The Social Impact of Zakat

As a Muslim Ummah caring for one another is an essential part of our Islamic Identity. Islam
focuses on community sustainability, and Zakat is the engine that facilitates that.

Zakat is a powerful tool to help re-circulate wealth to those most vulnerable, many of whom are
experiencing poverty at no fault of their own, but due to their unfortunate circumstances, such as
access, war, resources, and limitations. Zakat, the obligatory Islamic practice of charitable
giving, is a tool for promoting social justice, alleviating poverty, and fostering a sense of
community by redistributing wealth among the less fortunate.

The Prophet Muhammad(PBUH) said, “Give charity without delay, for it stands in the way of
calamity.” __ Al-Tirmidhi.

Alleviating Poverty
Zakat serves as a safety net for the less fortunate, providing essential resources and financial
support to those in need. By channeling funds to the poor and underprivileged, zakat helps
address the root causes of poverty, empowering individuals to become self-sufficient and
improve their quality of life.

Promoting Social Justice

Zakat is a powerful tool for reducing income inequality and promoting social justice. By
redistributing wealth from the affluent to the disadvantaged, zakat helps create a more equitable
society, where everyone has access to basic necessities and opportunities for growth and
development.

Fostering Community
The act of giving zakat fosters a strong sense of community and social cohesion. It encourages
Muslims to look beyond their individual interests and consider the wellbeing of the entire
community, promoting a culture of empathy, generosity, and mutual support.

Sustainable Development
Economic Resilience

Zakat helps build economic resilience by providing a reliable source of funding for development
projects and small businesses, enabling communities to become self-sufficient and less
dependent on external aid.
“He who sleeps on a full stomach while his neighbor goes hungry is not one of us.”

Prophet Muhammad (PBUH).

Environmental Stewardship

Zakat-funded initiatives can promote sustainable practices, such as renewable energy, sustainable
agriculture, and environmental conservation, contributing to the long-term well-being of the
community and the planet.

Social Empowerment

Zakat-supported programs can empower marginalized groups, such as women and youth, by
providing access to education, healthcare, and skills training, enabling them to become active
participants in the development of their communities.

Multiplying the Impact

Individual Contributions

When individuals faithfully pay their zakat, they contribute to a collective effort that has a far-
reaching impact, creating a ripple effect that benefits the entire community.

Institutional Coordination

Effective coordination among zakat-collecting institutions, charitable organizations, and

government agencies can maximize the impact of zakat, ensuring that resources are directed to
where they are needed most.

Innovative Approaches

Exploring new and innovative ways to distribute zakat, such as through microfinance initiatives
or social enterprises, can further amplify its transformative potential.

Understanding the impact of Zakat

The system of Zakat ensures proper distribution of wealth and has a wide impact on the
entire set-up of an ideal Muslim society. If Zakat is established as an institution, it will create
a collective social security scheme for mutual help and the resources of the rich can be
further utilised for the benefit of the poor and subsequent social development of the entire
society.

Zakat, being obligatory for those who qualify as donors, is practically a system of social
equity that ensures that the gap between the rich and the poor is lessened in society. It
predetermines the donors and the recipients in order to ensure a fair redistribution of
wealth.

While all of this sounds nice, the current reality is a stark contrast from this ideal scenario.
Instead, the real potential of Zakat is stunted.

The reality on the ground

In the current status quo, wealth is not redistributed across the socioeconomic hierarchy
efficiently. Without the implementation of Zakat, taxes alone are not sufficient to reduce the
gap between the rich and the poor. For example, the World’s 22 richest men have more
money than all the women in Africa combined. This indicates a blatant disregard for social
and economic equity under the modern capitalist system.

The institution of Zakat, on the other hand, is a religious ordainment and much more. If
understood and carried out correctly, it has the potential to bring about widespread change,
empower the poor and needy, and eradicate financial exploitation.

The National Zakat Foundation (UK) states, “The woes of modern day Zakat are in stark
contrast to the success of Umar bin Abdul-Aziz, who is oft-mentioned as the poster child of
Zakat success. Historical accounts show that there was a surplus of Zakat funds during his
reign i.e. there was so little poverty, that Zakat eligible recipients were scant. Contemporary
studies show that if everyone were to pay their Zakat in particular Muslim countries,
absolute poverty would be significantly reduced, or even eradicated (Islamic Social Finance
Report, 2014).

However, the actual mobilisation of Zakat funds is particularly low. In this respect, Umar’s
commitment to fairness was a factor that reduced the gap between actual and potential
Zakat funds. From this we can garner that trustworthiness of a Zakat institute is crucial to
encourage people to pay Zakat.

The way Zakat funds were used was also a major success factor. The focus was upon
encouraging agriculture and general productive capacity. This contributed towards an
increase in income, causing more to be eligible for paying Zakat, and less people eligible to
receive Zakat. As such Zakat revenues increased. Economic theory also supports the
focussing upon agriculture as a starting point of economic development.”

Should we just invest the zakat funds to get more funds? Sheikh Ibrahim Nuhu ‫حفظه الله‬
said, “Zakat and Waqf is for the current needs of the people. It is needed NOW. Investing
these funds for future benefit cannot take precedence over the current needs of the people.
I dare anyone to come and tell me that there are people or a place where Zakat and Waqf is
not needed. These investments can only be done when there is no one to benefit from the
Zakat and such a thing doesn’t exist now.”
He also said, “From the Sunnah is to take the Zakat from the rich and give it to the poor
immediately. There is no room to invest the Zakat. Investment carries a lot of risks. Who
guarantees the risk? Who monitors it? How can you do business with the money you don’t
even own? Who gave you the permission to think and act on behalf of someone else?” This
is the classical position and the safest opinion.

That being said, the reality on the ground is very different.