The effectiveness of Zakat in reducing poverty incident: An analysis in Kelantan, Malaysia

This study attempts to examine the effectiveness of monthly zakat distribution as a mechanism to poverty reduction in the state of Kelantan. The target population of this study is the masakin (poor) and fuqara (hardcore poor) (Note 1) categories of the Kelantan Islamic Religious Department (MAIK) (Note 2) zakat recipients. Simple Random sampling procedure is applied to collect primary data related to zakat recipients from the poor and hardcore poor category of ten districts of Kelantan. The effects of zakat distribution on poverty are analyzed within the context of burden of poverty; specifically in terms of incidence, intensity and severity of poverty. These are examined using four major indices of poverty, which include the Headcount Index, Average Poverty Gap, Income Gap and Sen Index. Results revealed that zakat distribution reduces poverty incidence, reduces the extent of poverty and lessens the severity of poverty. Further, the current zakat distribution in Kelantan only gives a small effect on increasing the income of the poor. Hence, by locating the perfect amount of zakat distribution to eliminate poverty and to offer alternative zakat distribution model is the best way in reducing the income inequality and maximization of social welfare. � 2015, Canadian Center of Science and Education. All rights reserved.