Are charities permitted in Islam to deduct expenses from zakat and sadaqa donations?

In a Nutshell: No, charities cannot deduct their operational costs or administrative fees from Zakat or Sadaqa donations. These donations are exclusively for the benefit of those designated as rightful recipients in Islam. Table of ContentsIntroduction Background and Context Evidences Analysis of the Question Misconceptions Objections FAQs (Zakat and Sadaqa Deductions) Conclusion Introduction Zakat and Sadaqa are two important pillars of Islam that require Muslims to donate a portion of their wealth to help those in need. Zakat is an obligatory charity with specific requirements for calculation and distribution, while Sadaqa is voluntary charity. This answer explores the Islamic ruling on whether charities can deduct their operational costs from Zakat and Sadaqa donations. Evidences Quranic Verses:Surah at-Tawba, verse 60: Alms (Zakah) are for the poor and the needy and those employed to collect (the funds); and for bringing hearts together (conciliation); and for freeing captives; and for the debtors; and for those in debt; and for the way of Allah (Islamic cause); and for the traveler (stranded). (It is) a duty (imposed) by Allah. And Allah is Knowing, Wise. (English translation by Sahih International) This verse outlines the eight categories of recipients for Zakat distribution, highlighting their specific needs.Surah ar-Rum, verse 39: Zakah purifications are only for the poor and the needy and those employed to collect (the funds) and for bringing hearts together (conciliation) and for freeing captives and for the debtors and for the way of Allah (Islamic cause) and for the traveler (stranded). Allah is Knowing, Wise. (English translation by Sahih International) This verse emphasizes the role of Zakat in purifying one's wealth through its distribution to those in need. Hadiths:Narrated by Abu Hurairah (??? ???? ???): The Prophet (saw) described the specific categories for Zakat distribution, corresponding to the eight categories mentioned in the Quran (Sahih al-Bukhari). Narrated by Ibn 'Umar (??? ???? ?????): The Prophet (saw) forbade taking a portion of Zakat for personal use (Sahih Muslim). Scholars' Opinions: There is a scholarly consensus (Ijma) amongst the four Sunni Madhhabs (schools of jurisprudence) that Zakat and Sadaqa donations cannot be used to cover administrative expenses of charities. These funds must be distributed entirely to the designated recipients. the Question The core purpose of Zakat and Sadaqa is to alleviate the suffering of those in need and to purify one's wealth. Deducting operational costs from these donations would directly contradict this objective. It is important for charities to be transparent and accountable in managing donations. They should strive to minimize administrative expenses and explore alternative means of financial sustainability, such as fundraising events, endowments, or applying for grants. Islamic finance allows for permissible fees associated with managing financial products or services. However, this is distinct from deducting expenses from Zakat or Sadaqa, which are designated charitable donations. Misconceptions There are some common misconceptions regarding the use of Zakat and Sadaqa funds: Charities can keep a portion of donations to cover their operational costs. This misconception contradicts the core purpose of Zakat and Sadaqa, which is to directly benefit those in need. As mentioned earlier, there is a scholarly consensus (Ijma) that these funds cannot be used for administrative expenses. Zakat/Sadaqa can be used for any charitable cause. Zakat has specific categories of recipients outlined in the Quran and Hadith. These categories prioritize those facing financial hardship, such as the poor, the needy and debtors. Sadaqa, while more flexible, should still be directed towards those in need or for Islamic causes. Objections Some may argue that allowing charities to deduct a small percentage for operational costs would benefit Zakat and Sadaqa distribution in the long run. Here we address two such objections: Charities need funds to function and distribute Zakat/Sadaqa effectively. While it is true that charities require resources to operate, there are alternative solutions to ensure financial sustainability. These include: Doesn't deducting a small percentage ensure better Zakat distribution? The concern is that without covering administrative costs, charities may struggle to function effectively. However, deducting even a small percentage from Zakat or Sadaqa reduces the amount reaching those in need. Transparency and accountability are crucial. Donors have the right to know how their contributions are being used. Charities should clearly communicate their operational costs and fundraising efforts to build trust and encourage further donations. FAQs (Zakat and Sadaqa Deductions) How can charities ensure financial sustainability? Charities can employ strategies such as:Diversified Funding:Relying on a mix of grants, donations, fundraising initiatives and endowments. Efficient Operations:Minimizing expenses without compromising the quality of services. Transparency:Maintaining clear and open communication with donors about operational costs and fundraising efforts. What are some acceptable ways for charities to collect additional funds?Membership Fees:Charging nominal fees for membership and associate benefits. Merchandise and Services:Selling merchandise or providing services related to their mission, with profits going towards operational expenses. Ethical Investments:Investing a portion of their funds responsibly, in line with Islamic principles. Conclusion In Islam, the practice of Zakat and Sadaqa serves primarily to alleviate the suffering of the less fortunate and help establish social justice. The obligation upon the giver is to ensure that their charitable contributions reach the intended recipients in full. Deductions for operational costs or any other purpose defeat the primary purpose of these acts of charity. It is vital that charities prioritize transparency, accountability and responsible resource management. They should actively explore alternative funding sources and maintain a clear distinction between funds earmarked for Zakat/Sadaqa and those intended for operational expenses. This ensures that those giving Zakat or Sadaqa can have full confidence that their donations are being directed as intended by Islamic law. It is always advisable to consult a qualified Islamic scholar for further guidance on complex matters related to Zakat and other forms of Islamic charity. Understanding the purpose, recipients and the correct calculation of Zakat is important for Muslims as this is one of the pillars of Islam. ReferencesInvestopedia. (n.d.). Zakat: The Basic Rules for One of the Five Pillars of Islam. https://www.investopedia.com/terms/z/zakat.asp Khan, M. (n.d.). Sahih al-Bukhari. https://sunnah.com/bukhari Khan, M. and al-Hilali, M. (n.d.), Sahih Muslim. https://sunnah.com/muslim