British Journal of Economics, Finance and Management Sciences 50 February 2012, Vol. 4 (1) © 2011 British Journals ISSN 2048-125X Composite Performance Measurement for Zakat Organisations Jamaliah Said, Erlane K. Ghani, Siti Noor Hayati Zawawi, Sharifah Norzehan Syed Yusof Accounting Research Institute and Faculty of Accountancy Universiti Teknologi MARA Tel: +60355444973 Email: jamaliah533@salam.uitm.edu.my ABSTRACT This study proposes a composite performance measurement which is often used in profit-making organisations to be also used in Zakat Organisations. Zakat Organisations are non-profit organisations in Malaysia formed to collect funds from eligible Muslims and then distribute the funds to the eligible recipients. This study modified and developed a composite performance measurement which comprise of financial index, employee index, Zakat recipient index and Zakat payer index. Using a series of focus group interviews, the results in this study show that in terms of financial performance index, the proposed nine ratios to capture the performance of Zakat distribution is expected to encourage Zakat managers to become more creative and innovative in increasing Zakat collection. Similarly, the managers are expected to distribute all the collection to the rightful recipients within the same year. Total Zakat collected for the year as a proportion of total collected for the year tends to show high ratio if the amount collected is not distributed. In addition, the dimensions of organisational performance proposed in this paper include input from the employees as well as major stakeholders; Zakat payers and Zakat recipients through satisfaction survey. It should be noted that the performance ranking of each Zakat organisation also depends highly on the satisfaction level of the major stakeholders. The unique of this proposed model is that it does not only include the efficiency performance of Zakat organisation but also on the evaluation of stakeholders. Keywords: Composite Performance Measurement, Non-profit organisations, Zakat Organisations, Financial Performance, Service Quality Performance 1.0 Introduction The management of non-profit organisations has gone through significant changes. Such changes are attributed to the aim of the non-profit organisations to deliver better services which are often measured in terms of efficiency and effectiveness. With the emergence of the global economy, advances in technology, increased societal demands and the need to provide more social services with fewer resources, such evolvement suggested that the role of managers in non-profit organisations has become more challenging than ever (Kaul, 1997). The demand for improvement in the provision of their services by the recipients of non-profit organisations has provided a significant distinct and powerful pressure for change (Kaul, 1997; Carmeli and Cohen, 2001). Subsequently, many non-profit organisations worldwide are now devoting time, money and attention to satisfy multiple stakeholders’ expectations. The managers of non-profit organisations have been challenged to place a higher emphasis on customer-focused strategies in delivering their services to their stakeholders