Zakat-based ownership model for sustainable poverty alleviation in developing Muslim countries

Purpose Zakat is an Islamic financial instrument that facilitates circular finance by transferring cash flow from the wealthy to the economically marginalized and contributing to a more balanced and equitable economy. This study aims to develop a Zakat-based ownership model for sustainable poverty alleviation in developing Muslim countries. Design/methodology/approach This study is a conceptual work for revising the existing system of Zakat management by introducing a more productive and sustainable approach. In this regard, a constructive approach is used to examine the historical foundations of Zakat, aiming to offer an effective solution for poverty management. The method involves reading, collecting and compiling historical materials about the philosophical concepts of Zakat and governance during the era of prophet Mohammad (PBUH) and his Caliphs. Findings The model envisions creating ownership opportunities for Zakat holders in small, medium and large business enterprises. It aims to leverage their knowledge, skills and values to ensure long-term financial security and promote social inclusion. This Zakat-based ownership model, known as the production theory for Zakat management, seeks to engage both employable and non-employable Zakat holders by assisting them in developing economic activities that contribute to sustainable poverty management. In addition, the model addresses the distribution of Zakat for individuals who are crippled or blind, and it aims to transform non-employable Zakat holders into financially self-reliant individuals by providing Zakat funds to their guardians. Practical implications This research seeks to replace the current individual and partial Zakat systems with a Zakat-based ownership model, which is more effective for alleviating poverty. In developing countries, it is the duty of governments and local agencies to implement this model to ensure sustainable poverty development. Originality/value This study adds a new sustainable Zakat management strategy, known as the Zakat-based ownership model, which will improve Zakat fund collection and distribution by creating and widening economic opportunities for Zakat holders.