Effects of stewardship on zakat payers’ trust in Kelantan: Does a good mix of board capital increase zakat payers’ trust through stakeholder management?

Abstract

Due to the COVID-19 pandemic crisis, it is an urge to maximize the zakat collection to reduce citizens' burden who got laid off and lost income sources. Despite zakat's obligation to every eligible Muslim, the zakat collection is still considered unsatisfactory due to the leakage in the zakat collection. The leakage happens when zakat payers prefer to pay directly to asnafs. One cause of the leakage is a lack of trust in the zakat institution. There is a lack of previous literature that reported on determinants of zakat payers’ trust. Therefore, the objective of this paper is to explore the relationships between board capital, stakeholder management, and zakat payers’ trust and the mediating effect of stakeholder management on the link between board capital and zakat payers’ trust. Four hypotheses were derived for this paper. 553 responses were collected from zakat payers in Kelantan. The data was analyzed using SmartPLS and revealed that board capital and stakeholder management positively affects zakat payers’ trust. Furthermore, board capital positively impacts stakeholder management, and the mediating effect of stakeholder management is confirmed. These findings imply that a combination of board members and good stakeholder management does increase zakat payers' trust, thereby strengthening the function of zakat institutions as a socio-economic balancer.