Zakat Policy

IDRF (International Development and Relief Foundation) is a Canadian registered charitable organization dedicated to empowering the disadvantaged people of the world. IDRF provides effective humanitarian aid and sustainable development programs, without discrimination, based on the Islamic principles of self-reliance, social justice and human dignity. 

IDRF seeks to provide the most vulnerable communities with the means to create lives of dignity, equality and sustainability, toward a more just world. Our projects are particularly effective as local partners implement them, and therefore are culturally sensitive and provide targeted assistance.

For 38 years, IDRF has successfully implemented Relief and Development projects in Asia, Africa, the Middle East, Eastern Europe and the Americas.

Policy Statement

IDRF’s Zakat policy aligns with best practices across the international charitable sector responsible for disbursing Zakat to the poor and needy through short-term relief efforts and long-term development programs. 

IDRF upholds the practice of transparent and accountable governance of zakat funds rooted in the foundational principles outlined in the Qur’an and enacted in the prophetic example. IDRF abides by the legal requirements of the Government of Canada Nonprofit Law, Income Tax Act, Canada Revenue Agency Charities Directorate, and the varying provincial and territorial legislations.

 

How does IDRF Approach Zakat?

At IDRF, we take the responsibility of handling Zakat exceptionally seriously. IDRF’s goal is to provide Canadians with a trusted, transparent and reliable means to fulfill their Zakat obligations. IDRF facilitates the use of Zakat in our operations in accordance with the specific requirements of Zakat. 

At the heart of IDRF’s zakat policy is ensuring the dignity and well-being of the recipients we serve. Within the context of IDRF’s humanitarian work and related projects, IDRF views zakat as the wealth of the poor and endeavours to give recipients maximum autonomy while ensuring proper oversight & CRA  compliance.

 

Purpose of this Policy

IDRF recognizes the need to effectively implement and communicate how we approach, use, and administer Zakat funds in our humanitarian projects worldwide. IDRF intends to clearly help define and guide both donors and IDRF to the importance of upholding Zakat principles and also maintaining rigorous standards of excellence in the use of Zakat in ongoing and future projects. The purpose of this policy is to:

  • Communicate the concept of Zakat, and its specific role and application in IDRF’s work.
  • Establish guidelines for IDRF on which projects are zakat eligible.
  • Provide transparency and accountability around how IDRF collects, administers, and uses Zakat.
  • Help clarify specific issues relating to our zakat activities, such as questions around which projects are Zakat eligible and how Zakat funds are collected and administered for such projects.
  • Identify different types of right holders of zakat, and help donors understand categories of wealth on which zakat is applicable.
  • Continue to refine and expand the processes related to ensuring the collection, administration, allocation, distribution, and impact of zakat funds used by IDRF are transparent, effective, efficient, and aligned with Islamic principles and the best practices of humanitarian development.
  • Improve IDRF’s internal and external transparency regarding the collection, allocation, disbursement, use and impact of zakat funds.
  • To ensure appropriate governance of Zakat from a theological perspective and adhering to the federal laws around charitable funds.
  • Help ensure that IDRF’s zakat activities are conducted in the most transparent and Islamically-compliant manner possible.
  • Direct IDRF to utilize zakat within our programs in a manner that continues to maximize the impact and efficiency of our work in reducing poverty, and inequality, and uplifting disadvantaged communities around the world.
  • Guide IDRF Board of Directors, management, and staff on how zakat should be collected, administered, distributed, and the impact zakat has in driving humanitarian work and development projects.

 

Terminology

Zakat (sometimes spelled zakah) is an obligatory aspect of Islam, and requires Muslims who have certain amounts or types of wealth, within specific conditions, give a portion of their wealth to specified categories of individuals. For the purpose of this document, zakat refers only to money given to IDRF by zakat-eligible individuals who want IDRG to redistribute this money to the poor and needy.

Sadaqa refers to a more general and less prescribed charity given to IDRF for distribution in a discretionary manner, which may be used by the organisation for feeding the homeless, covering operating costs, running programs and the like.

Nisab is the minimum amount of wealth or savings that a Muslim must have before being obliged to give Zakat.

What is Zakat?

Almsgiving is a common practice in all the world’s major religious and charitable traditions. In Islam, Zakat is a sacred obligation of every able Muslim, rooted in the principles of compassion and justice, and one of the five pillars of Islam. It is a powerful form of charity that requires Muslims with accrued wealth to donate a portion of it to those in need – including orphans, individuals in debt, those who are stranded during travel, and those who live in poverty. By honouring the responsibility to serve those who are less fortunate, Muslims demonstrate their devotion and connection to Allah.
Since Zakat is an obligatory form of charity, every Muslim who meets the eligibility criterion must pay Zakat. These donations are then re-distributed to the Muslim community on an annual basis.


The Spirit of Zakat

Zakat is more than a prescribed form of almsgiving. Neither is it a tax. As an act of faith, it is an offer, made in kind, of wealth that an individual holds on behalf of the poor, vulnerable, and deserving. It is not a favour from the giver, rather the recognition of the right of the recipients as the real designated owners of this wealth. The Qur’an says “In their wealth and properties is the right of the poor, the beggar and he who is in deprivation.” (51:19).

Through Zakat, one acknowledges that their wealth and provisions are a double blessing, for them to enjoy and use, but also for them to support disadvantaged people. It teaches those who are more fortunate the power of self-restraint and offers us a means to better live with moral integrity and justice. Helping others in need therefore is not viewed as a charity, it becomes a duty.

The distribution of Zakat from those who have extra to those in need connects our economic well-being to a spiritual one, and our personal livelihood to the social space. Zakat literally means “to purify or cleanse” and is mentioned in numerous verses of the Qur’an. Zakat purifies one’s wealth and reminds us that all worldly possessions belong to Allah alone and must be shared with the needy.

 

Who is Eligible to Receive Zakat

It is essential to determine who is eligible to receive Zakat. This informs the validity of a Zakat donation. Since Zakat is not a form of Sadaqah (voluntary charity), a set criteria is used to determine who is eligible to receive it.
The distribution of Zakat is designated for categories of people identified in the Qur’an:
Alms are meant only for the poor, the needy, those who administer them, those whose hearts need winning over, to free slaves and help those in debt, for God’s cause, and for travellers in need. This is ordained by God; God is all knowing and wise.

From this verse, eight categories of eligible people are clearly specified.

  • The poor
  • The needy
  • Those who administer Zakat
  • Those whose hearts can be won over
  • Those in bondage
  • The indebted
  • Those in Allah’s cause
  • Travellers in need

These eight ordained categories determine the general eligibility on a yearly basis. IDRF can only distribute zakat to these categories of rights holders (directly or through projects), while ensuring individual ownership for recipients.

 

Recipients of Zakat

Around the world, we work with populations and communities to provide emergency humanitarian assistance and support long-term development. In many places, the communities which we work alongside are of a majority Muslim faith.

To be eligible to receive Zakat, the recipient must be poor and/or in need. A poor person is someone whose property, in excess of his basic requirements, does not meet the level of the nisab threshold.
The recipient must not belong to your immediate family; your spouse, children, parents and grandparents cannot receive your Zakat. Other relatives, however, can receive your zakat.
We also receive Sadaqah and other forms of Muslim charitable giving as part of our ongoing activities.
Zakat payments are restricted to responding to emergency situations to save lives in Muslim majority communities and supporting specific development projects that are taking place in Muslim majority communities.

How much Zakat does one Owe?

Zakat is different to other forms of Muslim charitable giving such as Sadaqah, which is non-obligatory and voluntary. However, since Zakat is required of every mature and earning Muslim, regardless of gender, there is a minimum threshold and certain guidelines that help determine how much zakat is due.

In Canada, Zakat is calculated based on one’s annual income and assets. Based on scholarly consensus and prophetic tradition, the rate of zakat is calculated as 2.5% of a person’s accumulated wealth which exceeds the minimum amount they need for the basics of everyday living, or nisab. Furthermore, the wealth that is eligible for zakat must have been in one’s possession during the previous 12 months (lunar year). 

One can calculate their zakat independently using tools like our zakat calculator.

When is Zakat due?

Zakat can be paid any time during the Islamic lunar year, however the majority of Muslims choose to pay their Zakat in the month of Ramadan. It is advised to pay Zakat as soon as it becomes due because the poor become the rightful owners after the year has passed.

 

What wealth is Zakat eligible?

As essential as it is to determine who is eligible for Zakat, for the giver it is also essential to know what types of wealthon which they may owe zakat.

Zakat is owed on the following items:

  • Cash
  • Business inventory
  • Stocks
  • Properties strictly intended for trading
  • Gold and silver or jewelry possessed as a store of value, excluding jewelry used for regular, personal use.
  • Mutual funds
  • Pensions
  • Agricultural products (Zakat is due for farmers at the time of harvesting and it is either 5% or 10% from the total amount of the crop depending on the method of irrigation)

Zakat is not due on the following items:

  • One’s house or place of residence
  • Vehicles used for personal purposes and needs.
  • One’s clothes, furniture or any personal item.
  • Land, buildings or equipment used within the business operation as fixed assets.
  • Rental properties
  • Livestock

For nuanced and highly specific calculations, IDRF recommends seeking the assistance of local religious scholars and/or accounting professionals. For general calculation, see our zakat calculator.

 

Zakatul Fitr

Giving during Ramadan as an act of faith, Zakat-ul Fitr is a ‘special’ kind of charity because it purifies the fasting person of the shortcomings in his or her observance of fasting during the month.

Zakatul Fitr is sometimes also called Fitrana or Fitrah, related to an Arabic word which means breaking a fast, as is done daily in Ramadan. Zakatul Fitr thus refers to what is to be given when the month of fasting comes to an end. It is to be distributed before the end of Ramadan.

The amount given in Zakatul Fitrah should be enough to cover a single meal for a single individual and must be given on behalf of each member of a family. IDRF follows local market prices on determining the value, which is currently $15 per person and can be donated to IDRF as part of other religious giving.

 

Zakat-ul-Fitr Collection

Since the primary collection method for zakat-ul-fitr is through mosques, IDRF asks local mosques to pledge anticipated zakat-ul-fitr collections in advance of Ramadan. IDRF then allocates and spends based on the amount of anticipated collection during the month of Ramadan. Where a mosque collects fewer funds than anticipated, IDRF will make up the difference through sadaqa or other zakat funds. If a mosque collects more funds than estimated, then IDRF works to ensure proper distribution of the wealth to the poor as quickly as possible, within the three days of Eid following Ramadan.

Scope

We save lives through our humanitarian work and work at the grassroots level to promote development in some of the world’s poorest communities. We support people to come out of poverty by working on access to education, healthcare, food, improving livelihoods, providing clean water and upholding women’s and children’s rights.

By giving Zakat to IDRF, the giver can be sure the amount will help those suffering from poverty or hardship. We spend all Zakat payments per the procedures detailed in the sections below.

Specifically, IDRF restricts the the allocation of zakat payments to two areas of our work:

  1. Responding to emergency situations to save lives in Muslim majority countries or areas.
  2. Supporting development projects that are taking place in Muslim majority countries and focused on communities seeking to lift themselves out of poverty.

 The destination countries, projects and communities that will be receiving support from Zakat payments will be listed on IDRF’s Zakat website and under continuous review by our team  and  Zakat  Advisory  committee.


Administration of Zakat Payments

In accordance with the requirements of Zakat, IDRF administers payments to various projects as follows: 

  • Donations are collected into a specific, restricted Zakat fund within IDRF.
  • Funds are directed to the identified list of Muslim-majority countries where IDRF implements humanitarian projects, focused on wherever the need is greatest at that moment in time.
  • Zakat donations collected are spent within the annual cycle of a lunar year requirement.


Collecting Zakat

IDRF’s channels of collecting and spending Zakat, whether in person or online, are clearly defined and contain specific and relevant information to help ensure donor clarity and transparency over their Zakat donation and where and to whom it will be spent. 

IDRF staff who engage directly with Zakat collection in the community are educated on the basic principles of zakat, and on providing specific and relevant information to Zakat-eligible projects and options for the donor.

While IDRF operates under the working experience that the majority of Zakat funds are donated and received in Ramadan, IDRF collects Zakat all year round, although the frequency of collection can be split through the year according to the wishes and Zakat schedule of the donor.


How are Zakat funds utilized?

IDRF uses Zakat received to support individuals and specific groups who qualify as recipients and who, by virtue of receiving Zakat, demonstrate an immediate or eventual alleviation from hardship and/or poverty.

Zakat funds are restricted to responding to emergency situations to save lives in Muslim majority communities and supporting specific development projects that are taking place in Muslim majority communities. 

Zakat funds may be used to support tangible goods and practical support, as well as more intangible benefits such as education, training and health promotion. This may include the direct costs of purchasing goods and services, as well as the necessary in-country logistics, transport and staff required to provide the services and help needed.

In utilizing and distributing Zakat funds, IDRF notifies potential recipients that what they are receiving is in part or fully being provided through Zakat.


Other Considerations

IDRF uses Zakat funds to provide direct help through our many, varied project interventions. However, this could be in whole or part payment of the project activities. Other funds supporting the project could come from a variety of other sources, including sadaqah donations.

Similarly, IDRF works, helps, and serves many specific diverse communities, even within Muslim majority countries. IDRF does not discriminate against the support we provide based on religion. As a non-religious institution, the scope of our charitable work is determined by humanitarian principles, which include all those in need, as respected and practiced by all respected humanitarian organizations. 

For example, IDRF is working in a Muslim majority community, but also contains a small number of non-Muslims in equal need of help, everyone of similar need will be included. IDRF uses its local assessment and understanding of any recipient community to then determine if or what portion of non-zakat funds may then come from other sources, like sadaqah donations.


Zakat Advisory Committee

Our consultation phase identified the importance for IDRF to establish a small group of individuals to act as voluntary advisors in relation to our Zakat offer. These individuals need to be well versed in Islamic principles and Zakat and be willing to develop an understanding of IDRF and the particular needs, concerns, and context of the Canadian Muslim community in respect of Zakat. They will offer their knowledge, expertise and advice to inform IDRF ’s understanding of Zakat and ensure it evolves in a robust and appropriate manner.

The members of the Zakat Advisory Panel will:

  • Provide ongoing review of our policy & implementation procedures and advise accordingly on Zakat compliance requirements.
  • Advise on how to most effectively communicate to donors and supporters in regards to Zakat implementation.
  • Meet at least once a year to review and assess the progress of Zakat at IDRF.
  • Advise on the eligibility of the specific restricted projects and/or communities and individuals proposed as recipients of Zakat.
  • Be involved in raising IDRF ’s profile in this space for engagement and fundraising purposes. This may include opening up networks if appropriate, speaking at IDRF or Zakat events, promoting our policy and work online and meeting stakeholders interested in this area.
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