Zakat: Islam’s Least Talked About 3rd Pillar—Charity

The Prophet Muhammad is quoted to have said God loves those who offer charity but remain anonymous and uncelebrated given the importance of secrecy in Islam for protecting the dignity of recipients

Zakat literally means something that purifies
A Muslim’s 2.5% of savings, investments, and the value of items such as gold and silver, have to be paid as zakat. Picture courtesy

By Sameer Arshad Khatlani

For years, Usman, a fisherman in Indonesia’s Sumatra, could barely make ends meet. He did not have the resources to augment his income. Usman’s rickety fishing boat only took him up to a point of a river where it merged into the sea. The catch was never enough for him to fetch enough income to even properly feed his family of five.

Usman’s life changed when funding generated through zakat (charity), the third of Islam’s five foundational pillars, helped him buy a new boat. The vessel was equipped to venture deeper into the sea. Usman could now catch more fish and boost his income to help him not just fund his children’s education but also give them pocket money.

Untapped Potential

Zainulbahar Noor of Indonesia’s National Zakat Agency (BAZNAS) and UN Development Programme’s Francine Pickup cited Usman’s story in a 2017 Guardian article about zakat’s untapped potential. They argued zakat (literally something that purifies) could boost livelihoods by reducing poverty globally.

Muslims, who account for the world’s 22% population, are believed to have paid almost $2 trillion in charity in 2015. By 2020, this was projected to surpass $3 trillion, which is equal to the size of the French economy.

Wealth Transfer

A Muslim is obliged to pay at least 2.5% of savings, investments, and the value of valuables such as gold and silver, as zakat. It is believed this transfer of wealth to the poor helps purify the donors.

Testament of faith in monotheism, namaz (five daily prayers), zakat, month-long Ramadan fasting, and the Haj pilgrimage to Mecca are Islam’s five foundational pillars. Haj, fasting, and namaz are the most visible symbols of Muslim piety.

Zakat is the least talked about due to the importance of secrecy related to charity for protecting the dignity of the recipients. The Prophet Muhammad is quoted to have said God loves those who offer charity but remain anonymous and uncelebrated.

Ramadan is particularly important in the context of charity. Muslims prefer offering the mandatory zakat, which is one of many forms of charity in Islam, during the fasting month.

They believe good deeds bring bigger rewards during the blessed month of Ramadan, which is much more than abstaining from food, water, and worldly pleasures. Ramadan is a month of sacrifice, reflection, and charity.

Forms Of Charity

The Quran mentions zakat and sadaqah (general charity alms) over 80 times. It underlines the importance of charitable giving. Every adult Muslim possessing disposable wealth is obliged to offer charity, which is not limited to money.

For the Prophet, even smiling was an act of charity. He is quoted to have said those who have nothing to give should work, benefit themselves and also do charity from what they earn, or help the needy who appeal for help.

The prophet also regarded good deeds, staying away from evil, helping the indebted repay their debt, showing mercy and giving debtors more time to pay back loans, cancelling debt, removal of stones, and thorns also as acts of charity.

Sadaqat-ul-Fitr, one of the subcategories of sadaqah, is also mandatory. It is also paid on behalf of children and is equal to the rate of 1.6 kg of wheat or 3.2 kg of barley. Sadaqat-ul-fitr has to be distributed before the Eid prayers to make sure the participation of the poor in the festivities. 

Other forms of charity include Nadhr, which is paid to express gratitude. Fidyah and Kaffarah are paid to compensate for the inability to pray or fast or keep an oath, etc.

An unbinding charity can be offered to hospitals, schools, orphanages, etc, under sadaqah nafilah. Spending on long-term causes comes under sadaqah jaariyah.

Better Utilisation

Muslims pay a bulk of the charity through non-banking channels, leaving its real potential untapped. The estimated zakat paid is believed to be a fraction of the actual money given.

In Indonesia, BAZNAS has sought to tap into the potential of Muslim charity and utilise it better. It has tied up with UNICEF to mobilise zakat funding to help protect and empower children caught in humanitarian crises and ensure their access to education, healthcare, nutrition, and clean water.

Zakat is estimated to contribute up to 3% of Indonesia’s Gross Domestic Product of $1.11 trillion. Indonesia, the world’s most populous Muslim country, was rated as the most generous country in the 2018 CAF World Giving Index. A bulk of charity in there also is transferred through non-banking channels.

Zakat and UN SDGs

In their 2017 article, Noor and Pickup referred to ‘striking commonalities’ between zakat and the UN sustainable development goals (SDGs)’, the global action plan adopted in September 2015 for alleviating poverty, hunger, and inequality by 2030.

Noor and Pickup referred to Maqasid al-Sharia, the five foundational Islamic goals, and said much of the SDGs are reflected in these values.

Zakat is one of the largest forms of wealth transfer to the poor. Noor and Pickup wrote developmental organisations have overlooked zakat’s importance as a source of finance despite its tremendous potential for contributing to the SDGs.

As much as $3 trillion to $5 trillion were projected to be needed every year to achieve the goals. The investment for it in 2017 fell short at around $1.4 trillion.

Noor and Pickup emphasised by working together with religious organisations, development bodies can fill the $2.5 trillion gap and also promote peace and development.  

Addressing Challenges

Noor and Pickup called for seeing zakat as more than just charity, changing the mindset and realising zakat needs professional management for positive change. They added this will enhance the development impact of zakat in poorer countries. Zakat is mostly channelled informally between individuals and paid in cash to needy acquaintances.

Noor and Pickup wrote just a quarter of contributions were thought to be channelled through certified organisations. They underlined a growing recognition among Islamic organisations for addressing challenges such as poverty by routing zakat contributions to more people for a sustainable solution.

According to Development Initiatives data, at least US$5.7 billion was collected in zakat annually from Indonesia, Malaysia, Qatar, Saudi Arabia, and Yemen alone.

There has been no reliable value of zakat. Its estimates have varied from US$200 billion to US$1 trillion annually while the international humanitarian assistance was US$22 billion in 2013.

The actual zakat paid is believed to be significantly higher as much of it is paid informally. Development Initiatives research found that 23% to 57% of zakat was used for humanitarian assistance. It cited evidence and added it suggested zakat in Indonesia and Pakistan could potentially meet all ‘current requirements to respond to domestic humanitarian emergencies, with significant amounts remaining to cover other areas of zakat spending.’  

In 2017, Islamic Relief USA charity alone received $19.3 million in zakat contributions in the United States, where Muslims (3.5 million) account for just 1% of the population. The charity receives $25 to $1 million in zakat and spends it on food programmes for the poor, disaster relief, and medical clinics globally.

In a 2019 report, Institute for Social Policy and Understanding said Muslims were just as likely to support causes for solving hunger and poverty as a religious duty.   

An ICM Research poll in 2013 found Muslims in 2012 gave an average of $567 in charity in the UK, which was more than Jews ($412), Protestants ($308), Roman Catholics (around $272), and Atheists ($177). A global 2012 Pew Research Center survey found a bulk of Muslims paid zakat in 36 of the 39 countries surveyed.

The charity component as a share of money spent on religious activities was the largest among Muslims in India, according to research based on the 72nd round of the National Sample Survey. A higher level of charity among Muslims was seen among the reasons behind the lower inequality of consumption among India’s Muslims.

The Association of Muslim Professionals (AMP) has been among the organisations routing the zakat donations for education and employment. In 2016, it estimated Zakat collections to be around $1 million to over $5 million annually in India, which has the second-biggest Muslim population globally.

Sameer Arshad Khatlani is a journalist and the author of The Other Side of the Divide

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