The policy created by the Islamic Council of Europe is a useful starting point in evaluating how zakat is spent
By Ahmed Shaikh
July/August 2022
A “zakat myth” exists in the Muslim American community: Zakat is something you calculate and then give to a Muslim nonprofit. These organizations fortify this myth through aggressive and sustained marketing, despite a rather gaping hole: The Quran says nothing about Muslim nonprofits or their projects being eligible. This is not a small matter, for they are restricted to acting as the donor’s wakeel (representative) to ensure its distribution to legitimate beneficiaries and maybe (depending on which scholar you follow) deducting their legitimate expenses from it.
In the past few decades, various scholars have stated that one particular category (out of the categories of zakat mentioned in the Quran, 9:60), that of fi sabil Allah (in the cause of Allah) can be used for anything “good.”
This is dramatically different from its traditional and historical very specific meaning. For those who use the loose definition, “anything good” can include organizations that focus on social welfare, civil rights, constructing roads and bridges, hiring schoolteachers and a wide variety of other things for which U.S. taxpayers are already paying.
Many Muslim American nonprofits are trying to reimagine zakat from the traditional “hand-to-hand” model of the wealthy giving to the poor into other priorities focused on what they want to do. While some Muslims still administer hand-to-hand zakat, particularly in local areas, zakat has become a spending bonanza for larger nonprofits, with little if any direct benefits going to the poor or needy. Even benefits to the poor have become more diffused and indirect. “I don’t have money for you, poor person, but here’s a nice conflict mediator, road, English teacher or someone who can write press releases.”
Donors Should Understand how Zakat is Spent
If you are a zakat donor, your wealth is being used for worship. In the same way you wouldn’t pray on a soiled carpet, you shouldn’t give zakat to iffy organizations or those that spend it in a manner that conflicts with your intent. Also, never assume that merely because the person at the nonprofit is a “good brother” or a “good sister” or has hired a scholar to speak at the fundraising gala that the organization has been vetted. Often, it hasn’t been.
Furthermore, the recent nonprofit- and government-instigated reimagining of zakat, including the expanded fi sabil Allah interpretations (expanded zakat, or EZ) as well as “zakat for development” (known as Z4D in the charitable sector) may have gone off the rails.
The donor’s perspective matters here, because a wakeel for zakat represents the donor. A wakeel who doesn’t provide adequate disclosure or a system of accountability is doing a poor job and should be replaced.
Is There a Zakat Policy?
The first thing you should ask any zakat administrator is to describe the organization’s distribution policy.
You don’t give zakat to an organization; rather, you entrust them with it. This is very important. You need some form of written assurance from the administrator as to what will be done with your money and if the distribution is valid.
One way to ensure its validity is to ascertain if scholars have agreed with policy. But also realize that this method is far from foolproof. I have discovered multiple instances of Muslim organizations using scholars’ names without their authorization or actual endorsement. So if you see a scholar’s name, consider contacting the scholar to verify his or her approval.
You don’t need a scholar-approved zakat policy if a group of volunteers distributes your zakat “hand-to-hand” to the poor and needy, taking no overhead. That is the most obvious and purest form of zakat. You only need scholars for practices that cause normal people to scratch their heads — of which there are plenty in Muslim nonprofits.
Regardless of what scholar signed off on the zakat policy, review it yourself. The existence of a policy is neither an excuse nor a permission for donors to turn off their brains.
A scholar who creates a zakat policy for a nonprofit is essentially doing nonprofit consulting and therefore cannot be considered independent. Credentialed scholars have blessed many of the most flagrant abuses. In fact, loopholes in zakat policies render the whole effort pointless. For example, one policy may restrict overhead to 12.5% while simultaneously allowing unlimited overhead.
I recommend that when you start evaluating how your zakat should be spent, begin with the policy created by the Islamic Council of Europe (though like anything else, there may be grounds for some to quibble).
Unfortunately, as the U.S. has no uniform zakat standards guiding the relevant organizations, they are free to make up their own or, more likely, to have no standards at all, since donors historically have not cared. Indeed, some of this country’s largest zakat collectors provide donors with no meaningful policy on how they use the funds differently from other donations or provide no accounting for them at all. And why should they? Donors have not demanded them.
Typically, a charity’s information and “education” on zakat will be about how to calculate it and the obligation to pay it. As a result, you don’t see very much on what the organization does with your money other than vague descriptions and marketing photographs.
As a rule, unless you know how your zakat is being distributed and are comfortable with the process, don’t donate. This is your worship.
Zakat Ethics
Competition between Muslim charities for the same zakat dollars can be savage. Online searches for one Muslim charity’s zakat during Ramadan will frequently result in search results for multiple other Muslim charities buying the other charity’s name as a keyword, which search engines put up for auction. In 2020, one prominent Muslim charity spent $4.4 million on Google and about $1 million on Facebook advertising, which the organization dubiously claimed was a valid zakat expense.
Indeed, zakat administrators commonly regard marketing expenses, including convention and meeting sponsorships for groups of affluent Muslims, as valid zakat expenses.
Much of this zakat is spent competing with other administrators who are using these dollars to pursue the same donors. Such organizations, unfortunately, treat your donation as a massive self-licking ice cream cone.
Representatives of Muslim nonprofits often trash other Muslim nonprofit organizations to donors. These organizations are often focused on their own growth and treat their organizations as enterprises that need to expand their ever-increasing salaries, bonuses and other executive perks. In fact, zakat has become more about the organizations than the donors or the beneficiaries.
Donors have not yet demanded that they act in a transparent and ethical manner. This should change.
Getting it Under Control
It is long past time for the Muslim community to develop standards and processes of accountability so donors can make better decisions and start making apples-to-apples comparisons between nonprofits. Of course, such standards should be developed by those who hope to fulfill zakat’s purposes, as opposed to considering such organizations’ business and growth objectives.
Muslim donors should give nothing to organizations that place their own institutional needs above those of zakat’s eligible beneficiaries.
Who Should Receive my Zakat?
So far, the only trustworthy zakat operations in the U.S tend to be local masjid-based volunteer zakat committees. Of course, local masjid management and zakat practices can vary from year to year and place to place, which means that it remains vital for donors to understand how the operation is currently conducted.
Occasionally, a masjid may collect zakat but hold on to it because they lack volunteers to distribute it. Or, its board may have become comfortable with using zakat to meet the masjid’s budget or to fund construction projects — things that EZ interpretations allow, along with nearly anything else.
After years of writing about Muslim nonprofits, I wish I could tell you that some Muslim organizations operate with the gold standard when it comes to collecting and distributing zakat. But I cannot. Every donor needs to be vigilant about his or her worship and ignore slick online marketing campaigns or a great banquet speech. Zakat is about so much more than donors being separated from their money. It’s about you caring about what happens to it after it has left your hands.
Ahmed Shaikh is an Islamic estate planning attorney based in Southern California, co-author of “Estate Planning for the Muslim Client” (ABA Publishing; 2019) and a former member of ISNA’s executive council. His newsletter on Muslim nonprofits can be found at ehsan.substack.com.
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