<![CDATA[Purpose – This study evaluates the socio-economic outcomes of charity-based Islamic microfinance institutions charity-based microfinance institutions (C-IMFIs) in addressing financialization and the social failures of conventional microfinance, focusing on the BAZNAS Microfinance Desa (BMD) program and its integration of ZISWAF instruments to promote socio-economic justice.Methodology – Using propensity score matching (PSM), this research analyzes 107 active participants (45 first-cycle and 62 repeat financing recipients) in Yogyakarta, compared against relevant control groups to reduce observed selection bias and strengthen comparative validity.Findings – Significant increases in profit are observed exclusively within the repeat financing group, suggesting the potential role of continuous capital access in optimizing economies of scale. A contrasting pattern emerges initial recipients show higher cash donation intensity, potentially reflecting emotionally-driven giving typical of early-stage recipients, while repeat recipients exhibit a shift toward institutionalized social capital, evidenced by increased time spent on organizational volunteering. The food sector records the highest capital effectiveness, albeit with higher default risk.Implications – Zakat institutions should consider multi-cycle financing, spiritual transitions, and flexible group liabilities to sustain recipient altruism and program resilience, supported by longitudinal research to track outcome persistence and disentangle causal mechanisms.Originality – This study contributes to Islamic social finance literature by empirically documenting a non-linear, stage-dependent shift in altruistic engagement across financing cycles, extending the conceptual foundation of C-IMFIs and by integrating the World Giving Index (WGI) framework including helping a stranger and volunteering metrics to measure social performance.]]>
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