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[Crosspost] Effective Zakat: Why direct cash transfers might be the best way to give this year
3 min readApr 17, 2023
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[This is a crosspost from the Muslim Impact Lab substack. Subscribe to keep up-to-date with our future articles.]
Every year, Muslims spend an estimated $550 - $600 billion in zakat donations, according to the UN and Islamic Development Bank. But how much do we consider how we are giving zakat? We think that direct cash transfers, such as GiveDirectly's Zakat Fund for families in Yemen, might be a more beneficial means of fulfilling your zakat obligations.
Muslims often give a significant amount of their zakat to large, international non-profit organisations. These organisations convert some of the cash donation to in-kind goods such as food, or to fund projects such as sanitation, healthcare, and education programmes. They also use some of the zakat donation for their administrational fees.
By contrast, with direct cash transfers such as GiveDirectly's Zakat Fund, or the similar 100% Zakat programme run by Penny Appeal, all of your donation is given to recipients as cash. Administration fees are covered with money from other sources, not your zakat donation. It is then up to the recipients to decide how to spend the money they have received.
There are several advantages to direct cash transfer programmes. Firstly, paying zakat on your wealth via cash transfer is recognised by most Islamic scholars as an acceptable means of donating, whereas paying people in poverty via in-kind items such as food without a specific reason to do so is the subject of some scholarly disagreement.
For example, Dr Shahrul Hussain, a scholar of Islamic jurisprudence and graduate of the University of Al-Azhar in Cairo, argues that charities should refrain from unnecessarily converting donations into in-kind items or to fund programmes, as "zakat-money belongs to the recipients to spend it as they see fit". Hussain argues charities do not have the right to determine how to spend zakat; from an Islamic perspective, the money belongs to the recipients, and so should be given to them as cash, so that they can decide how best to spend it for themselves.
Cash transfers of this kind can often have a much greater positive impact than interventions such as food distribution, sanitation, or education programmes. Many systematic studies have found that cash transfers to those in poverty often have a significantly greater positive impact on their economic situation, as well as on their health, nutrition, and education. Independent charity evaluator GiveWell concluded that “GiveDirectly is one of the strongest programs that we’ve found in years of research”.
Enock Wangila, an expert from the humanitarian NGO Mercy Corps, has said that "there is overwhelming evidence that shows that unconditional cash transfers are the best mode of providing assistance to the most vulnerable, because they are best placed to understand the needs that they’re experiencing and meet that need.”
By giving your zakat through a direct cash transfer, you can empower families to choose how to spend it. GiveDirectly's Zakat Fund benefits families in Yemen, where over 75% of the country lives in extreme poverty. The war in Yemen, which began in 2014, has been described as "the world's largest humanitarian crisis." It's clear that families in Yemen are often in a better place to decide how to spend donations than charities; Sky News found that families were selling food donations they had received from NGOs so that they could purchase medicine, which they needed more urgently. Why not let Yemenis judge for themselves what they need most?
So this year, we encourage you to maximize the impact of your zakat in one of the world's most desperate situations by ensuring that your zakat is given in cash. With GiveDirectly’s Zakat Fund, all your donation ends up in the hands of the recipients, who can then decide how to spend it. We think this could be one of the most rewarding and effective forms of fulfilling the religious duty of zakat.
الله أعلم (Allah knows best)
Donors from the UK and Netherlands can make tax-deductible donations to the Zakat Fund via this Giving What we Can page. Donors from other countries can donate via GiveDirectly’s website.
About the author: Nayaaz Hashim is a student of Arabic and Classics at the University of Oxford and a researcher at the Muslim Impact Lab.
Is there a particularly effective time to talk about this to my muslim friends? Like is there a particual date within Ramadan?
Hey Nathan!
The annual Zakat can be given at any during the year, but since most Muslims give it during Ramadan, that would be the best month.
As for a specific date within Ramadan, that would be harder to point to, so the earlier the better.
We only have one or two days left of Ramadan this year though!
Yeah I mentioned to some friends and they said they were tossing up between GD and UNHCR