Governance and Financial Sustainability of Zakat Institutions: Applying the Zakat Institutional Health Index

Abstract

This study examines how zakat institutions in Indonesia sustain their organizational health through the Zakat Institutional Health Index (ZIHI), a framework initiated by PUSKAS BAZNAS to integrate governance and financial accountability. Using LAZ Sahabat Yatim Indonesia as the focal case, the research evaluates 28 indicators that collectively describe financial vitality, operational efficiency, liquidity, and growth, as well as governance quality, including management structure, risk awareness, and Shariah compliance. Data were gathered from financial documents, internal assessments, interviews, and ZIHI tools. The results show the institution remains moderately stable, with governance practices displaying stronger consistency compared with its financial performance. Strengths were noted in financial activity, operational expenses, general management, and risk management. Efficiency and risk management are relatively stable, yet liquidity constraints and limited growth momentum continue to pose operational challenges. Although limited to a single institution and a cross-sectional design, this study offers a replicable model for other ZMIs and highlights the potential for broader, longitudinal research. The findings offer valuable insights for zakat policymakers and regulators, enabling them to effectively enhance institutional governance and ensure financial sustainability, while also providing actionable lessons to reinforce transparency, strengthen resilience, and align institutional practices with broader governance standards.