Zakah is one of the five pillars of Islam and is a duty carried out on a regular basis by Muslims. Zakah is not an optional duty, it is a compulsory act for all Muslims. It is a contribution paid once a year on savings of two and a half percent. This giving is to “cleanse” your money and possessions from excessive desire for them or greed. The idea is, that by giving this money you learn not to place too much importance on material wealth (cash and possessions).
Zakah is a compulsory payment that Muslims make comparable to a form of tax. It is expected from every mature Muslim individual whose individual net worth is about a certain amount.
Zakah provides us with the opportunity of sharing our excess wealth with those less fortunate than ourselves. In fact we and our wealth belong to Allah. He is the real owner and we are merely the trustees of His wealth. We do our duty as trustees if we pay Zakah as an obligatory part of Ibadah.
Islam is a complete code of life which includes among other things, the economic side of life. Islam has its own economic principles. Zakah is one of the basic principles of the Islamic economy, based on social welfare and fair distribution of wealth. In addition to the compulsory payment of Zakah, Muslims are encouraged in the Qur’an to make voluntary charity contributions to help the poor and needy, and for other social welfare purposes. This voluntary contribution is called Sadaqah (Charity).
Through the payment of Zakah, the rich share their wealth with the poor and thus the process of concentration of wealth is checked and fair distribution ensured.
“You shall observe the Prayers (Salah) and give the obligatory charity (Zakah). Any good you send forth on behalf of your souls, you will find it with Allah. Allah is seer of everything you do.”Holy Qur’an
Zakah is a virtuous practice for Muslims for many reasons. Whilst creating relations between the wealthy and their local poor, it also serves to soften ones ego, distancing the heart from jealousy and greed. Zakah is not intended to be burdensome or detrimental to Muslims. As such, there is a minimum amount upon which Zakah is payable (Nisab). Muslims are only required to pay Zakah if they possess assets that fall within or above the Nisab threshold and if they are over the age of puberty and sane.
One of the key concerns that many people have is that any Zakah given reaches the people in need, this means that there is no money kept by a charity for administration etc. Nawaal Fund operates under a 100% donations policy, this means that every single donated penny reaches people in need.