Zakat is a divine injunction and a pillar of faith. It empowers faith, people, societies and the economy in multiple
Zakat is the third of five core pillars of Islam and by Quranic ranking, is next after Prayer in importance. It has been interlinked with Prayer 28 times in the Quran.
Zakat functions and is calculated in a similar manner to a wealth tax, but it is so much more wholesome than a tax. Zakat finances the growth of faith and the faithful. Zakat is a human capital fund which seeks to empower individuals. Zakat guarantees every struggling person a baseline provision and support to give them more opportunities to break out of the cycle of poverty.
Zakat is liquidity injections to the market and acts as an economic stimulus by activating consumer spending. Zakat is a social contract between communities to look after one another and to grow together.
Zakat is not a charity and it is not a voluntary donation. It is an obligatory payment for those who qualify. Zakat is calculated in the following manner:
Zakatable assets – deductible liabilities = Net Zakatable Assets
(Gold + silver + cash + receivables + investments in Zakatable assets + business stock) – (liabilities due now) = Net Zakatable assets
Net Zakatable assets ≥ Nisab = Zakat payable
Net Zakatable assets < Nisab = No Zakat due
2.5% of the net Zakatable assets must be given as Zakat on one’s annual Zakat payment date.
Zakat cannot be given to anyone and anywhere. The Quran has specified eight areas of spend or eight areas of ‘concern’ for believers where Zakat must be allocated. They are as follows:
“Ṣadaqah (Zakat) is for the poor and for the needy and for those employed to collect [Zakaat] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveller – an obligation [imposed] by Allah. And Allah is Knowing and Wise.”(Quran 9:60)
The eight are as follows:
- Al-Fuqara’ (The poor)
- Al-Masakin (The needy)
- Al-Amilina Alayha (Administrators of Zakat)
- Al-Mu’allafah Qulubuhum (Reconciliation of Hearts)
- Fir-Riqab (those in Bondage)
- Al-Gharimin (Those in Debt)
- Fi-Sabilillah (In the Cause of Allah)
- Ibn al-Sabil (The Wayfarer)
Historically, the collection and distribution of Zakat was by the state. An institutionalised mechanism that allowed it to reach those who needed it most. NZF Worldwide is establishing regional institutes across the world that collect and distribute Zakat within those regions and countries. This is done by leveraging decades of experience, the latest technology, specialists, expert knowledge and a determination to serve God’s cause.