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Zakat-al-Mal is the obligatory charity paid by an individual to the needy. It is obligatory on an individual who possesses wealth equal to or above a minimum amount called Nisab for an entire lunar year. For the purpose of calculating Zakat, different categories of wealth are defined. Nisab for the category of "Personal wealth" is three ounces of gold (or its equivalent amount in money). However, this amount is defined for each type of wealth separately. See under Nisab. Zakat-al-Fitr is a special charity paid to the needy on or before the day of Eid-al-Fitr, which is first day of the month of Shawwal following the month of Ramadan. An individual who is in possession of the Nisab, (three ounces of gold or its equivalent amount), on the day of Eid-al-Fitr pays this Zakat. For Zakat-al-Fitr, one does not need to possess Nisab for the entire lunar year. This is paid as atonement for any shortcomings in the worship of Fasting during the month of Ramadan. This is calculated as a fixed amount per person. An individual pays this on his/her behalf and the dependents. This amount is specified as the cost of one normal meal and therefore it varies based upon the time and place. One may estimate this amount oneself or contact any Islamic scholar or institution for help.
Literal meaning of the word "Zakat" is cleansing and growth. In keeping with these qualities, Allah has prescribed Zakat as an obligatory charity, as a duty to Allah, upon every wealthy individual. Wealthy individual is defined as one who is in possession of a minimum amount of wealth called Nisab for an entire year. This charity is prescribed in order to cleanse the individual's wealth, heart, and by extension the society in general, of the baser characteristics of miserliness, selfishness, greed, and materialism and replace them with higher qualities of generosity, love and care, and mutual help.
Various scholars have defined it more or less in this manner. They have also developed further definition of the amount that constitutes Nisab, categories of wealth, the rate of Zakat that applies to each category of wealth, and the rules of eligibility for receiving assistance from Zakat.
Zakat is one of the pillars of Islamic life. It is a duty to Allah that obligates every wealthy individual to share with the needy a portion from his/her wealth. It is a very important institution for the individuals as well as the society in general. This institution aims at not only alleviating the financial hardships of the less privileged in the society through sharing a small part of one's wealth, but also building a society on higher moral and spiritual values. It checks the baser instincts of greed, miserliness, and selfishness, which lead to materialism. It promotes mutual caring, love, and generosity leading to gratitude to Allah. For those who receive assistance from Zakat, it reduces their economic burden and they are enabled to pay attention to the family, social, and spiritual aspects of their lives.
Though Zakat is an act of sharing, it is discharged, as a duty to Allah, and in that respect is distinct from an act of normal charity. If there is an Islamic government, Zakat will be collected by the Government and distributed to the needy. In the absence of such an arrangement, this function can be discharged through any voluntary collective effort, for example, through any private organization. Ultimately every individual is personally responsible for discharging this obligation and must take care of this every year.
There are, in general, the following categories based upon commonality of either the Nisab or the rate at which Zakat is calculated for different types of wealth. They are:
There are different opinions about this. However, the general opinion is that jewelry, whether it is normally in use, or stored for occasional use, must all be included in calculating Zakat. The value of the gold or silver content in the jewelry should be included in the category of "Personal wealth". Precious stones (diamonds, ruby, pearls, etc.) are not to be included neither the labor cost of making the jewelry is to be included.
Though owning a share of stock of any business is like having a share in the ownership of the business; we have categorized it as "Personal wealth". Therefore, the lower of the value of stock at the beginning and the end of the year should be added in the category of "Personal wealth". This is categorized as "Personal wealth" because of two reasons.
When one is engaged in business, whatever its nature, one usually invests some money in the purchase of building, furniture, and equipment. Next there is investment in inventory (raw material, or work-in-progress, or finished goods). The inventory on hand is eventually sold and converted into cash. The third element is the net profit (after all expenses and taxes etc. are paid) that the business makes. This net profit flows into the cash that the business holds for further distribution to the owners or for re-investment. There are only two items on which Zakat is paid.
This business has to be operating for at least one year. If any share of the business is sold during the year, that share will not be included in the "Personal wealth" of the seller or the buyer because neither of them had it for at least one year. The assets used in the production of wealth (building, furniture, equipment, and even some animals or any other assets) are exempt from Zakat because Zakat is collected from the output from those assets.
Nisab is the minimum amount of wealth owned by an individual for one year that obligates the individual to pay Zakat. This minimum amount of wealth is separately defined for each category of wealth.
The Nisab and the rate of Zakat for each category are given below. For further details refer to the answer for
|Category of wealth||Nisab||Rate of Zakat|
|A. Personal wealth||Three (3) ounces of gold or its current value||2.5%|
|B. Agricultural produce
1. From cultivated land
2. From non-cultivated land
|653 Kg of wheat or its equivalent value.||1. 5%
|C. Minerals and Rikaz||20%|
| D. Live stock
1. Goat and sheep
40 goats and/or sheep
|See tables below|
Following tables give the Zakat for the three sub categories of livestock.
|Sub Category 1: Sheep, lambs, and goats|
|Number owned||Zakat in kind|
|1 to 39||0|
|40 to 120||1|
|121 to 200||2|
|201 to 399||3|
|Greater than 400||4+1 for every 100 above 400|
|Sub Category 2: Cows, and buffaloes (Domestic and not wild)|
|Number owned||One year old calf||Two year old calf||Total|
|1 to 29||0||+||0||0|
|30 to 39||1||+||0||1|
|40 to 59||0||+||1||1|
|60 to 69||2||+||0||2|
|70 to 79||1||+||1||2|
|80 to 89||0||+||2||2|
|90 to 99||3||+||0||3|
|Greater than 100||Increase progressively for each increment of 10 using combinations of Zakat for 30 and 40|
|Alternate for 150 (40+40+40+30)||1||+||3||4|
|Sub Category 3: Camels|
|Number owned||Goat or sheep (1 yr old)||One year old she-camel||Two year old she-camel||Three year old she-camel||Four year old she-camel||Total|
|1 to 4||0||+||0||+||0||+||0||+||0||0|
|5 to 9||1||+||0||+||0||+||0||+||0||1|
|10 to 14||2||+||0||+||0||+||0||+||0||2|
|15 to 19||3||+||0||+||0||+||0||+||0||3|
|20 to 24||4||+||0||+||0||+||0||+||0||4|
|25 to 35||0||+||1||+||0||+||0||+||0||1|
|36 to 45||0||+||0||+||1||+||0||+||0||1|
|46 to 60||0||+||0||+||0||+||1||+||0||1|
|61 to 75||0||+||0||+||0||+||0||+||1||1|
|76 to 90||0||+||0||+||2||+||0||+||0||2|
|91 to 120||0||+||0||+||0||+||2||+||0||2|
|Greater than 120||(2) three year old she-camels plus zakat from the above table for increment above 120|
Zakat is obligatory on every man or a woman who is an adult, of a sane mind, and satisfies the specified Nisab. This responsibility is to be discharged by each individual based upon his/her situation and value of wealth the individual possesses.
Under the condition that they satisfy the Nisab, their guardian should pay Zakat on their behalf. It is incumbent upon that guardian to make sure that the money is growing otherwise the entire amount will be eaten up over a number of years by paying Zakat itself. Various opinions in this regard are:
The above opinions will also apply to an insane person or a prisoner.
The following conditions obligate payment of Zakat on an individual.a. Complete ownership
In case of a loan, Zakat on the amount loaned to someone is primarily the obligation of the owner of the money, and the obligation is determined based upon the following conditions.
a. If the borrower is expected to return the loan in the year in question, the lender (the owner) should include the amount in his calculations. There are two opinions within this, one is that this Zakat shall be paid every year, and the other opinion is that it should be paid for all the years the loan was outstanding upon its return.
b. In case the repayment is not expected, there are three possible opinions.
If this amount is available to the individual at any time without any restrictions, then Zakat should be calculated for this amount through the category of "Personal wealth" because its nature will be that of savings.
If the plan is restrictive and involves penalty and/or taxes, opinions differ on the payment of Zakat.
a. One opinion is that an individual should calculate the amount that is available to an individual after paying an early withdrawal penalty and taxes, and include this remaining amount in the calculation of Zakat as a part of "Personal wealth" category.
b. Another opinion is that Zakat should be only paid when the amount is actually received or is available to the individual without any penalty. In that case only taxes due on this amount should be deducted. The net amount after taxes (for the year the amount is completely available to the individual) should be included as a part of the "Personal wealth" category.
Yes it can be paid in kind or in equivalent amount of money.
The holy Qur'an specifies eight (8) purposes for which the money from Zakat can be used. They are the following.
One who belongs to the family of the Prophet (Peace be upon him) is not eligible for receiving Zakat.
Yes, provided they are not the dependents, such as wife and children, and parents (including ascendants grand parents and descendents such as grand children). Beyond these relatives, in fact it would be preferred that one gives Zakat to one's relatives first. A wealthy wife can give Zakat to her poor husband and not the other way around.
Zakat shall be paid with the intention of paying Zakat since it is an act of worship. If an individual declares his/her Zakat in order to encourage others, it is permissible, since this an obligatory act of worship. However, it is not necessary to mention, in fact preferable not to mention, to the recipient that the payment is from Zakat, if it is feared that it would embarrass him/her.
Zakat can be paid any time during the year, in one lump sum or in installments. However, at the end of each year one must calculate one's Zakat and the amount due but not paid must be paid. In actual practice, many Muslims prefer to pay Zakat in the month of Ramadan. This is also fine. Bear in mind that for agricultural produce, it is preferred to pay Zakat after the harvest.
Yes, Zakat can be paid to institutions, which meet the purposes described.
Yes, one may give extra charity beyond Zakat for any good cause, and in fact, charity beyond Zakat is to be encouraged.
In addition to alleviating the hardships of the needy and the less privileged, this act of worship provides a check against and cleanses individuals, and indeed the society as a whole, of the baser instincts, such as miserliness, selfishness, enmity, exploitation etc. that ultimately lead to materialism. On the other hand, Zakat promotes love, kindness, generosity, and sharing/caring and mutual cooperation. This also promotes relying on Allah, and sincerity in seeking the pleasure of Allah alone, and finally building a society more empathetic and more caring.
A lot has been written about the inner dimensions of Zakat. One may refer to many books available on Zakat for further details on this subject.
Indeed there are differences of opinion concerning the definitions of Nisab and the treatment of different categories of wealth. For the sake of providing a comprehensive tool, we have adopted those opinions, which are generally accepted by various scholars, or are easier to apply. However, other major differing opinions are also mentioned in the various answers given under frequently asked questions (FAQs) and the individual is free to follow other opinions if more appealing to him/her. For a greater in depth understanding, of course, one can access many books available on Zakat.
Source: The Central Zakat Committee-Chicago