Measuring Total Factor Productivity of Zakat Institutions in Aceh, Indonesia

This study aims to measure and decompose Total Factor Productivity (TFP) of zakat institutions (Baitul Mal) across 24 districts/cities in Aceh province, Indonesia over the period from 2015 to 2019. Using Data Envelopment Analysis (DEA) to calculate the Malmquist TFP Index, the study documented that, on average, the TFP level of Baitul Mal in managing zakat has slightly improved, contributed mainly by technical progress. Meanwhile, the reduction in efficiency level has deteriorated the TFP of zakat institutions. Overall, the zakat institutions across 24 districts/cities in the province have recorded different levels of TFP. A proper policy design is strongly needed to further enhance the productivity of zakat management by optimally utilizing and properly combining existing resources to raise the highest zakat funds and its distribution. Zakat institutions are suggested to fully utilize the online-zakat payment system.