Tuesday, September 16, 2014

Cooperative Zakat Distribution Structure

With a decentralized structure having proven its ineffectiveness over time, and a centralized structure proving difficult to implement, we moved to examine other structure types that could help accomplish our stated goals.  Not so surprisingly, this same dilemma is observed by zakat administrators across the world!  
Despite the fact that we could not get a decentralized system and centralized system to work efficiently in the region, each had its recognizable advantages.  In an attempt to develop the most effective and viable structure, we attempted to merge the respective benefits of each structure into a hybrid model.  The thought, in essence, was to take the good, leave the bad, and figure out how to design them into a viable structure.

Mohammed Mahmood, Professor of Political Science (Retired), Aligarh Muslim University (India) had a similar observation and an interesting approach to solve the problem:

"The intent of the Shariah is to support and maintain the indigent, disabled, sick, old and unemployed of a local community by pooling the zakat proceeds in a locally managed Zakat Fund/Baitul Mal. But it is possible that some local communities fall short of funds to meet their obligation. In that case other affluent communities may redirect their funds to the deficit communities. Since Muslim communities are dispersed and unorganized in a continental country centralization of collection of zakat funds or their centralized dispersal is neither desirable nor possible. Let us evolve a confederal approach to management and distribution of zakat funds with different regional and local communities cooperating with and aiding each other. This naturally implies transfer of funds from the developed rich regions to the underdeveloped poor regions on a voluntary and humanitarian basis."
Professor Mahmood does recognize that the optimal scenario, in his respective region, may be the cooperation of mosques in a respective region.  Along this line of thought and based on what our experience has shown, the cooperative structure, which we believe would benefit our region the greatest, took the following form:

Features of a Decentralized system to be incorporated
  • Local application
    • Simple path of coordination - removal of the bureaucratic exhibition
    • Ease of application for individual seeking zakat
    • Encourages integration with local mosque and leadership
    • Builds confidence and trust in local mosque and zakat system
  • Local review
    • Speed and efficiency between applicant, interviewer and ultimately the reviewing party
  • Local disbursement
    • Speed and efficiency as the applicant applies at the nearest mosque/organization
    • Use of local knowledge to identify specific issues affecting respective area.
  • Use of local imams and/or administrators knowledge of constituents
    • Benefiting from the existence of a relationship between local members and constituents that has been built gradually over time
    • Helps to identify individuals who are zakat eligible and unable, or unwilling because of social/societal pressure, to apply

Features of a centralized system to be incorporated
  • Standard application form at all mosques
    • Outward display of uniformity across the region
    • Facilitates ease of transfer between local mosques, i.e., application will be forwarded to local mosque of applicant for processing
  • Standard review process at all mosques
    • Transparency and clarification as to zakat eligibility
    • Removing inconsistency in the review process; which often led to applicants going out of area
  • A common distribution database
    • Standardization of distribution record keeping
    • Can assist in minimizing fraud
    • Can identify dependency would could be used to address any root causes
  • Single platform for communication between administrators
    • Ease of communication between regions
    • Facilitates ease of training and standardization of relevant items
    • Feedback loop to continually improve efficiency across region
  • Increase of distribution performance could be leveraged to increase zakat collection across the region
  • Ease of buy in as the community could measure and monitoring performance

Features of the cooperative system
  • Create a syndication method in which funds from nearby mosques could flow between each other in lieu of a centralized pool
    • Creates a working relationship between zakat administrators
    • Local mosques continue to retain full control of locally collected funds
    • Standardization of procedure will help quell reluctance of mosques to initiate the flow of zakat funds, if needed  

Accordingly the Zakat Review Process was amended to be consistent with the cooperative model, e.g., local application and local review.  Several items on the process are a result of systematic integration yet to be discussed.  

Initial results were very promising.  However the success, failure or evolution of the cooperative structure could only be fully gauged upon successful integration within the region.  Hence, the next post will cover the successes and challenges experienced with integration.

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