A very significant institution, which implements the concept of social security in Islam, is the system of the compulsory payment of Zakat (alternately spelled as Zakah). Its importance can be gauged from the fact that in 82 verses of the Holy Quran, Zakat is associated with prayer (Salah), such as: "Establish regular prayer and give Zakat; and obey Allah and His Messenger." (Qur'an, 33:33).)
Social justice and compassion for fellow brethren who are disadvantaged constitute one of the key elements in the message of Allah to humanity. Little wonder then that Zakat, like prayer and fasting, was also enjoined upon the people of the past messengers: "And We made them (descendants of Abraham) leaders, guiding by Our command, and We sent them inspiration to do good deeds, to establish regular prayers and to practise Zakat; and they constantly served Us." (Quran, 21:7).
Zakat purifies your wealth as Allah Almighty says in the Holy Quran: "Take alms from their wealth in order to purify them and sanctify them with it and pray for them." (Quran, 9:103).)
It is not considered a favour that is given to the poor by the rich. It is the right of the poor on the wealth of the rich. Allah says: "(In their) wealth there is a known share for the beggars and the destitute" (Quran, 70:24-25).
Zakat, therefore, is unlike charity that is given to the needy voluntarily.
Withholding Zakat is considered depriving the poor of their due share.
It reminds Muslims of the fact that whatever wealth they may possess is due to the blessings of Allah and as such it is to be spent according to the His commands.
Zakat functions as a social security for all. Those who have enough money today pay for what they have. If they need money tomorrow they will get what is necessary to help them live decently. The person paying Zakat pays his dues to Allah as an act of worship, a token of submission and an acknowledgment of gratitude. The receiver of Zakat receives it as a grant from Allah out of His bounty, a favour for which he is thankful to Allah.
It keeps one away from sin and saves the giver from the moral ills arising from the love and greed of wealth. Through Zakat, the poor are cared for; they include widows, orphans, those with disabilities, the needy and the destitute.
Allah says in the Holy Quran: "The parable of those who spend their wealth in the way of Allah is that of a grain of corn. It grows seven ears and each ear has hundred grains. Allah increases manifold to whom He pleases." (Quran, 2:261).
The Prophet (peace be upon him) said, "He who observes three things will taste the sweetness of Iman (faith): One who worships Allah alone and believes (from his heart) that there is no one to be worshipped but Allah and one who pays the Zakat on his property, willingly, every year. Zakat is obligatory on an adult sane Muslim who has wealth that reaches or exceeds a certain level called the nisab for a lunar year. (You may contact your local scholars about the exact amount of nisab in your local currency). If you are in possession of money, gold, silver, stock in trade or shares that amount to more than the value of nisab (at current market rates), then you are obliged to pay Zakat. What amounts are owed by you should be deducted from the capital amount before Zakat is calculated. The rate of Zakat is 2.5 per cent.
From a study of the Holy Quran and Traditions of the Holy Prophet, it transpires that there are three objectives of Zakat. One is basic and specific and the other two are secondary and collective.
The basic and essential objective of Zakat is purification of the soul. It cures the lust for wealth, infuses the fear of Allah in a person's heart and makes one amenable to good deeds. The Holy Quran says: "And away from it (Hell) shall be kept the most pious one, who gives away his wealth in order to purify himself." (XCIL:17-18).)
Although temporal love includes many things, the most powerful and dangerous of all is the love of material wealth. The Holy Prophet has, therefore, regarded it as the greatest of all evils for the Muslims: "The trial for my Ummah is wealth." (Tirmidhi).
If a Muslim can save himself from the lure of wealth, he will be able to protect himself from many other vices. The other secondary objective of Zakat is the help and support of Islam. While giving the details of the beneficiaries of Zakat, the Holy Quran says: "The alms are only for the poor and the needy, and for those who collect them, and those whose hearts are to be reconciled, and to free the captives and the debtors and for the cause of Allah, and for the wayfarers." (9:60).
The first claim on Zakat money is of deserving relatives, then the deserving poor of the village, town, city or country in which one lives. If the needs of the people of another area are more deserving and urgent, the Zakat could be sent to them too.
Although it is permissible to take out Zakah and distribute it on an individual basis, it is highly recommended to pay one's share of Zakah to Baitulmaal, literally a House of Wealth, from where it will be distributed systemically and to the right beneficiaries. It may be interesting to note that Zakat is the minimum and voluntary charity is wide open.
Sadaqah is another form which refers to voluntary charitable donations. Simply put, it is a financial help offered to a needy or a poor person without any obligation on the part of the giver or any condition on the receiver. Sadaqah need not be confined to financial help and refers to any good work.
Offering just a glass of water is considered charity in Islam. A tradition says that a good word is a charity and removing a harmful thing from the road is also a charity.
Sadaqah is an act that reflects feelings of love and compassion on the part of the giver, who is considered "rich" in the sense that he has more than he needs. Thus, it has a dual effect of purification: It purges the beneficiaries of any feelings of grudge and hatred towards rich people and purges the rich givers of feelings of greed, self aggrandisement and miserliness.