The role of Zakat in Islam

A cornerstone of Islam is empathy and compassion for the poor and the vulnerable. The Qur’an contains hundreds of verses in which God instructs believers to be merciful, kind, generous, gentle, and live by ideals that shun exploitation of all types. A maxim of Islamic jurisprudence states: “harm will neither be done nor reciprocated.” This comprehensive principle is applicable in every facet of a Muslim’s life, from relationships to dealings in society, to economics to spirituality. Islam emphasizes the importance of being a force of good wherever a believer may be.  

In the 2^nd year of the Hijrah, the Prophet (ﷺ) obligated believers to pay Zakat al-Fitr to the poor on the day of Eid al-Fitr in order to ensure that the day of celebration was enjoyed by everyone in the Muslim community – both the well-off and the most destitute. In the 9^th year of the Hijrah, the Prophet (ﷺ) obligated the giving of Zakat al-Maal by the wealthy. 

Zakat al-Maal became the quintessential institution through which Islam cemented the concept of alleviating poverty and financial hardship in society. It became the mechanism through which wealth was distributed through an efficient system to the most vulnerable. Allah lays down the Islamic principle of economics in the Qur’an in Surah Hashr (Surah 59, verse 7): 

...So that wealth may not merely circulate among your rich... 

Surah Hashr [59:7] 

In the verse quoted above, Islam uproots the idea of the rich getting richer and the poor getting poorer –a phenomenon that has become the norm in today's world, with wealth inequality increasing daily. According to findings from the 2022 World Inequality Report, 10% of the world's richest own three-quarters of the world's wealth. This huge chasm in wealth distribution is what Islam sought to get rid of. Islam criticizes the concentration of wealth in the hands of few individuals (or companies/corporations). Islam views wealth as a tool that must be utilized for the purpose it was intended: to create opportunities for growth, development, and societal good, instead of hoarding and accumulation by a few.

However, it must be understood that Islam is not against flourishing businesses. On the contrary, Islam encourages entrepreneurship, business, financial growth, and wealth creation. What Islam mandates is that the poor must never be left out of the conversation. Zakat al-Maal provides a systematic way for this vacuum to be filled; it provides a proper way through which poverty can not only be alleviated but also one day be eradicated. 

Without getting too technical, Zakat al-Maal is given to 8 categories of people and is required to be paid by the wealthy at least once per year. From the 8 categories of Zakat recipients are the poor and the needy. Another category is people who are being crushed by debilitating debt. These 8 categories are clearly outlined in the Qur’an in Surah Tawbah (Surah 9, verse 60): 

Zakah expenditures are only for (i) the poor and for (ii) the needy and for (iii) those employed to collect [zakah] and for (iv) bringing hearts together [for Islam] and for (v) freeing captives [or slaves] and for (vi) those in debt and for (vii) the cause of Allah and for (viii) the [stranded] traveler - an obligation [imposed] by Allah. And Allah is Knowing and Wise. 

Surah Tawbah [9:60] 

A poor person is defined as someone who can meet less than 50% of their yearly living expenses. By the same logic, a needy person is someone who can meet more than 50% of what they require for the year, but less than 100%. With this framework, Islam then qualifies who is obligated to give Zakat.  

The Zakat giver/payer is someone who is defined as wealthy in Islam. This is determined by the minimum assets that they own after all their living expenses for the year are taken care of. The Arabic term for this minimum threshold is called nisab. If a person owns assets equal to or above the nisab for one whole year, then they are obligated to give 2.5% in Zakat from this wealth. The value of nisab is 85g of pure gold, as its value in the market is never constant. This year (2022), the gold nisab is approximately CAD $6,471.

Wealthy Muslims around the world are encouraged to seek out charities that distribute Zakat properly according to the Qur’anic mandate. They are also encouraged to seek out relatives or community members who may be facing financial hardship and give them their Zakat.  

An interesting point to note is that linguistically Zakat carries a number of meanings including “growth” and “purification.” Embedded within the word itself is a motivation to wealthy Muslims that giving Zakat to the poor will NOT diminish their wealth but will increase it! In addition, giving Zakat actually purifies one of spiritual diseases such as greed, miserliness, hoarding, and other related vices.  

There is so much that can be said about wealth, its creation, the institution of Zakat, and Islam’s practical solutions to the world’s macro and micro economic problems. It is our hope that this piece illuminates some of the ideas around these very important conversations. 

Shuaib Mansoori,

Regional Development Manager 

National Zakat Foundation Canada 

CLICK HERE for more information on how to pay your Zakat.