Sadaqah, Zakah, Interest and Waqf FAQ

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Sadaqah

Q. What is sadaqah?

A. Any donation other than zakah is considered 'sadaqah' or 'charity.' Amounts large or small and towards any good cause are considered sadaqah.

Q. What is sadaqah jariah?

A. Sadaqah jariah is 'continuous charity.' It includes any charity that continues to bring benefit to people, animals or the environment over time, and for as long as it does so it brings reward to the donor insha'Allah. Education, orphans care, safe water and tree plantation are just a few examples of sadaqah jariah projects.

Zakah

Q. What is zakah?

A. Zakah (also spelt zakat) is a form of alms paid on one's wealth to the poor and needy. It is paid at a rate of 2.5% on most types of wealth, provided the wealth exceeds a minimum level known as the nisab.

Q. Do I have to pay zakah?

A. Zakah is an obligation upon every Muslim who has wealth exceeding the value of the nisab or minimum value. Zakah is mentioned more than 80 times in the Qur'an and to withold it is a major sin.

Zakah is also payable on most types of business or trade.

Q. What is the value of the nisab?

A. The nisab is defined as 87.5g of pure gold or its equivalent value in money. At current market rates (updated daily) this is equal to £1,906.19.

Q. How much zakah should I pay?

A. Please see the Zakah section for further details on calculating your zakah and for an online zakah calculator.

Q. When should I pay my zakah?

A. Zakah can be paid at any time within the year it was calculated. However, many people choose to pay their zakah within the blessed month of Ramadhan every year for the extra reward and so they do not forget to pay!

You can also spread zakah payments across the whole year if you so wish.

Q. How can I donate my zakah?

A. You can donate your zakah in the same way you would general sadaqah, except that you must specify the type of your donation is zakah.

You can donate your zakah online, over the phone or by post.

When adding items to your donation basket via the How to Spend page, if the project or fund chosen is eligible for zakah you will be given the option of specifying this type; if no such option is available the project or fund is not eligible for zakah.

Q. How can I give my zakah monthly?

A. Giving your zakah monthly is simple: simply calculate your zakah payments, divide this by 12 and set up a regular gift, specifying zakah as the type of donation.

Remember that you can pay your zakah in monthly installments for the year ahead and not in arrears.

Q. How is zakah money spent?

A. Zakah must be spent as stipulated in the Qur'an:

"Alms are for the poor and needy, and those employed to administer the (funds); for those hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of Allah; and for the wayfarer."

Exact meanings are given to all these categories in Islamic Law.

Q. Will Muslim Hands spend my zakah money properly?

A. Yes, Muslim Hands can insure that your zakah reaches the most needy Muslims around the world and is spent in accordance with Islamic Law.

The vast majority of our projects are of course zakah eligible in that they serve orphans, widows, refugees etc. Projects that may not be zakah eligible are always paid for through our sadaqah funds.

Q. I have a question regarding zakah or need help calculating how much I should pay, who should I ask?

A. Please contact us if you have a question and we can put you in touch with a qualified Islamic scholar to answer your questions.

Interest

Q. What is riba (interest)?

A. Any transaction or loan where the payment of an additional amount on the principal is made conditional to the advance of such a loan is called riba. The most common form of riba these days is interest, whether that paid on bank accounts or loans.

Interest is strictly forbidden in Islam and to accept or deal in it is a major sin.

Q. Why is interest forbidden?

A. Interest is forbidden as it is a socially unjust mechanism for lending money. It benefits the rich to the detriment of the poor and also does not involve any investment risk for the lending party.

Q. I have interest money or my bank account pays interest, what should I do?

A. If one has interest money from a bank account or elsewhere many scholars recommend this money is given to a charitable cause with the understanding one will not receive any reward for the donation. The money should be used by the charitable organisation to help the poor and needy, but is not to be used for certain projects such as the construction of mosques.

Q. Can I donate interest money to Muslim Hands?

A. Yes, you can. We will use your money to support our work helping the poor and needy but will not use it on projects where interest should not be spent, such as the construction of mosques.

Q. How do I donate my interest?

A. You can donate your interest online or over the phone. Please ensure that you select 'Interest Fund' as the project, so that we may spend your interest money correctly.

Waqf

Q. What is a Waqf Fund?

A. The word waqf is used to define a charitable donation in the form of money, property or other items of value, which are used to bring a return, but which cannot be disposed of or spent. Hence a waqf donation keeps on giving year on year, making it a prime form of sadaqah jariah (continuous charity).

Q. How much does a Waqf Fund share cost?

A. A Waqf Fund share costs £550 and includes a lifetime administration charge of £50.

Q. Why is there an administration charge?

A. The administration charge is taken as a one-off lump sum to cover Muslim Hands' and IBB's costs associated with administering the fund over the lifetime of the investment.

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