Institutionalization of Zakat and Waqf in Contemporary Economies
: Challenges and Prospects

Zakat and Waqf are important social finance institutions, but their utilization and impact are less than optimal compared to the expectation and potential. Part of the reason is weak governance and enforcement. Another notable reason is the complexity of applying old jurisprudential axioms to new modes of production, income, and forms of wealth. Therefore, both jurisprudence related to the institutionalization of Zakat and Waqf and their current governance needs a fresh revisit given the changes in the type of production, the process of production, market structure, forms of business organization, income distribution, storable wealth forms and the functions of a state. The paper highlights several potential anomalies in applying the traditional understanding of institutionalizing Zakat in the context of modern economy, if the implications of choosing a particular way of interpretation among different sets of interpretations are not considered. Thus, serious deliberations are needed on challenges involved and how to overcome them and this paper adds to that dialogue.