Millions of Muslims around the world choose this month – Ramadan, the Islamic month of fasting – to pay zakat, the annual paying out of a prescribed percentage of one’s wealth to the needy. Muslims believe that through the paying of one’s zakat God purifies and blesses one’s wealth. Moreover, of the many benefits of zakat, poverty alleviation is among the foremost.
With no clear estimate of total zakat amounts worldwide, some say that with over 1.6 billion Muslims, of whom millions are obliged to pay zakat, the size of payable zakat could run into the hundreds of billions of dollars. Yet Muslims lead many indicators for global poverty.
Why is this the case? Some lay blame on corruption. Others point to poor distribution. Ethica Institute of Islamic Finance, a Dubai-based certification institute, says, “If zakat were paid properly, poverty could become a thing of the past for Muslims. But for this to happen, it first has to be calculated correctly. Many Muslims may be underpaying or improperly allocating funds because they are simply unaware of how zakat gets done.”
Ethica put together a seminar "How To Calculate Zakat" to discuss many of these important details, including how to pay zakat, to whom zakat is paid, which assets zakat is paid on, and similar issues. With much emphasis put on development and economic reform, it may be that simply paying zakat correctly would solve many of the world’s poverty problems.
