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Productive zakat is zakat whose purpose is for development and empowerment of poor-yetcapable mustahik. The purpose of this study is to understand, review and analyze the productive zakat as a fiscal instrument in reducing poverty level and transforming both economic and social life of mustahik. This research uses qualitative approach. Primary data is in the form of data of interview and observation; while secondary data is obtained from various literatures. This research also uses triangulation analysis from informants with similar background, including BAZ officers, mustahik, and zakat experts. The results show that productive zakat is not directly distributed to mustahik only, but through a program run by zakat institution partners. Partners are fully responsible for zakat funds provided by zakat agencies. Productive Zakah is proven to help reduce poverty and has a positive effect on reducing unemployment in East Java. So, it is clear that zakat is a very pro-poor fiscal instrument. This study includes the subject of productive zakat which has implications for some fundamental economic elements, such as micro, small, and medium enterprise (MSMEs), and poor. Therefore, in millennium era, zakat management becomes vital in collection, distribution, and supervision of zakat. Social media can be put as main “instrument” in supporting zakat institutions.
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