When paying zakat, it is important to trust people and organizations who meet the Islamic requirements for distributing your zakat payment.
When paying zakat, it is important to trust people and organizations who meet the Islamic requirements for distributing your zakat payment.
Muslims abiding by the Quranic guidance to give zakat need to know just how to fulfill that obligation. Not all wealth is treated the same.
To start: only those whose wealth crosses a minimum threshold in one lunar-calendar year have to pay zakat. How much zakat they have to pay is based both on how much total wealth they have after covering basic living costs, and what type (or types) of wealth they possess.
Who Doesn’t Pay Zakat?
In general, four categories of people do not have to pay zakat: the poor, the indigent, the debt-ridden, and the unfree.
Furthermore, eight categories of people are eligible to receive zakat. This set of eight is explicitly defined in the Quran’s Surah At-Tawbah.
“Alms are meant only for the poor, the needy, those who administer them, those whose hearts need winning over, to free slaves and help those in debt, for God’s cause, and for travellers in need. This is ordained by God; God is all knowing and wise” [Quran 9:60].
What Are Zakatable Assets?
For those who possess the minimum amount required to pay zakat (called nisab in Arabic), five types of wealth require zakat payment. These five types are “zakatable” (think zakat-eligible):
- Personal wealth and assets
- Liquid and exploited assets
- Agricultural produce
- Livestock
- Treasure
Earned income is the primary type of “zakatable” wealth, but it is not the only kind. Assets must be factored in. And for those types of “zakatable” wealth, there are three major conditions:
- The one paying zakat on them must have sole, exclusive ownership
- Growth (actual or potential)
- Passage of a zakat-year
For more detail, Zakat Foundation of America, a nonprofit humanitarian organization, has scholars answer frequently asked questions (See: What Requirements Qualify Wealth for Zakat? and Is Zakat Due on All Wealth?) and even provides a free Zakat Calculator.
But even beyond the zakat calculator, the organization provides further direction for how zakat is calculated on wealth. These FAQ and guidance pages provide detailed answers to questions that often require more nuance than a simple yes or no.
When paying zakat, it is important to trust people and organizations who meet the Islamic requirements for distributing your zakat payment. Charity Navigator has given Zakat Foundation of America its top rank, as has the Better Business Bureau. Among many reasons for these top ranks, Zakat Foundation of America transparently and efficiently uses the donations it receives, keeping administrative costs low, year after year.
Zakat Foundation of America also ensures zakat donations go to zakat-eligible programs, and that sadaqah donations go toward programs that are not zakat-eligible. One key difference between zakat and sadaqah is that zakat is an obligation specifically meant to help the above-mentioned eight types of people who are eligible to receive it. It is effective as a social system in that it allows the wealthy to purify their wealth by giving from it.
Both zakat and sadaqah help those who give by freeing their hearts from the desire to hold onto money that others need more than them. But whereas a sadaqah donation can help someone construct a water well for those without access to running water — a noble and truly humanitarian endeavor — zakat donations fund specific goals and projects, like orphan care and sponsorship.
While Zakat Foundation of America keeps administrative costs below 15%, note that the organization takes zero overhead from donations directed toward the orphan sponsorship program.
