Generosity is good, Zakat is bad
by Henrik Ræder Clausen
Zakat, one of the “Five Pillars of Islam”, is a religious tax introduced for the benefit of the poor and needy, as well as for the advancement of Islam itself, and is often quoted as one of the best elements of Islam. This essay sets out to examine the gap between the stated intention and reality, and why the fundamental structure of Zakat works against the stated intention of reducing ‘inequality’.
Historically, Zakat being one of the five ‘pillars’ of Islam, is the holy tax introduced by Muhammad. A bit of background information seems in order.
It is not without precedent, though, as Muhammad’s fifth generation ancestor Qusayy had formalized the religious rituals at the Kaa’ba, including a tax (rifada) on wealthy pilgrims that would enable the poorer pilgrims to afford the costs of the pilgrimage. Depending on one’s view of pre-Islamic paganism, one could consider this tax ‘holy’, or just a tool of the Meccan traders to increase the income from the wealthier pilgrims. As Islam has now replaced paganism, this is mainly of academic interest. It is worth noting, though, that the scope of this tax was tied to the Kaa’ba and the Hajj/Umra pilgrimages.
Zakat isn’t, and that’s important. Zakat is payable to Islamic rulers anywhere, who will then dispose of the resources. Hajj and Umra remain important in Islam as they were in paganism, of course.
The purpose of Zakat
The intended purposes of Zakat are, as listed by SunniPath:
1) “The foremost and primary purpose is to distribute the wealth of the community among the poor…”
The emphasis on the community is an Islamic classic, and it makes sense. For if individuals with talent for trade and business were to have too much economic power, they, not the Islamic leaders, would direct the community. Unfortunately (as will be elaborated below), this is not good for productivity in society. The Soviet Union also emphasized the community over the individual, leading to extensive irresponsibility and neglect. And, as the Soviet Union used to be, Islamic countries have not become affluent by this approach.
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2) “Removing the love of wealth from one’s heart, a spiritual disease that could be detrimental to one’s Imam. Thus, it is a form of Tazkiya (self-purification).”
Now, it might seem weird that any religion would request to remove any kind of love from one’s heart, but this indeed is the case here. It’s a bit contradictory, for what is actually the problem of loving wealth? It is clearly assumed that there is some problem, but the nature of the problem is unclear. Is it wrong to have a nice house, good clothes, healthy food and money to spare with friends and family?
But we do get a clue with the reference to Iman (faith). People who have their material needs fulfilled, and are confident that this will be the case later as well, are less likely to bother with religion. Material wealth does diminish religiousness, as we can see in the West, and that in turn diminishes the power base of religious leaders.
3) “Giving in the path of Allah.”
This is obviously meant to be holy. Giving for the advancement of Islamic faith is considered a good thing in itself, no questions asked, and is a prime purpose of Zakat. Without resources, spreading Islam is very difficult. Muhammad himself spent lavishly on booty and slave trade to finance his wars, and there is no reason for Islamic fundamentalists to deviate from this behavior.
4) “Prevention of monopolies in society.”
The last of these seems a bit off. Monopolies, as in dominant corporations, can exploit their position unreasonably. Also, they tend to become non-religious holders of power, which is obviously bad for the religious leaders’ claim to power. This is just speculative, of course. The point is not elaborated.
Further, it is explained that:
These are just some of the basic reasons behind the obligation of Zakat, but one must remember that Zakat is also a form of worship (ibadah) of Allah Almighty, and an obligation set by Him. As such, one must accept this obligation and the rulings connected to it, even if one is not able to understand the wisdom behind it, for the meaning of ‘worship’ is to submit to the will and command of Allah Most High.
Interestingly, neither the remaining ‘basic’ reasons or any advanced reasons are explained. Instead, we are given a clear directive to pay the Zakat even if the above explanations are found lacking.
Therefore, it is necessary that we accept the various acts of worship (ibadah) as they are and not insist on understanding the wisdom behind it, for Ibadah is something that is carried out in a submissive form without questioning its rationality.
Clear enough. Zakat is a religious duty, not something to be challenged, and giving away a part of ones property constitutes worship. This is submission; rationality on these matters is explicitly discouraged.
As mentioned. Zakat was introduced by Muhammad during his rule in Medina. Along with the early Muslims, he had only a limited selection of incomes. Islamic sources make no mention of Muhammad participating in the rich farming and trading life of Medina, nor did he take up his earlier work as a caravan guide. Additionally, he had heavy expenses purchasing weapons and horses, financing his allies, as well as supporting his many wives and concubines. We find in the Islamic sources that he had mainly three sources of financing:
- Loans from the wealthy Jewish community. Interestingly, Abu Bakr (the future 1st caliph) promised prospective lenders a doubling of their investment, but no mention is ever made of Muhammad paying back his loans. One would expect the Islamic scripture to show concrete examples of honesty by the founder of Islam, and the absence of this detail is puzzling. One can assume that this source of funding dried up quite fast.
- Raiding caravans and (mainly Jewish) settlements. This practice started soon after Muhammad moved to Medina, where he would send the Muslims to raid caravans, and later participate himself. It was assumed that if the Muslims successfully plundered a caravan, it was a gift from Allah. The owners of the caravans, however, had a different opinion of this, as did the native citizens of Medina, and the tribe of Quraysh in Mecca. Muhammad and the Muslims initially hesitated taking the booty, as doing so was not only considered immoral, but also could seriously damage their reputation with the Jewish and Arab tribes of Medina and elsewhere. This dilemma was resolved through the revelation of Sura 8, “The Spoils of War”, where booty was legalized, provided Muhammad was awarded a fifth of the spoils, a share named ‘Khums’. The 20% share for holy persons serves as inspiration for certain Zakat rates today, particular those levied on natural resources and wealth increase.
- Zakat, the holy tax imposed on all Muslims. Enforcing this tax was, then as today, a problem. No tax is truly mandatory without an effective enforcement, and — as can be seen in the latest Suras of the Quran and the many commands to pay the Zakat — appears to have been a perpetual problem within the original Islamic community. In some cases, the income was so low that it drove the Muslims to plunder additional settlements. This had several benefits. First and foremost, it brought immediate financial relief to the Muslims.
Also, as Muhammad made it clear that only non-Muslims would be plundered, it encouraged more people to convert to Islam in order to protect their lives and property, which would increase the taxable community as well. This introduced a dilemma, however, for these freshly converted Muslims were not eager to fight, and soon earned the title of ‘hypocrites’ for their preference of family and well-tilled lands over sacrificing life and property for Allah’s cause.
Zakat, being mentioned more frequently in the Quran than any other of the five pillars, developed into an intricate system according to the later Islamic tradition, and the various Islamic schools have different interpretations of the details, including the tax rates on various items, the range of items to be taxed, and not least how to handle Zakat on items not invented at the time of Muhammad. Muhammad did not predict future discoveries and inventions, and thus did not prescribe Zakat on items such as TVs, VCRs, etc, which leaves a significant openness of interpretation to Islamic scholars of later days.
Foundation of Zakat
“The basic and essential objective of Zakat is purification of the soul. It cures the lust for wealth.” (Islamic Voice)
“And away from it (Hell) shall be kept the most pious one, who gives away his wealth in order to purify himself” XCIL: 17-18
This is clear enough. Those who pay Zakat avoid Hell, and by implication those who refuse will presumably be cast into the fire.
The Quranic instruction to Muhammad and his followers to take Zakat runs like this:
“Take alms of their wealth, wherewith you may cleanse and purify them.” (9:103)
“The root of all evil is the love of worldly things.” (Mishkat)
Summing up, Islamic Voice concludes: “These verses make the real importance of Zakat quite clear: it aims to emancipate the heart from temporal preoccupations and purifies the soul.”
It remains a mystery, however, that this principle seems to apply to ordinary Muslims only. if wealth is truly such a dangerous things, one would expect Islamic leaders to go in front renouncing it, to set a good example for the Muslims at large. Instead, Islamic leaders, by the example of Muhammad, urges the Ummah to transfer the surplus wealth to these leaders. One can only hope that they are immune from selfish motivations and acts of evil.
An interesting aside is the question of Zakat being voluntary or mandatory. It is stated to be a religious obligation on all Muslims, but that contradicts an important stated principle of Zakat:
“It must, however, be remembered that the aim of Zakat is achieved only when its payment is motivated by sincere desire and practical effort.” (Islamic Voice)
If one follows this principle, payment with insincere motivation, such as a mandatory tax, is void of meaning. Islamic scholars may handle this paradox with surprising arguments, such as:
The purification of the soul to be achieved by paying Zakat is not detailed much, it remains an assumption that wealth and worldly goods are ‘evil’. Usually one pays money in exchange for goods or services, or gives money out of generosity. In the case of Zakat, as has periodically been the case in the Catholic church, the mere giving to ‘holy’ purposes is assumed to be beneficial, period. It remains a fundamental feature of Islam not to be disputed.
Actually, Zakat does not need to have a central, enforcing institution. Being a religious duty, Zakat is, in several countries, voluntary. The giver of Zakat must adhere to the holy principles of who will benefit, but retains a significant say in who gets to receive it. Employers may for instance use Zakat to reward needy employees for good efforts, or prefer giving to family and relatives, even though others may be worse off than the relatives.
Beneficiaries of Zakat
The eligible receivers of Zakat are explained in Sura 9:60: “The alms are only for the poor and the needy, and for those who collect them, and those whose hearts are to be reconciled, and to free captives and the debtors, and for the cause of Allah and for the wayfarer.”
This is a curious mix. Let us look at them bit by bit:
- “The poor and the needy” is the most quoted reason to pay Zakat, and this redistribution is intended to reduce poverty and inequality. Now, Islamic societies tend to suffer from widespread poverty and in many cases extreme inequality too, so the need is certainly there.
- “Those who collect them” is obviously a dangerous point. Yes, it motivates more effective gathering, but also opens a door for corruption and inefficiency. Cases have been reported where the share to those who collect Zakat exceeds the share going to the ‘poor and needy’. This is not so good.
- “Those whose hearts are to be reconciled”. Good points. It means to use the Zakat money as a tool for creating loyalty, for those who have recently converted to Islam or those who might be about to do so. Giving gifts to purchase loyalty may seem strange to a Western mind, but was a perfectly fine tradition in the time of Muhammad, whose biography includes a chapter on the issue. Calling it ‘corruption’ certainly would not be very friendly.
- Freeing slaves or freeing captives is hardly relevant at this point in time. While slavery has been practiced well into the 20th century in Islamic countries, it is largely abolished by now. Demanding ransom for prisoners of war was common practice among the early Muslims, but is abandoned by modern conventions and is generally considered a criminal act, not a justified act of war.
- “For the cause of Allah”, however, is a minefield. Fighting in the cause of Allah is the main activity of Muhammad and the Muslims in the later Medina days, and permitting the use of Zakat money for this can be interpreted as a justification of financing war by means of charitable resources. In practice Zakat also goes to non-violent ways of education in Islam, and in several cases Islamic organizations, not the poor directly, benefit most from Zakat.
- Finally, helping wayfarers. This might seem odd (why not ‘help orphans’ or something?), but just might stem from the original pilgrimage tax related to Hajj and Umra in pagan times, and forms a kind of ‘travel insurance’ to make it clear that travelers getting in trouble while doing pilgrimage would be given a hand to get back home. This item is not of practical consequence today.
The real world results of Zakat can be hard to assess. Timur Kuran in his book Islam and Mammon quotes an embarrassing array of faults and misuses of the Zakat system, with focus on the mandatory systems in Pakistan and Malaysia. The list of faults and misgivings about the system is much too long to repeat here; suffice it to state that the creativity in misusing the Zakat system is amazing, and adapts easily to many different aspects of life and business.
One persistent problem, though, is enforcement. Rich landowners are much more likely to have either creative means, well paid connections or simply enough brute force to avoid paying any significant amount to the Zakat collectors. The poorer landowners are less efficient avoiders, and this seriously damages the stated intent of distributing wealth from the rich to the poor.
For an example of how Zakat is distributed, Kuran goes back to 1970 and quotes one Malaysian state capital, Alor Setar, for the following breakdown:
- 53% went towards teaching Islam.
- 22% went to the Zakat collectors.
- 15% was spent to the benefit of the poor.
- 6% went towards pilgrimage support
- 2% went to converts
Other figures quoted by Kuran estimates the share of Zakat going to the poor marginally lower than this, with the same overall tendency:
- The lion’s share of Zakat goes towards teaching of Islam.
- Collectors are second on the list, significantly over:
- The poor, who receive only 10-15% of the Zakat collected, and
- Other religious purposes.
The conclusion of Timur Kuran is clear:
… Zakat has not made a major dent in Muslim poverty and inequality. While it has obviously redistributed some income and wealth, it has not conferred substantial benefits on the poor as a group.
A related conclusion is tempting: Zakat is, in practice, used much more for the benefit of Islam than for the benefit of the poor. Even the administrators of the system have greater benefit than the poor, who then become little but an excuse for exploiting productive people for the benefit of the non-productive.
The use of Zakat towards those ‘whose hearts are to be reconciled’ points to an interesting feature, that of purchasing loyalty by means of charity, implicitly or outspokenly. The receiver of charity will feel gratitude towards the giver, and this has consequences.
Imagine that charity, rather than being institutionalized, by way of tradition was done by those who had collected personal wealth. One might have a rich uncle helping in an hour of need, and this creates a thankfulness and an openness towards the giver. Who in turn may take the opportunity to teach a lesson:
“You ask, dear nephew, how I became rich? Well, while luck is good, there is nothing like working well and fulfilling the needs of your customers. I had notice that the businessmen of my town had trouble getting mail and errands across town quickly and reliably, and offered them my services. The complaints were both of slowness, but in particular of too many broken goods on the way, so I took extra care to look after the goods as if they were my own. That earned me a reputation for doing a good job and making their lives easier, so I was able to charge higher prices than my competitors, and after a while I was able to buy more cars and hire good people to help me expand my business. This is how I came to run not exactly the biggest but at least the best shipping company in town. Yes, it took a lot of work. Finding reliable drivers is hard, and bad ones can easily spoil my reputation.”
“Wow. And now you are so rich that you can give money away to your family. That is really nice. But I cannot depend on your kindness without giving you anything back. Is there something I might be able to help you with?”
“Well, actually there might be. We have a problem in our quality department, where we just cannot find people reliable enough for the job. Since you are my family, I trust you not to let me down like strangers do. But you would have to do half of year of driving first to get a feel for the business.”
Generosity is good, for it build relations, confidence and openness on the side of the receiving part. And listening in on some well-intentioned advice on how to become self-reliant and diminish the risk of having to ask for help in the future.
Now, building similar relations to religious institutions in turn increases the confidence in these institutions, and openness to the ideas they stand for. However, these ideas tend to focus on worship, not on earning money and becoming self-supporting. Even the question “Can you drive a truck?” might have unusual implications if asked by an Islamist organization.
Which in turns points to a different problem of Zakat. While bringing immediate relief for the needy, it does not by itself eradicate poverty, for the mere giving of alms does not teach how to become economically self-reliant. On the contrary, unconditional giving to the poor can be seen as a kind of reward for poverty more than a tool for getting out of the situation. Giving alms, while charitable, in most cases apart from emergencies, is the wrong cure for the problem of poverty. If Zakat really was a workable remedy against poverty, the Islamic countries should have less poverty than others. The opposite is very obviously the case.
Charity in Palestine
While not directly related to Zakat as such, the case of Hamas as a charity is instructive:
Hamas was for a long time the primary distributor of Western aid in the Palestinian areas, as the PA was considered too corrupt and inefficient to be entrusted the task. While this got the aid out to the needy, it also created a loyalty to Hamas which helped them significantly in the 2006 general elections. The elections, which were widely seen as a protest vote against corruption rather than an endorsement of terrorism, gave Hamas a democratic legitimacy it had not enjoyed before, which in turn helped them seize power in the Gaza strip and abolish democracy there. Unfortunately, the tables have now turned, and Hamas is now actively sabotaging deliveries to the civilian population or simply stealing their supplies. The population of Gaza, in particular, has effectively ended up as hostages to the situation. Their dependency on aid seems endless, but Hamas seems willing to even deepen the crisis of it serves their purposes.
Zakat and funding of terrorism
A compounding problem is that Zakat is administered by religious organizations, where the ‘holy’ status of these frequently frees them of suspicion and scrutiny. Devout Muslims, in particular, may tend to reject any suggested scrutiny of their charitable foundations. This has led these organizations to be important money-laundering channels for terrorists, as has been documented quite extensively, and even led several donors to attempt to force the books in question off the market, such as Alms for Jihad by Burr and Collins.
The relevant response to this challenge, of course, is to double the scrutiny of ‘holy’ charities, not least those of an Islamic leaning. While it may cause some dissatisfaction with Islamic leaders, the results so far have exposed a sufficient number of ‘rotten apples’ to justify a heightened level of suspicion against Islamic relief organizations. We all wish to stop the terrorists, and one of the best way to do so is to cut their sources of funding and resources.
Now, for all its risks and flaws, Zakat isn’t going to just disappear. Paying Zakat is one of the most important elements of a major world religion, and one doesn’t just ‘change’ this. But there are ways to ensure that the system does not breed corruption and terrorism, and first among those is transparency. It should be open to anyone, not just the donors, where the money ends up, how much is used for administration, and what part is spent on religious instruction instead of helping the poor. It is natural to have compassion for those in difficult circumstances, and likewise natural to trust organizations with charitable purposes. On the other hand, abuse of charitable resources for selfish or even criminal purposes is a betrayal of trust at both the donor and the poor, and needs to be exposed and punished, or charity itself may suffer a bad reputation.
Related, protection for those who expose misuse of the resources is important, or wealthy donors may be able to intimidate journalists and authors into silence. A recent case is that of Dr. Rachel Ehrenfeld, whose book Funding Evil caused a certain amount of offense among rich donors, and a court case in Great Britain against the author. Since she is American, one should consider that to be immaterial, but it turned out that a legal adjustment was needed to ensure her protection. The “Libel Tourism Protection Act” (also known as “Rachel’s law”) renders non-US libel verdicts unenforceable in the US and protects authors and publishers alike.
Being unforgiving is relevant. Religion is supposed to be an uplifting force for humanity, and use of religion for criminal purposes, not least terrorism, gives the religion in question, as well as all religion, a bad name. Abetting, endorsing or tacitly approving terrorism should be immediate and irrecoverable ground for revoking any religious status and privileges awarded to an organization.
Islamic leaders consider Zakat to be religious. The rest of us don’t. Freedom of religion lets Islamic societies use Zakat for strengthening their communities, inefficiencies and pitfalls being irrelevant to the religious status of the system. But the actual use of Zakat deserves no protection on ground of it being considered religious by some.