Abstract:

One of the main objectives of Zakat Institution is to ensure the poor and the needy receive assistance either in the form of financial or non-financial.  This financial assistance can be in the form of monthly cash contribution for the purpose of personal consumption and business assistance.  On the other hand non-financial assistance is in the form of sponsoring the needs of the zakat recipients such as food, medicine, education, business consultancy and training, and few others. The zakat institution has implemented various programs to assist the poor and the needy to start their own business.  However, due to various responsibilities shouldered by Zakat Institution, the distribution has become less effective and yet to reach its full potential. Collaboration with other institution is expected to assist Zakat Institution in distributing the zakat fund to the rightful recipient in more efficient manner.  Microfinance in zakat has caught the attention of the researchers lately due to the effectiveness of this program in assisting the poor to generate their own income. Nevertheless, the Zakat Institution’s expertise is quite limited in executing such programs for the poor and the needy.  Therefore, this paper attempts to explore the conceptual approach in collaboration analysis for Zakat Institution and Microfinance Institution. Second, this paper tends to propose the collaboration model to be implemented by both institutions. Finally, this paper will also provide recommendations on proper instruments for Islamic microfinance as part of the Zakat Institution program.