What Are the Economic Benefits of Zakat?

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As economists look at economic disparity, they keep revisiting the concept of Zakat. Zakat is a powerful tool to allow for a more equitable distribution of wealth. Zakat allows more people to invest, increase consumption, and allow for investment in community projects. 

Appalling, and growing, wealth inequality across the world has become a shamefully defining reality of the truly frightening times in which we have been brought to life. The unstoppable spread of wretched poverty coupled with the instant-by-instant funneling of an impossible aggregation of wealth into fewer and fewer hands has led an increasing number of modern researchers to the examination of Islam’s obligation of Zakat in their hunt for a “new,” humane model of social wealth redistribution.

They have come to the right place, for it begins not with man but with God.

A Divine Mechanism to Offset Human Greed and Social Inequality

God created man from the clay of the earth, and then Himself blew the breath of life into this clay form. So, each of us human beings are of two natures, earthen and heavenly.

More properly, human nature (fitrah) is composed of both a higher and lower self (nafs): one pulls our clay selves earthward with a feverish lust to possess the things of this world and to dominate all else and others in it. For you love wealth with an ardent love (Surat Al-Fajr, 89:20).

The other draws us up toward the heavens, our real and intended home in a life everlasting (O peaceful soul! Return to your Lord, well-pleased and well-pleasing (Surat Al-Fajr, 89:227-28)), and so to unladen our souls from the anchoring stuff of the earth that drags us down, all of which shall perish into dust. No indeed! Most surely, it shall all perish, when the earth is pounded to dust with a crushing pounding (Surat Al-Fajr, 89:21).

Zakat — the religiously obligatory giving away in alms set portions of our various kinds of wealth to the poor and the designated deserving each year — is God’s mechanism to simultaneously (1) cleanse our higher souls from the taint of their base natures, (2) purify the worldly possessions that remain with us, (3) uplift the needful around us, and (4) elevate society by restoring its economic balance, locality by locality, with a fair and equitable redistribution of a wealth that, in the end, like everything else, belongs to God alone.

So Zakat — the middle, Third Pillar, of the Five supports the Prophet Muhammad, God’s blessings and peace be upon him, said Islam is built on — is unique among the obligations of belief. It welds worship to the transactional, the moral to the material, the individual to the communal, and the economic to the societal.

Notably, God specifically identifies Zakat as fundamental to all real religion. He says of all the peoples to whom He ever revealed the Scripture:

They were not commanded but to worship One God — making the practice of their religion pure and sincere to Him alone, being ever upright of heart — and to duly establish the Prayer, and to give the Zakat-Charity. For that, indeed, is the upright religion (Surat Al-Bayyinah, 98:5).

In what ways does Zakat benefit society?

Zakat, when properly institutionalized in a community, underwrites both its social and spiritual integrity. You can read something more about how Zakat supports psychological and religious coherence in society in Why Muslims Pay Zakat and What Does the Quran Say About Zakat?

But briefly, Shaykh Yusuf Qardawi in Fiqh Al-Zakat, Understanding the Legal Rulings of the Zakat-Charity, cites the scholar Al-Bahi Al-Khawli explaining (in the 1960s) three ways in which Zakat guarantees the ongoing indivisibility of Muslim societies, that is, helps preserve their spiritual integrity:

Nations are founded on spiritual and psychological elements in addition to material factors. Indeed, the spiritual factors count for much more in creating unity and vitality in any community. Islam pays great attention to these factors and makes the spending of the income of the community — to nourish and support these — one of its major obligations …

One can distinguish three major factors to which Islam gives special attention. The first is freedom or liberty. One objective of Zakat is to liberate individuals from the bondage of slavery. For the first time in the history of humanity, the liberation of slaves was made, by Islam, a social obligation for which a certain portion of the community’s wealth is to be spent.

Secondly, it encourages individuals to carry out projects of public interest and to spend with the objective of smoothing out differences between members of the community and to reconcile individuals and groups for the purpose of deterring social unrest … by assigning a share of Zakat to support those who have to bear financial responsibility for these purposes.

Third, spending in the Way of Allah and spreading the sound religion that comes from Him is urged, [which] includes defending the ideals and doctrines for which Allah sent His Messengers and upholding the Oneness of Allah and righteousness on earth.

What does Zakat offer people economically?

Zakat specifically creates a comprehensive social financial and care support service that — unlike most social insurances and social security systems in our modern Enlightenment- and economic-based states — does not require any dues or financial contribution from a person to gain its coverage or qualify for its payment.

Yet every Muslim who has minimally, externally defined means of wealth sufficiency must pay a percentage of that surplus to the well-being and support of the ones whom God has entitled to it.

God Himself makes universally eligible for yearly payment from all Muslims six categories of recipients, and particularly those who live in the locality of these Muslims who have annual surpluses above minimum thresholds established for their various wealth streams — and whether these recipients are Muslims or others.

These Zakat-eligible, in the order of their presentation in the Quran (Surat Al-Tawbah, 9:60):

  1. The Poor

  2. The Indigent

  3. Zakat System Administrators

  4. People with Hearts in Need of Reconciliation

  5. People in Bondage

  6. The Debt-Ridden

  7. People upon the Way of God

  8. The Wayfaring Displaced

Scholars are agreed that the first two closely related categories — the poor and indigent — represent the highest priority of the Zakat right, while the others (each group crucially worthy of the divine right to Zakat) are not necessarily ranked according to precedent.

Yet together these divinely inalterable categories of the Zakat-eligible show clearly that God has institutionalized Zakat in Muslim society (and among Muslims even if they are not gathered into a society) for the explicit purpose of directly giving sustaining economic benefit to the most vulnerable of the societies in which they live. And, in fact, the goal of Zakat, according to the most venerable Companions of the Prophet, on him be peace, is to (a) maintain the integrity of that society and its collective Zakat obligation, even as the communal Salat-Prayer is sustained, and (b) enrich its recipients ideally, not merely meet their immediate needs.

What specific economic benefits does Zakat give society?

Six particular social benefits inure to a society that institutionalizes Zakat, according to Fiqh Al-Zakat:

  1. The Fair Distribution of Wealth and Income

  2. The Inculcation of an Ethic of Self-Reliance Coupled with the Means to Remove the Causes of Begging

  3. Engendering Fellowship

  4. Security Against Hunger and Disaster

  5. Security Against Homelessness

  6. Provision for Marriage Against Involuntary Celibacy

Zakat compensates all the members of a society in which it is established against each of these hardships and tests and, in so doing, helps bring about society’s harmonious cohesion.

Very briefly:

By assigning specified portions of surplus wealth annually to the poor and impoverished, with the objective of lifting them into the ranks of the wealthy, not in the sense of gaudy opulence but in Islam’s meaning of well-sufficed in provision and the essential needs for a good life, Zakat reduces the wealth gap now tearing apart not only our societies but our world.

The very institution of Zakat and its divine requirements instills in the individual the knowledge that God has made ineligible for it a person with sufficient provision or the physical capacity to work. In addition, many are the statements of the Prophet, on him be peace, that prohibit the taking of Zakat when one has minimal means of sufficiency and begging, unless one is in so dire a need it threatens his or her essential life needs.

The rewards for restraining oneself from asking other than Allah are of the highest divine value in this life and the Hereafter, while the consequences on the Day of Judgment for taking Zakat when one has wealth or capacity and means to work are catastrophic.

Dispute, disagreement, contention, and fighting have proven inveterate features of human interaction, even among people who share a faith, a society, a community, or even family relationships. Zakat provides for financial recompense to “reconcile the hearts” of those who feel wronged, either by circumstance or action. Zakat’s eligibility rules strongly imply that when one steps in to do the great good deed of mediating between those in contention, and from his or her own resources pays parties a compensation for the settlement of such disputes, that mediator is entitled to reimbursement from Zakat. Or it may be that proper authorities appoint mediators for such dissensions with the warrant to use Zakat to bring about amicable resolutions between disputants.

Islam elevates the provisions of food against hunger and personal security against attack the highest blessings and guaranteed rights of all human beings, individually and in community. God has, therefore, licensed Zakat for use in both these circumstances. Those afflicted by hunger have a God-given right to be sufficed with food on a continuous basis until their conditions are cured, just as those struck with natural or human-imposed disasters have an allowance for ample recompense that augments their essential life needs and restores their well-being in Zakat. This is a communal duty that Allah has imposed on Muslims.

Islam considers a place of residence an essential right of every human being, and the scholars have interpreted this to mean that those in authority must use Zakat to provide adequate shelter for the homeless of society. (Should that prove insufficient, Islam charges governing authorities to constrain the wealthy of society to provide homes for every destitute person on the street.) This Zakat provision includes the full care of orphans, be they double-orphans (missing both parents), children without a father to provide for and protect them, or abandoned children.

God has forbidden voluntary celibacy and encouraged men and women to marry within the guidelines He has set. If one cannot marry due to lack of financial ability, that person becomes Zakat-eligible to secure marriage and a functioning household within the decree of God.

These six main categories of how Zakat economically advantages society each nest other kinds of material benefits that Zakat institutes for the people — both vulnerable and privileged — of any community that establishes it.


What about paying Zakat to Zakat Organizations?

Muslim agencies that take on the solemn duty of enabling, educating, and organizing Muslims to fulfill God’s command do so by paying to the poor and deserving a portion of their wealth to purify it. This means uplifting their brother, their neighbor, their community and the global ummah. Muslim organizations that do this according to the revealed guidelines of Allah and His Prophet, on him be peace, have instituted and are spreading an incalculable service of good, not only for Muslims, but for all nations and humanity.

The humanitarian needs of human beings have never spiraled higher or billowed darker than what we behold, often in horror, today. There is no question that establishing Zakat among Muslims, developing its global channels, and evolving its local delivery mechanisms are essential — along with voluntary sadaqah charity-giving — to helping humanity regain its divinely created, upright stature.

Very truly, We created man in the fairest stature. Then if he disbelieves, We return him to the lowest of the low (Surat Al-Tin, 95:4-5).

This same Surah tells us that what preserves or restores that lofty human form in which we were made is belief in Him as He has revealed it — but only a belief that is verified by the “righteous deeds” that prove the faith our lips proclaim for our hearts is real…

… and no deed more than this melding, middle Pillar of “worship-in-wealth-transaction” — Zakat — paying it and distributing it with all heartfelt diligence.

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