Exploring Zakat Efficiency in Urban Areas: A Case Insight from Pusat Pungutan Zakat (PPZ) and Lembaga Zakat Selangor (LZS)

Zakat institutions play a vital role in achieving socio-economic justice. Thus, it is important to ensure the efficiency of zakat management, particularly in urban areas where the demand for zakat assistance is high. Zakat institutions in urban states are more efficient in zakat management due to the shift towards a more structured, corporatization and technology-based system. By exploring their efficiency level in zakat management, this study will identify the key factors contributing to the success of the zakat institutions. The purpose of this study is to analyze the efficiency of zakat institutions in Pusat Pungutan Zakat (PPZ) and Lembaga Zakat Selangor (LZS). The annual report data for PPZ and LZS between 2019 to 2023 will be analyzed using the data envelopment analysis (DEA) model. The study evaluates how these institutions utilize their resources to optimize zakat fund allocation, ensuring sustainability while addressing urban poverty and social welfare needs. The findings shows that the PTE for both zakat institutions scores higher compared to the SE score, which suggests that the efficiency of PPZ and LZS may be due to the technical aspect rather than their scale or size. This study will provide valuable insight of zakat management efficiency across the two institutions, highlighting the key factors that drive their success in urban areas.