Purpose

The purpose of this study is to identify some well-set instruments in Islam that can efficiently alleviate poverty, solve social problems and reduce social inequality through a new operational framework called “Islamic Social Business”.

Design/methodology/approach

This is a conceptual research that is based on Al-Quranic principles as well as contemporary social welfare philosophies, such as, augmented stakeholder theory, social enterprise and social business. Al-Quran, Al-Hadith and existing traditional and Islamic literature are consulted for this study.

Findings

The study proposes an efficient system of Islamic wealth sourcing and management to make the process of poverty alleviation sustainable. Other social problems for disadvantaged people, such as, health, shelter, literacy and environmental related issues are also addressed in the proposed system. The study identifies the inefficiency in the current practices and makes some propositions that are in conformance with Islamic principles and implementable by Islamic institutions all over the world. We propose a theoretical framework and operational propositions for Islamic social business.

Practical implications

In following this study, social policymakers, Islamic financial institutions, Islamic social enterprises and Islamic charity organizations will find organized guidelines to initiate ‘new entities’ or ‘reshape existing entities’.

Originality/value

This is the first study that identifies all the potential Islamic sources of funding and the efficient management thereof through Islamic social business. The study also proposes an Islamic social business model and makes several propositions for different types of Islamic social business.