Is it permissible for a Zakat institution to take ownership of the Zakat and then distribute it to the eligible recipients?
According to the majority of scholars:
It is not permissible for a Zakat institution to take ownership of the Zakat for itself. The Zakat remains the property of the payer until it is delivered to one of the eight eligible categories mentioned in the verse:
“Zakat expenditures are only for the poor and for the needy and for those employed to collect [zakat]…” [Surah At-Tawbah: 60].
- Zakat must be transferred directly to the rightful recipients (e.g., the poor or needy), or spent on those entitled to it (e.g., Zakat workers, those whose hearts are to be reconciled, etc.)
- The Zakat institution or intermediary acts as an agent on behalf of the payer to deliver Zakat to its rightful beneficiaries.
- The institution cannot take ownership of the Zakat unless it falls under one of the eight categories, such as:
- If employees in the institution are actively collecting and distributing Zakat, they may receive a portion of Zakat as “those employed to collect it”.
- If there are poor or indebted persons within the institution, they may receive Zakat based on their personal eligibility.
Ruling by Fiqh Councils
- The International Islamic Fiqh Academy (OIC), the Council of Senior Scholars, and the Fiqh Council of the Muslim World League have ruled that:
- Zakat institutions do not own the Zakat; they are only entrusted to collect and distribute it according to Shariah rules. They may receive reasonable compensation for qualified staff as part of the “workers on Zakat” category.
Practical Example
- A Zakat institution collects 1 million riyals:
- A designated portion may be allocated as compensation for Zakat workers, if eligible.
- The remainder must be distributed to the rest of the eligible recipients.
- The institution cannot retain the funds for its own projects unless those projects fall under the legitimate Zakat categories.
A Zakat institution may not claim ownership of the Zakat funds. It must distribute them directly to the eligible recipients or spend them in accordance with the legitimate Zakat categories.
Second opinion
Some contemporary scholars and researchers who have permitted, under certain conditions, that a Zakat institution may assume functional (not personal) ownership of Zakat funds in order to distribute them to eligible recipients. This is based on delegation from the ruler (Wali al-Amr) or the necessities of institutional work, and with strict adherence to the eight legitimate categories of Zakat recipients:
1. Dr. Yusuf al-Qaradawi (may Allah have mercy on him)
- In his famous book “Fiqh az-Zakah”, he mentioned that institutions can act as executive bodies to collect and distribute Zakat.
- If they are delegated by the ruler, they may bear responsibility similar to that of the Imam, allowing a form of administrative ownership, though not personal possession of the Zakat funds.
2. Dr. Ali al-Sallus
- In various writings, he emphasized the importance of institutional Zakat management and considered that officially appointed entities may take administrative ownership of Zakat for the purpose of proper distribution.
- He stresses the need for strict Shariah supervision and adherence to eligible categories.
3. Dr. Abd al-Sattar Abu Ghuddah
- A member of the Shariah supervisory boards in many Islamic institutions.
- He permits conditional institutional ownership, particularly when a body is officially delegated by the state or ruler, but strictly within Zakat purposes.
4. Dr. Muhammad Umar Chapra
- A leading researcher in Islamic economics, he advocated for the development of Zakat systems through proper institutional frameworks.
- He supported a kind of regulated functional use of Zakat by institutions, under the condition that recipients remain within the prescribed categories.
5. International Islamic Fiqh Academy (OIC)
- •While it didn’t explicitly permit full ownership, in Resolution No. 3/3, it allowed Zakat institutions to temporarily invest or retain Zakat funds for the benefit of the poor—implying a form of authorized administrative handling, not personal ownership.
Therefore the view that a Zakat institution may functionally and conditionally “own” Zakat funds was supported by:
- Yusuf al-Qaradawi
- Ali al-Sallus
- Abd al-Sattar Abu Ghuddah
- Muhammad Umar Chapra
- Fiqh councils in certain applied contexts
This is not the majority view (jumhur) but is a valid opinion among modern scholars addressing contemporary institutional needs—so long as strict adherence to the eight legitimate categories is maintained and misuse is prevented.
Shaykh Haytham Tamim 29th June 2025