This study examines the influence of Zakat, Infaq, and Sadaqah (ZIS) funds and Islamic banking financing on poverty, the Human Development Index (HDI), and economic growth in Indonesia. Despite stable economic growth of around 5% amid global uncertainty, Indonesia faces a paradox where growth has not been fully accompanied by poverty reduction and equitable income distribution. This research employs panel data regression using provincial-level data from 2018 to 2024, analyzing both direct and indirect effects through mediating variables. The results indicate that ZIS funds have a positive and significant effect on HDI, reflecting their contribution to improving community welfare. However, ZIS funds also show a significant positive effect on poverty and a negative effect on economic growth, suggesting that current distribution patterns have not effectively enhanced productivity or reduced poverty in the short term. Meanwhile, Islamic financing has a positive and significant impact on HDI, but its effects on poverty and economic growth are statistically insignificant. These findings imply that both ZIS funds and Islamic financing contribute to welfare improvement but have not yet optimally supported inclusive economic growth. Therefore, a shift toward productive-based ZIS distribution and strengthened financial inclusion, particularly in the MSME sector, is essential.