Islamic Social Finance and Community Welfare: The Case of Productive Zakat Management

Abstract

Purpose: This study aims to analyze the management of productive zakat in promoting economic empowerment and improving community welfare in Batu Ampar Village, Kemuning District, Indragiri Hilir Regency. The study also examines the role of productive zakat as an instrument of Islamic social finance in fostering the economic independence of beneficiaries. Method: This study employed a qualitative approach with a descriptive design. Data were collected through in-depth interviews, observations, and documentation involving zakat administrators, religious leaders, and zakat beneficiaries. The data were analyzed descriptively to understand the management process of productive zakat and its impact on community economic empowerment. Findings: The findings reveal that the management of productive zakat in Batu Ampar Village has been implemented through the stages of collection, distribution, and utilization of zakat funds, although the management system remains relatively simple. Productive zakat has contributed positively to community economic empowerment and the improvement of welfare, both materially and non-materially. However, limited business mentoring, low managerial capacity among zakat administrators, and the lack of sustainable business development programs remain major challenges in optimizing productive zakat management. Implications: The management of productive zakat needs to be optimized through strengthening institutional and managerial capacities, improving business assistance programs, and developing sustainable economic empowerment strategies so that productive zakat can more effectively promote long-term community economic independence.