Every able Muslim is obligated to tackle inequality by giving Zakat. Akhuwat Islamic microfinance can help you do it sustainably.
Zakat is obligatory charity in Islam. It enables the distribution of surplus wealth to the needy. At Akhuwat, we believe Zakat has the power to eradicate world poverty if it were applied on a wide enough scale. The term ‘Zakat’ in Arabic literally means to cleanse. As the third pillar of Islam, Zakat is a form of worship and a way for us to cleanse our wealth.
Paying Zakat is mandatory for all Muslims who have surplus wealth, which they aren’t using for their own basic needs. These surplus savings you have must be above a set minimum amount, called ‘Nisab.’ If it is, and if you’ve held them for a year, then you should be paying Zakat. Zakat is 2.5% of your savings, which the poor and needy have a right over.
The value of Nisab is determined through today’s value of gold and silver.
87.48 grams (3oz) is Nisab by the gold standard
612.36 grams (21oz) is Nisab by the silver standard
Zakat isn’t payable on personal assets like the home you live in or the car you drive. Neither is it payable on tools of trade, which allow you to earn a living. Assets that Zakat is payable on include:
According to the Islamic rulings, there are eight types of people who we can give our Zakat to. These are:
Akhuwat turns your Zakat into interest-free micro-loans for widows and needy families. Our families use the loans to gain a sustainable livelihood or boost the one they already have. This lifts them out of poverty through their own hard work. Akhuwat’s loans are strictly interest-free, so our borrowers only pay back what they’ve borrowed. No one makes a profit off their hard work, but them.
Next year, the widows and families who received your Zakat as a loan, won’t be reliant on charity anymore. The loans they pay back will help new families to break the poverty cycle. The Zakat you gave will keep on supporting the needy, over and over again.
Most people are daunted by the process of calculating Zakat, but it’s actually quite straightforward. It’s even more straightforward with our Zakat Calculator. But if you’d rather do it yourself, here’s a breakdown of how:
First, you need to know the accurate price of gold/silver today to work out the monetary value of Nisab. So for example…
So if the Nisab by gold standard is 87.48; and if the price of gold was AU$ 30 per gram; then you could work out the value of Nisab as: 30 x 87.48 = 2,624.40.
That means that if you have AU$ 2,624.40 or more in assets/savings you are eligible to pay Zakat. The amount you’ll have to pay is 2.5% of your total savings (after a year’s worth of living expenses, and provided you’ve had that amount for a full year.)
As per these prices, the Zakat you’d have to pay would be AU$ 65.61.
Please note that the calculation above is just an example of how to work out your Zakat, and you shouldn’t take it as an up-to-date representation current gold prices. If you’re still unsure about how to calculate your Zakat or are worried you might get it wrong, please use our Zakat Calculator for free.
