibility of supervising zakat administration in alignment with Islamic principles. The principles encompass trust, benefit, justice, legal clarity, integration, and responsibility. The agency plays a crucial role in ensuring the equitable and efficient administration of zakat, promoting transparency, and upholding adherence to the principles of Islamic law in the allocation of zakat. BAZNAS has delineated six facets to serve as guidelines for the management of zakat in the context of the COVID-19 pandemic, as follows (BAZNAS, 2020): 1. Distribution of zakat funds for COVID-19 handling in accordance with sharia and applicable regulations in Indonesia; 2. The distribution of zakat funds for COVID-19 handling does not violate the established health protocols; 3. The mechanism for distributing zakat funds for COVID-19 handling uses a push approach (approaching those in need), not a pull approach (gathering those in need); 4. Strengthening coordination with the government/COVID-19 task force in the distribution of aid; 5. Establishing six clusters of target beneficiaries; and 6. Establishing two program groups as vehicles for distributing aid. The six clusters that are the target beneficiaries of zakat assistance during the COVID-19 pandemic can be seen in the following Figure 5 (BAZNAS, 2020): Figure 5. Clusters of Beneficiaries of BAZNAS RI Zakat Assistance Source: BAZNAS Report on COVID-2019 Pandemic Response, 2020 Education and Da'wah Cluster Micro and Small Business Cluster Formal Labour Cluster Informal Labour Cluster Layoff and Unemployment Cluster Others Cluster European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 40 The detailed grouping of mustahik targets for each cluster is detailed in Table 1 below: Table 1. Cluster and Target of Mustahiq BAZNAS RI in Countering the Impact of COVID-19 No Cluster Target of Mustahiq 1. Education and Da’wah Cluster Honorary teachers/lecturers, clerics, Quran teachers, and mosque caretakers 2. Micro and Small Business Cluster Salons, Barbers, Small Food Stalls, and Street Vendors 3. Formal Labour Cluster Parking Attendants, Rickshaws, Office Boy, Masseurs, and School Canteen 4. Informal Labour Cluster Factory Workers 5. Layoff and Unemployment Cluster Factory Workers who were laid off 6. Others Cluster According to the assessment results of the BAZNAS Programme Implementation Team Source: BAZNAS Report on COVID-2019 Pandemic Response, 2020 In implementing its assistance programme across the six designated clusters, BAZNAS also operates two dedicated “vehicle-based initiatives” designed to enhance outreach and service delivery. These programmes serve as logistical support mechanisms to ensure the timely and effective distribution of aid. The two “vehicle programmes” are as follows: 1. Health Emergency Programme a. Health Programme • Education and Socialisation of Clean and Healthy Lifestyle • Disinfectant Spraying • Sink Installation b. Curative Programme • Provision of Personal Protective Equipment for Health Workers • Provision of Isolation Room 2. Socio-economic Emergency Programme a. Strengthening Food Security • Family Logistics Package • Distribution of Zakat Fitrah b. Curative Programme • Cash for Work Programme • Mustahik Cash Assistance Programme European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 41 The management of zakat funds in the realisation of the two vehicle programs can be seen in Table 2 below: Table 2. Realization of Zakat Funds in Distributing the COVID-19 Program in Indonesia No Programme Area Zakat Fund Realization Health Emergency Programme 1. Health Programme IDR 268,777,411 2, Curative Programme IDR 1,823,852,122 Darurat Sosial Ekonomi 1, Family Logistics Package IDR 933,710,000 2, Distribution of Zakat Fitrah IDR 170,868,000 3, Cash for Work IDR 3,830,125,000 4, Mustahik Cash Assistance Programme IDR 70,200,000 Total Zakat Fund Realization IDR 7,097,532,533 Source: BAZNAS Report on COVID-2019 Pandemic Response, 2020 The implementation of zakat fund distribution demonstrates a significant emphasis on remedial and socio-economic initiatives. This study examines socio-economic emergency programmes due to their significant role in enhancing overall household consumption levels. The Family Logistics Package initiative aims to enhance the capabilities of farmers supported by BAZNAS. BAZNAS extends financial support to mustahik farmers to enhance food production, procures their harvests, and subsequently distributes the products to mustahik clusters impacted by the pandemic. This mechanism serves a dual purpose: it not only allocates assistance but also fosters enduring economic circulation within the grassroots community. The operational framework of this program is illustrated in Figure 5 below: Figure 5. Empowerment-based Family Logistics Mechanism Source: Authors’ elaboration The explanation of the Empowerment-Based Family Logistics mechanism is as follows: 1. BAZNAS provides capital assistance to farmers who are classified as mustahik to improve welfare. The capital assistance is funded from zakat funds for land rent, equipment, and product marketing access assistance, 2. BAZNAS assisted farmers in selling their crops to BAZNAS, and BAZNAS assisted farmers get income from the sales. 3. BAZNAS distributes crops to mustahik who are classified as clusters of BAZNAS beneficiaries during the COVID-19 pandemic. The Family Logistics Programme increases household consumption of assisted farmer families and mustahik who are members of six clusters. The forthcoming initiative is Cash for Work, a program that engages mustahik in BAZNAS activities. This initiative is categorized into three distinct groups: Vulnerable Groups (those at risk of poverty), MSMEs, and individuals with disabilities. The implementation of zakat distribution for vulnerable groups, specifically mustahik (those eligible to receive zakat), aims to meet both immediate and long-term needs through a range of customized interventions. In the context of mustahik, a direct cash allocation is designated for each activity performed, thereby ensuring that these individuals receive prompt financial assistance that corresponds to the tasks they are involved in. This cash transfer system ensures that assistance is both prompt and directly linked to the recipients' contributions, thereby promoting economic autonomy and sustainability among them. For BAZNAS Assisted Farmers BAZNAS Mustahiq in Six Clusters 1 2 3 European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 42 micro, small, and medium enterprises (MSMEs), a pivotal initiative centers on reimbursing businesses for vital goods, particularly through a framework that aids enterprises like Z-Mart, which are nurtured under zakat programs. These enterprises receive zakat funds to acquire groceries, thereby supporting their operations and ensuring the livelihood of their employees. This initiative promotes the development of small enterprises, ensuring their ongoing ability to serve the local community while simultaneously contributing to the wider economy, thereby generating a multiplier effect that advantages both the business and its surrounding environment. A significant initiative focuses on individuals with disabilities, where zakat is utilized to enhance the capabilities of the mustahik in alignment with their unique skills and competencies. Through the acknowledgment of the abilities and potential inherent in individuals with disabilities, zakat programs aim to create opportunities for their participation in meaningful endeavors that promote both financial autonomy and social integration. This empowerment strategy ensures that individuals with disabilities are not merely recipients of charity but active contributors within the workforce. The concluding initiative, Mustahik Cash Assistance, aims to address urgent living needs, providing a safety net for individuals facing pressing financial difficulties. This initiative is crucial in ensuring that vulnerable groups can meet their basic needs during times of economic uncertainty, such as during a crisis, while also laying the groundwork for more sustainable long-term solutions. Figure 6 illustrates the framework of zakat management in Indonesia amid the COVID-19 Pandemic, incorporating the Family Logistics and Cash for Work programmes, with oversight from the Ministry of Social Affairs. Figure 6. Zakat Management in Indonesia during Pandemic Source: Authors’ elaboration The explanation of the mechanism in Figure 6 is as follows: 1. Muzakki facilitates the transfer of zakat to BAZNAS via Online Payment, as opposed to visiting the service office in person. This approach is consistent with the findings of Mutmainah et al (2024), which indicate that online zakat payments during the COVID-19 pandemic can enhance the willingness of muzakki to fulfill their zakat obligations. Widiastuti, Cahyono, et al (2021) contend that the amalgamation of zakat and technology has the potential to enhance the governance of zakat institutions to its fullest extent. Hudaefi et al (2022) noted that prior to disbursing zakat during the COVID-19 pandemic, muzakki tended to consult information on the BAZNAS website to enhance their understanding of zakat. An BAZNAS RI Muzakki (Online Payment) BAZNAS- assisted Farmers Ministry of Social Affairs Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 Cluster 6 Six Priority Clusters BAZNAS- assisted MSMEs 1 2a 3 4 2b 5 Commercial Companies European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 43 additional option is that the muzakki may also provide non-monetary support, including assistance with clothing, food, and beverages. Furthermore, organizations in the role of muzakki not only allocate zakat funds but also engage with BAZNAS to create employment opportunities for mustahik 2. BAZNAS is required to collaborate with the Ministry of Social Affairs to validate those in need of assistance through zakat. The zakat funds collected from the muzakki are distributed through two programs, namely: 2a: Family and Farmer Mentorship Logistics Program BAZNAS provides business capital to the fostered farmers who are classified as mustahik, 2b: Programa de Efectivo por Trabajo BAZNAS provides incentives to fostered MSMEs to enhance digital marketing and offers special discounts for registered mustahik. 3. The farmers under the foster program market their produce to BAZNAS. The proceeds from these sales will increase the income of the fostered farmers, subsequently boosting aggregate household consumption. This model perpetuates the economic cycle of purchasing and selling farmers' harvests, thus fostering a sustainable economic system. 4. BAZNAS extends support to six priority clusters of mustahik amidst the COVID-19 pandemic through three distinct packages. The initial package comprises food assistance derived from the harvests of supported farmers. The subsequent package entails temporary financial support. The third package comprises discount vouchers for shopping at MSMEs supported by BAZNAS. The implementation of these three packages is poised to enhance the overall consumption levels of mustahik households. 5. Beneficiaries from six priority clusters can acquire products from supported MSMEs at reduced prices by utilizing discount vouchers. This acquisition enhances the consumption patterns of beneficiary households while concurrently promoting the sustainable sales of supported micro, small, and medium enterprises. This model sustains the momentum of the business economy during the challenging period brought about by the pandemic-induced economic downturn. The integrated zakat management scheme illustrated demonstrates a dynamic and adaptive approach by BAZNAS in responding to the socioeconomic challenges posed by the COVID-19 pandemic. By leveraging digital payment systems, institutional collaboration, and targeted assistance packages, the mechanism not only facilitates efficient zakat collection but also ensures its strategic distribution to mustahik through productive and consumptive channels. The inclusion of mentorship programs, employment creation, and support for MSMEs reflects a holistic model that goes beyond immediate relief, aiming to stimulate local economic activity and foster long-term resilience. This scheme is particularly important as it exemplifies how zakat, when managed innovatively and inclusively, can serve as a powerful instrument for social protection, economic empowerment, and sustainable development during times of crisis. European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 44 During the post-recovery period in 2021, BAZNAS's program orientation underwent a strategic shift from productivity-based initiatives, such as empowerment and income-generating activities, to more consumptive assistance aimed at fulfilling immediate basic needs. This transition is further illustrated in the following Table 3, which outlines the specific forms and mechanisms of support implemented during that phase. Table 3. Zakat Allocation on Post-Recovery No Programme Area Zakat Fund Realization National Action Plan Programme 1. Grave Digger Assistance Package IDR 1,960,964,800 2, Personal Protective Equipment Assistance for Grave Diggers IDR 1,311,563,421 3. Isolation Room Support IDR 1,397,902,900 4. Immunity Package Assistance IDR 14,397,902,900 5. Emergency Tent Assistance IDR 738,763,000 6. Oxygen Support in Healthcare Facilities IDR 3,547,058,475 Protect Religious Leader Programme 1. Immunity Package IDR 532,900,509 2. Vaccination Package IDR 1,577,284,186 3. Salaries of Religious Teachers in Remote Areas IDR 738,763,000 Protect SME Programme 1. Cash Capital Assistance IDR 21,460,029,065 2. Shop Assistance IDR 672,145,000 Protect Orphan Programme 1. Orphan Education Scholarship IDR 738,763,000 Total Zakat Fund Realization IDR 30,005,706,235 Source: Outlook Zakat Indonesia, 2022 BAZNAS's zakat allocation for post-pandemic recovery emphasizes support for MSMEs to avert their collapse. Furthermore, it emphasizes the provision of immunological packages to high-risk areas. This indicates that the allocation of zakat for pandemic recovery is threefold more than during the pandemic itself. 4.2 Lesson Learned from Zakat Management in Indonesia The insights gained from zakat management in Indonesia throughout the pandemic underscore the significance of uniting diverse stakeholders to enhance economic resilience. The Ministry of Social Affairs plays a pivotal role in facilitating the distribution of zakat, exemplifying the crucial collaboration between governmental bodies and zakat institutions. The collaboration between governmental entities and groups supported by BAZNAS, including farmers and MSMEs, exemplifies the effective utilization of zakat for economic recovery in times of crisis, thereby safeguarding the livelihoods of the most vulnerable sectors. Furthermore, the incorporation of technological advancements in zakat governance, particularly through online payment platforms for muzakki (donors), has emerged as a pivotal factor in enhancing the efficacy of both zakat collection and distribution. BAZNAS RI's capacity to manage zakat donations via digital platforms has enhanced donor accessibility and expedited the distribution process to beneficiaries. This model represents a crucial advancement in the modernization of zakat management in Indonesia, positioning zakat as a means for sustainable socio-economic development rather than merely a temporary relief solution. Third, the framework comprising six priority clusters, as illustrated in the diagram, offers a systematic method for zakat distribution, concentrating on the most pressing areas of need during the pandemic. The alignment of these clusters with Indonesia's overarching economic recovery initiatives is noteworthy, as they channel zakat funds into sectors that demand urgent focus, including health, agriculture, and small and medium-sized European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 45 enterprises. The precise delineation of priority areas enables zakat institutions to allocate their resources with efficacy, thereby fostering economic stability and enhancing resilience within at-risk communities. Furthermore, the interplay between commercial enterprises and zakat institutions, as illustrated in the scheme, is instrumental in broadening the reach of zakat distribution. Organizations have the capacity to engage in zakat through their corporate social responsibility (CSR) initiatives, thereby ensuring that zakat transcends individual contributions and is integrated into more comprehensive community support systems. This collaboration aims to connect the private sector with social welfare initiatives, aligning economic contributions with the principles of social justice. Ultimately, the insights derived from Indonesia’s zakat management model highlight the imperative for ongoing innovation and adaptation within the governance frameworks of zakat institutions. The integration of digital tools and the systematic targeting of priority clusters underscore the importance of evolving zakat management structures, which will be crucial in addressing future socio-economic challenges. Indonesia’s case illustrates the capacity of zakat to address not only immediate challenges but also to play a crucial role in enhancing the long-term economic stability of communities, offering a framework for other nations facing comparable socio- economic and cultural circumstances. 4.3 Zakat Management in Malaysia during the COVID-19 Pandemic The administration of zakat in Malaysia, under the auspices of the Federal Territory Islamic Religious Council (MAIWP), has instituted a program titled the COVID-19 Emergency Zakat Assistance. This initiative encompasses five distinct programs designed to address the challenges posed by the COVID-19 pandemic. These include monthly financial support, supplementary special zakat assistance, respiratory aid, daily food provisions during large-scale social restrictions (PSBB), and the provision of pillows and mattresses for the homeless. The administration of zakat in Malaysia amidst the COVID-19 pandemic prioritized consumptive necessities, specifically addressing fundamental and health-related requirements (Hambari & Zaim, 2020). The implementation of the MAIWP program is illustrated in Table 4 below: Table 4. Realization of Zakat Funds in the Distribution of COVID-19 Programs in Malaysia No Programme Area Zakat Fund Realization 1 Monthly Financial Assistance MYR 9,670,000 2 Additional Spesific Zakat Assistance MYR 12,100,000 3 Respiratory Aid Assistance MYR 3,270,000 4 Daily Food Assistance during PSBB MYR 49,000 5 Pillow and Mattress Assistance for the Homeless MYR 15,000 Total Realization of Emergency Zakat Assistance MYR 25,104,000 Source: Majelis Agama Islam Wilayah Persekutuan Website The comprehensive analysis of zakat fund realization, as shown in Table 3, underscores the financial obligations undertaken by MAIWP to bolster these initiatives. The overall disbursement of emergency zakat assistance reached MYR 25,104,000, distributed among the five programs, with the most substantial allocation designated for monthly financial support and supplementary specific zakat aid. It is important to recognize that addressing the fundamental daily requirements of individuals, including access to food and essential healthcare services, aligns with the urgent priorities established during the pandemic. This distribution corresponds with Oikawa's (2022) argument that the most critical challenge faced during the pandemic in Malaysia was the reduction in household consumption levels, especially concerning essential needs. Figure 7 illustrates the framework for zakat management in Malaysia during the COVID-19 pandemic, carefully designed to effectively direct resources to those who require assistance the most. The amalgamation of diverse zakat initiatives, encompassing efforts to deliver respiratory assistance and nutritional support, guaranteed that at-risk communities obtained prompt aid. By prioritizing consumptive needs, MAIWP not only delivered immediate relief but also significantly contributed to alleviating the economic repercussions of the pandemic, particularly for households facing income loss and rising living expenses. Beyond the prompt financial aid, the incorporation of support for the homeless via the supply of pillows and European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 46 mattresses exemplifies a comprehensive strategy in the allocation of zakat. This initiative aims to address the needs of a significantly underrepresented segment of the population, seeking to improve their fundamental living conditions during a period of turmoil. The deliberate coordination of zakat funds with urgent needs reflects a meticulous strategy for resource management in times of crisis, thereby augmenting the efficacy of zakat as a mechanism for promoting social welfare. Figure 7. Zakat Management Scheme in Malaysia during the COVID-19 Pandemic Source: Authors’ elaboration The explanation of the mechanism is as follows: 1. Muzakki distributes zakat to MAIWP through Online Payment, rather than coming directly to the service office. This method aligns with research, which states that paying zakat online in Malaysia during the COVID-19 pandemic increases muzakki trust and minimizes risk. 2. The company distributes zakat funds as part of its corporate social responsibility (CSR) to MAIWP. The company's CSR funds serve as a promotional tool to the public in the company's halal label. 3. Zakat collection and CSR funds are allocated to two priority channels: 3a: The management of zakat funds in Malaysia during the COVID-19 pandemic participated in helping individuals who were unable to continue paying financing instalments (gharimin) in Islamic banking. Therefore, MAIWP fulfilled its debt repayment to the concerned creditor (Yamaludin et al., 2023). 3b: The management of zakat funds is also focused on three clusters: the poor, hospital inpatients who require respiratory equipment assistance, and gharimin. The assistance provided to the poor and gharimin is in the form of cash assistance. The assistance provided to hospitalised patients is respiratory equipment assistance. 4.4 Lesson Learned from Zakat Management in Malaysia The insights gained from zakat management in Malaysia throughout the COVID-19 pandemic underscore the importance of harmonizing corporate social responsibility with zakat distribution to enhance economic resilience. The diagram illustrates the process by which corporations allocate zakat funds to MAIWP (Majlis Agama Islam Wilayah Persekutuan) through corporate social responsibility initiatives, highlighting a synergistic partnership between the private sector and zakat institutions. MAIWP Muzakki (Online Payment) Creditor (Islamic Bank) Poor and Needy Mustahik Priority 1 3a 3b Hospital Inpatients Gharimin (People with Bad Debt) Company (CSR Fund) 2 European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 47 Engaging the private sector in zakat management promotes a more comprehensive approach, enabling corporate entities to make significant contributions to alleviating economic challenges during periods of crisis. Furthermore, the digitalization of zakat collection has proven to be an essential facilitator in improving the efficiency and accessibility of zakat payments. The online payment system enables muzakki (donors) to contribute zakat without the necessity of a physical visit to service offices. This approach not only mitigates the risks associated with physical transactions but also fosters trust among donors, as highlighted by Mahmood et al (2022). The digital platform enables broader engagement, which is essential for ensuring a consistent influx of zakat resources during crises such as the pandemic. Furthermore, the distribution of zakat funds to two primary avenues supporting the impoverished and aiding hospital inpatients and individuals in debt demonstrates the focused strategy employed by zakat institutions in Malaysia. The emphasis on these sectors signifies a calculated approach to addressing pressing socio-economic issues, ensuring that zakat funds are allocated to regions most severely impacted by the pandemic. The prioritization of individuals burdened by bad debt (gharinim) underscores the multifaceted role of zakat in facilitating financial recovery, tackling not only immediate necessities but also enduring economic challenges. The involvement of creditors, particularly Islamic banks, in zakat management presents a compelling case for examination. The partnership between zakat institutions and creditors provides essential support to individuals struggling to maintain their financing obligations amid the pandemic. This collaboration highlights the adaptability of zakat in addressing the financial challenges faced by individuals, underscoring the notion that zakat should be viewed not only as a charitable act but also as a tool for economic revitalization and debt relief. Ultimately, the strategic emphasis on clusters like respiratory equipment support for hospital patients illustrates the flexibility of zakat management systems in Malaysia. The distribution of zakat resources for medical supplies and equipment amid the pandemic illustrates the potential of zakat to be utilized in addressing particular, unexpected challenges. This flexible approach ensures that zakat remains relevant and effective in addressing both immediate and long-standing socio-economic challenges, thereby enhancing the resilience of communities and individuals during times of crisis. 4.5 Comparative Analysis of Zakat Management in Indonesia and Malaysia in General The management of zakat in Indonesia and Malaysia presents a compelling juxtaposition, characterized by distinct approaches shaped by their respective regulatory environments, institutional frameworks, and the integration of technological advancements. Both nations strive to enhance the importance of zakat in alleviating poverty and promoting social welfare; nonetheless, they face distinct challenges and opportunities that shape their approaches. The framework of institutions involved in Zakat management can be classified into three distinct categories: corporatized, semi-corporatized, and non-corporatized. Daud et al (2025) elucidate how these classifications profoundly influence zakat compliance behavior and the overall efficacy of zakat management. In light of the significant progress observed within the Malaysian zakat sector, it is imperative to acknowledge the governance and innovation challenges that institutions continue to encounter. There is a pressing need for the refinement of governance frameworks to address the excess of non-distributed zakat funds and to optimize the collection and distribution methodologies. Moreover, Hamid et al (2020) elucidated that Malaysian zakat institutions have embraced the wakalah zakat method, which actively engages zakat payers (muzakki) in the distribution process, thereby augmenting accountability and efficiency. The incorporation of technological innovations, including Automated Data/Account (AD/AC) and Zakat Performance/Zakat Reporting (ZP/ZR) systems, has yielded beneficial outcomes for zakat institutions; however, there exists considerable opportunity for enhanced technological integration (Abdullah, 2023). In contrast, Indonesia employs a hybrid approach to zakat management, combining governmental oversight with private sector involvement. This approach aims to harmonize regulatory oversight with local flexibility, while addressing issues related to coordination and public confidence (Hasan & Pasyah, 2019). The administration of zakat in Indonesia is presently evolving from conventional methods, wherein zakat contributors directly allocate resources to beneficiaries, to a more contemporary and systematic approach. This progression is crucial for maximizing the efficacy of zakat in the realm of poverty alleviation. The National Board of Zakat (BAZNAS) occupies a crucial position in this context, emphasizing both disaster relief and the systematic distribution of zakat (Hulwati et al., 2024; Pericoli, 2023). The endeavors pursued by BAZNAS underscore the crucial role of zakat in mitigating the effects of disasters and promoting humanitarian initiatives. Furthermore, Indonesian zakat institutions are progressively emphasizing productive zakat, which seeks to empower beneficiaries by assisting them in the European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 48 establishment or enhancement of microenterprises (Arifin & Anwar, 2021). This strategic emphasis aims to cultivate economic independence among zakat beneficiaries, thus augmenting the overall effectiveness of zakat in addressing poverty. 4.6 A Comparative Review of Zakat Management in Indonesia and Malaysia during the COVID-19 Pandemic The management of Zakat in Indonesia and Malaysia throughout the COVID-19 pandemic reveals notable distinctions. As previously discussed, these differences are illustrated in Table 5 below: Table 5. A Comparative Review of the Distribution of Zakat Funds in Handling Recession due to the COVID-19 Pandemic in Indonesia and Malaysia No Aspect of Difference Indonesia Malaysia 1 Focus on Fund Distribution Productive Consumptive 2 Priority of Mustahik Six Priority Clusters Three Priority Clusters 3 Sustainability Impact Long term, due to empowerment initiatives Short term, but more focus on specific Mustahik targets 4 Program Uniqueness Empowerment mechanism involving farmers and SMEs More focused Mustahik targets, such as prioritizing distribution for poor, gharimin, and homeless Source: Authors’ elaboration This study not only identifies differences but also rigorously evaluates the efficacy of the zakat policies implemented by each country. Indonesia’s model, centered on empowerment, reveals enduring advantages by invigorating productive endeavors among the mustahik, promoting sustainable income generation, and strengthening local economic cycles. This methodology may act as a paradigm for Malaysia and other nations aspiring to transcend mere consumptive assistance in favor of foundational poverty alleviation strategies. In contrast, Malaysia’s strategic and adaptive approach to zakat distribution, exemplified by targeted assistance for gharimin and those in medical care, underscores the significance of accurate beneficiary identification and health-oriented support in times of crisis. Indonesia might consider implementing targeted disbursement strategies to more effectively support particular vulnerable populations. The interplay of these models can enhance the effectiveness of zakat in providing both urgent assistance and fostering enduring economic stability. In light of the merits inherent in both models, it is important to acknowledge the persisting limitations that warrant consideration. In Malaysia, a significant institutional challenge lies in the inadequate disbursement of zakat funds, frequently attributed to bureaucratic inefficiencies and rigorous eligibility verification procedures. This may result in postponements in the provision of assistance and unutilized funds, particularly during critical periods of necessity such as the pandemic. Furthermore, although Malaysia's emphasis on consumption caters to immediate welfare needs, it may fall short in fostering sustainable economic recovery in the long run. Indonesia faces challenges in harmonizing its decentralized zakat management system, resulting in fragmented initiatives and varying degrees of implementation consistency. Identifying and addressing these institutional limitations is crucial for enhancing the effectiveness of zakat in promoting economic resilience. 5. Conclusion This research highlights the significant differences in zakat governance between Indonesia and Malaysia as they respond to the economic crisis triggered by the COVID-19 pandemic. The four primary factors that distinguish the two nations encompass the orientation of fund allocation, the priority demographics of beneficiaries, the sustainability of impact, and the distinctiveness European Journal of Islamic Finance - ISSN: 2421-2172 DOI: 10.13135/2421-2172/12000 Published by University of Turin https://www.ojs.unito.it/index.php/EJIF/index EJIF content is licensed under a Creative Commons Attribution 4.0 International License 49 of the programs executed. Indonesia prioritizes the empowerment of economic beneficiaries through a productive methodology, whereas Malaysia places greater emphasis on supporting consumers to fulfill the fundamental needs of vulnerable communities. Despite their differing methodologies, both exhibit commonalities in the implementation of digital-based zakat payment systems, which have demonstrated an enhancement in muzakki trust and the precision of zakat management. Considering these findings, it is advisable for the governments of Indonesia and Malaysia to continue enhancing their digital infrastructure, with a particular focus on expanding internet accessibility and promoting investment in the Islamic financial technology sector. The digitalization of zakat represents a forward-thinking approach to broaden the pool of zakat contributors and enhance the efficiency of zakat allocation. Indonesia might consider establishing a zakat gharimin initiative targeting individuals burdened by digital debt, including online loans, as a means of addressing modern economic challenges. Moreover, zakat should be established as a tangible public policy tool for tackling the socio-economic challenges faced by the community, rather than being viewed solely as a ritual duty. Consequently, enhancing the governance of zakat necessitates cooperative efforts among nations with significant Muslim populations. Cooperation platforms like the Organization of Islamic Cooperation (OIC) and ASEAN serve as valuable avenues for exchanging best practices, technological advancements, and harmonizing cross-border zakat policies. Collaborative benchmarking and digitalization initiatives will enhance transparency and facilitate a more effective expansion of zakat distribution outreach. Future research should focus on investigating the enduring effects of different zakat models on financial inclusion, poverty reduction, and economic recovery following crises. 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