Exploratory study of Nigerian zakat institutions and role of governance on zakat payers` trust

Abstract

There is a growing lack of trust in zakat institutions across Muslims countries as a result of allegations regarding allocation of zakat funds to public amenities and the use of zakat funds to support terrorist groups. Although the impacts of trust of Zakat payers on their selection of a particular institution into which they pay their religious obligatory levy have been documented, there is yet to be an empirical study on how Zakat payers’ trust is built. Consistent with Mayer, et al. (1995) integrative model of organisational trust and Resource Dependence as well as Stakeholders theories, this study developed a model of Zakat payers trust linking governance mechanisms to trust in Zakat institutions. Using survey data from an emerging Zakat sector, structural equation modeling software was used to test the model of Zakat payers’ trust. Three components of governance, including attributes of trustees, disclosure and Zakat stakeholder management practices were found to explain variation in Zakat payers’ trust. Perception of attributes of trustees was also found to have positive and significant impact on the perceptions of disclosure and Zakat stakeholder management practices. In line with sequential mixed methods tradition, the survey findings were complemented with follow-up interviews. The model of Zakat payers developed constitutes a significant contribution to Zakat management literature, and an evidence for applicability of integrative model of organisational trust as well as support for resource dependence and stakeholder theories. Similarly, the findings should provide practical guide for policy makers in the formulation of policies on selecting members of boards of Zakat institutions and appropriate direction to Zakat managers on disclosure and stakeholder management practices that will be beneficial to Zakat organisations and their stakeholders. Finally the preliminary findings from the exploratory study should serve as reference for future research on Zakat management in Nigeria.