Efficiency assessment of zakat institution in Malaysia: evidence from the DEA-BCC model

Zakat institutions in Malaysia play a vital role in promoting economic and social well-being through the systematic collection and distribution of zakat. However, concerns regarding inefficiency, such as the inability to adequately meet recipients' needs and declining public trust, have raised questions regarding their operational effectiveness. This study aims to evaluate the efficiency levels of zakat institutions in Malaysia using Data Envelopment Analysis (DEA): the BCC model. The analysis involves a panel of fourteen State Islamic Religious Councils where each of them is treated as Decision-Making Units (DMU) to the BCC model. The model incorporates three input variables: number of staff, number of zakat payers, number of zakat recipients (asnaf) and two output variables: total zakat collected, and total zakat distributed. Result indicates that seven institutions achieved full efficiency scores (ɵ = 1), indicating optimal performance relative to their peers. This outcome valuable for policymakers and zakat administrators aiming to enhance institutional performance, increase transparency, and restore public confidence. By strengthening redistribution mechanisms and ensuring a visible impact on beneficiaries, efficient zakat management can improve compliance, promote social justice, and contribute to sustainable socio-economic development in Malaysia.