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Blog - Zakah in Action

  • Zakah and poverty alleviation – the global lessons learned +

    Adapted from the World Islamic Economic Forum Foundation ZAKAH is an ancient Islamic practice based on one of the five Read More
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Zakah and poverty alleviation – the global lessons learned

blog ZAKAHAdapted from the World Islamic Economic Forum Foundation

ZAKAH is an ancient Islamic practice based on one of the five pillars of the religion. This obligation for us to give alms to the less fortunate is aimed at alleviating and eradicating poverty. Yet in many countries, poverty is a grim and persistent reality despite Zakah institutions.

What can we learn from success stories in Zakah management?

The Zakah model ensures the net transfer of wealth to the poorest people at the bottom of the pyramid

Poverty occurs due to the lack of transfer of assets to the poor. The Zakah model ensures the net transfer of wealth to the poorest people at the bottom of the pyramid, without burdening them with repayment and interest.

Zakah has to ensure sustainability for the recipients over the long term. A Zakah project jointly initiated by several corporations in Bangladesh has demonstrated success in helping poor families increase their income.

A post-assessment of the project found that not only was the original Zakah capital intact, but it had increased by nearly 15 per cent. The study also recommended a phase-out exit strategy of another two years, which will enable the families to be self-sustainable instead of relapsing into poverty.

Marriage of Waqf and Zakah

While Zakah can be a short-term arrangement, for long-term rehabilitation and poverty alleviation, Waqf institutions are needed to open up opportunities for the poor to access funds in the future.

Case study: Bangladesh

IN a village in Bangladesh, villagers were divided into groups of 30 families. Money was transferred to them and left for them to self-manage. In total, 90 lakhs had been given in three tranches over three years. The money belonged to the villagers, but they were told to use it in a sustainable way.

At the end of the three years, it was found that not only was the original Zakah capital intact, but it had increased by nearly 15 per cent. The villagers had also increased their income by 80 per cent.

They had used the initial sum to generate further income and send their children to school. Health levels and communal harmony had improved. The non-Muslim fishermen bought their own nets and boats and the 

Muslim families bought equipment for their bamboo business, or for cattle rearing.

In the traditional microcredit model, repayment and the interest can become burdensome for poor families. But in the Zakah model, a net transfer of wealth to the poorest people is ensured—a model that has proven to not just bring temporary relief, but to help alleviate poverty sustainably.

Zakah payers should be served as customers and treated as shareholders

To successfully institutionalise Zakah, the role of Muslim scholarship must be respected. Scholars need to work with practitioners to develop a framework for Zakah distribution, and come up with authentic and relevant solutions.

Zakah payers should be served as customers and treated as shareholders. As customers, Zakah payers want education and a deeper understanding of Zakah, including support for calculating Zakah. As shareholders, they want easy and accessible collection, an integrity of management, transparency of information and clear communication.

Zakah payers should not be taken for granted, even though Zakah is an obligation, as this attitude will cause a lot of disenchantment among the payers.

Transforming lives of Zakah recipients

To better serve Zakah recipients, data gathering and management are critical for correct distribution, to measure the impact, and to set a future agenda for advocacy and policy.

Zakah should not only aim to alleviate poverty among its recipients, but should also transform their lives. Gaining a deeper understanding of the community that needs help will enable the Zakah funds to be used more effectively, and strategically. This approach also enables Zakah organisations and institutions to determine whether those asking for aid are truly eligible, and are not violating social security laws.

Zakah should go beyond mere charity-giving

While the traditional understanding of Zakah is that Muslims give obligatory alms with the intention of sharing their wealth with the poor, Zakah should go beyond mere charity- giving. Hence, Zakah should be used for education, training, jobs creation and empowerment of people.

Furthermore, as Zakah is not always appropriate in all situations, the boundaries have to be very clearly defined.

Case study: the Zakah Foundation of America

THE Zakah Foundation of America was established in 2001, after the September 11 tragedy, with the aim of showing the true kindness and goodness of Islam through Zakah activities.

Khalil Demir, executive director of the Zakah Foundation, explained that the Foundation serves, firstly, as a resource centre on Zakah; and secondly, as a Zakah collection and distribution centre that is open to Muslims and non-Muslims.

With offices and operations in 40 different countries, the Foundation is able to carry out a lot of on the ground activities to distribute Zakah funds. For one, the funds are used for emergency relief in Syria, Lebanon, Jordan, Turkey, Gaza and Afghanistan, making the Foundation possibly the most active charity organisation inside Syria and its surrounding areas.

‘As education is the only way to empower societies and communities, we also have schools in Afghanistan, Sri Lanka and the Dominican Republic. Through sadaqah jariyyah, we opened around 200 water wells last year, with each well serving around 500 families, and also distributed 500 milk cows to selected families,’ Khalil said, adding that hundreds of thousands of people also benefit from the Foundation’s Ramadan programmes around the world.

Institutionalising Zakah in society

The institutionalisation of Zakah needs to be carefully managed to achieve:

  • Scale of distribution
  • Quality in terms of appropriate distribution, and communication, to Zakah payers.

Establishing a proper collection and distribution method of Zakah is of spiritual and economic concern. To achieve this, more dialogue is needed across the state and community Zakah institutions to share knowledge, information and best practices. Islamic financial institutions have a significant role to play here.

One challenge of institutionalising Zakah stems from the concern that employees of a Zakah organisation could be biased or corrupt. This is why such institutes have to be stringently audited, as they are no different from any other institution, such as a government or a bank.

There is good and bad. What is needed is carefully managed and nurtured institutionalisation that gives scale to Zakah distribution, while making sure there is quality in terms of how it is distributed, and how communication is conducted with Zakah payers.

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The WIEF Foundation is the organising body of the Annual World Islamic Economic Forum (WIEF), it comprises a Board of Trustees, who are supported by an International Advisory Panel and a Permanent Secretariat based in Kuala Lumpur.

The WIEF is focused on enhancing the economic well-being of the ummah via strategic alliances. It aims to package the Muslim world as a lucrative trade and investment location, and works to strengthen networking and to foster the exchange of ideas, information and knowledge.

The Foundation also undertakes various capacity building programmes under the WIEF initiatives of the Businesswomen Network (WBN), Young Leaders Network (WYN), Education Trust (WET) and Roundtable Series. For more info: https://infocus.wief.org/zakat-poverty-alleviation/

https://wief.org/

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