Social Finance Innovation: Qardh-Wa’ad for Sustainable Baznas Microfinance Desa (Bmd) Financing Through Productive Zakat

This study examines innovations in the distribution of productive zakat carried out by BAZNAS Microfinance Desa (BMD) through a combination of qardh and wa'ad contracts, as well as the legal culture of the community in financing schemes in Bogor and Bukittinggi, Indonesia. Data were collected using multiple methods, including document analysis, in-depth interviews, direct observation, and Focus Group Discussions. The study finds that BMD employs the qardh contract as the foundation for distributing productive zakat funds. The use of a commitment sheet (wa’ad) as a guarantee for fund repayment further reinforces this mechanism. BMD adopts a community-based financing approach that aligns with the Indonesian cultural value of gotong royong, which emphasizes mutual cooperation. Data analysis, conducted through a cyclical approach, reveals that the application of qardh mechanism with wa’ad contract— alongside specific eligibility requirements—is effective in generating sustainable impact. The findings indicate that this community-based model significantly contributes to the success of fund recovery. The study suggests combining different contractual instruments in the allocation of productive zakat, within the framework of social financing, has the potential to yield substantial and enduring benefits for the wider community. The implications of this study extend to the realm of a novel approach to the distribution of productive zakat, one that utilizes the legal culture of the community.