Kampung Zakat (Zakat Villages) in Indonesia represent a strategic initiative aimed at alleviating poverty and improving welfare through the productive use of zakat funds. Despite their potential, many of these communities still face socio-economic challenges due to limited economic opportunities and over-reliance on consumptive aid. This study explores the role of entrepreneurship as a sustainable mechanism for improving the welfare of Kampung Zakat communities. The research aims to identify how entrepreneurial development, supported by zakat-based funding and capacity-building programs, can transform beneficiary communities from passive recipients into active economic agents.

Using a qualitative approach, this study employed case studies from several Kampung Zakat locations across Indonesia. Data were collected through in-depth interviews with program beneficiaries, zakat institution managers, and local leaders, alongside direct observations and document analysis. The findings reveal that when zakat is strategically allocated for entrepreneurial activities—such as microbusiness development, vocational training, and market access support—it significantly contributes to income generation, financial independence, and social empowerment.