A Brief Analysis of key Differences of Islamic Charities

 

All forms of Charities in Islam are a form of Sadaqah, whether compulsory or voluntary.   Zakaat, Lillah, Waqf are different forms of Sadaqa. These are also major forms of charities in Islam. The overarching Qur’anic term for spending is “infaaq”

 

 

  Zakaat Lillah Waqf
Description Zakaat is a compulsory due that has to be paid by every Muslim who has  an excess over a certain minimum amount (nisaab) of wealth calculated in terms of a formula. Lillah  (for Allah) comprises any form of charity given in the cause of Allah on a pure voluntary basis. This charitable giving is over and above the Zakaat that one is liable for. For example, many of our charitable organizations collect lillah for relief aid, and masjid and madressah running costs. These contributions are made  through the goodwill of Muslims who give solely for the pleasure of Allah. Waqf is a an off shoot of Lillah. In this regard it is a permanent transfer of a portion of one’s wealth or assets, no matter how small or large,  for the sole pleasure of Allah on a pure voluntary basis. The asset or wealth is usually in the form money, a building, jewellery, or a bequest through ones will. Collectively, such funds are invested to purchase and own  a social or economic asset. A social asset could be a school, madressah, clinic. An economic asset could be,  for example, an income producing house, a block of flats. The income produced is then used for social development or any other purpose to serve the Muslim community, and humanity at large.

 
Compulsory/Voluntary
  • Compulsory
  • Voluntary

 
  • Voluntary

 
Rate
  • Fixed rate
  • Any amount

 
  • Any amount

 
Formula Fixed formula based on assets and liabilities at end of accounting year
  • No formula

 
  • No formula

 
Expense categories
  • 8 Fixed expense categories
 Flexible expense categories. Donor can decide. Flexible expense categories. Donor can decide.

 

 
Spend
  • Generally spent in one year
  • Generally spent in one year
  • Generally Capitalized

 
Investments
  • Generally not invested – needs to be discharged as soon as possible
  • Generally not invested – may be discharged according to need and mandate
  • Invested in social or economic assets

 
Shariah governance
  • Liability for payment  is governed by Shariah
  • Any person can give

 
  • Donor must be sane, of age, male or female

 
  • Mutawallee not necessary
  • Mutawallee not necessary
  • Must appoint Mutawallee (trustee)

 
  • No document necessary
  • No document necessary
  • May be done through a Waqfiyyah (Donation Deed)

 
  • Generally not continuous
  • Generally not continuous
  • A Sadaqah Jariyyah – a continuous charity and continuous reward
  • Not a capital base
  • Not a capital base
  • Forms a Capital Base for Sustainable Community Development
  • Applied only/mainly to Muslim beneficiaries
  • Open to all
  • Open to all
  • Generally paid in Ramadaan/

Muharram
  • Can be paid at any time
  • Can be paid at any time
  • Generally paid in cash or stocks
  • Can take the form of any asset
  • Can take the form of any asset – cash, land, coins, jewellery
  • Cannot bequeath, but can provide for liability
  • May bequeath up to 1/3 of  estate
  • May bequeath up to 1/3 of estate as Waqf