Disbursing PKR 4.2 Million of Zakat
A university Islamic society collects PKR 4,200,000 in zakat during Ramadan and must disburse it within the year. Donors have been told each rupee must be defensible. Five requests are on the table. (a) A final-year student whose father owns a business but who has taken an interest-bearing bank loan of PKR 900,000 for fees. (b) A madrasa seeking PKR 1,500,000 towards a new boundary wall. (c) A widow with three children whose monthly income falls below the nisab, asking for PKR 250,000 for the year. (d) Two volunteers who collected and audited the funds for 60 hours and ask for PKR 150,000 as compensation for lost wages. (e) A family with a PKR 600,000 debt owed to a commercial bank. The society has no scholar on its committee, and the treasurer argues that all five qualify because all five involve genuine need. The committee is also unsure whether it may retain 5% of the collection for its own office costs.
1. Decide requests (a) and (b), explaining the principle that separates them rather than simply labelling them.
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Both must be refused from the zakat fund, but for different reasons.
(a) The student's own means are not the test; his father is liable for his maintenance and owns nisab-level wealth, so the student is not among the poor or needy while that support is available. More seriously, the sum is an interest-bearing loan. Using zakat to retire riba effectively funds the riba, and the committee should not do with zakat what the society would not do with its own money. The right channel is a qard hasan or a fee waiver from the society's general fund; if the family's circumstances change and the student genuinely holds no nisab, the case can be reopened on those facts.
(b) A boundary wall is a building. Zakat must pass into the ownership of an eligible living person; it is not a construction budget. The madrasa may receive zakat for its poor students, given directly to them, but not for masonry. The distinction is ownership and eligibility, not the worthiness of the institution.
2. Assess requests (d) and (e), and rule on the treasurer's argument and the 5% retention.
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(d) The volunteers fall under the category of those employed in collecting and administering zakat. Payment from the fund is therefore permissible in principle if the work is real and the sum is a fair wage rather than a gift; 150,000 for 120 combined hours is defensible on that basis. The committee should minute the hours and rate, because the category is narrow and easily abused.
(e) A debt exceeding assets is the classic case of the debtor. Paying the creditor directly is widely accepted, and is often safer than handing cash to a family under pressure. The riba point is a genuine complication: the committee may settle the principal and require the family to address the interest separately, or negotiate a waiver, rather than discharging an interest charge from zakat.
The treasurer's reasoning fails because need is necessary but not sufficient. Four further tests apply: an eligible category, ownership of nisab, no forbidden relationship, and actual transfer of ownership. (a) and (b) fail those tests despite real need.
The 5% retention for office costs is not permissible from zakat as a flat levy. Only actual collection work falls within the administering category, and rent, printing and stationery should come from other funds.
3. Produce a disbursement plan that accounts for the full PKR 4,200,000 and states what the committee must do before releasing funds.
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A defensible allocation: (c) the widow, 250,000 as requested, paid in instalments rather than one lump sum so the year is covered and the family is not exposed to a single large payment; (e) the family in debt, 600,000 towards principal, paid to the bank, with the interest handled separately; (d) the volunteers, 150,000, documented as wages for collection work. That commits 1,000,000 and leaves 3,200,000.
The balance should go to poor students through a screened scholarship: applicants submit a means declaration showing no nisab-level assets and no liable, solvent guardian; awards are paid to the institution against fees rather than in cash where possible. At roughly 80,000 per award, 40 students can be supported. If fewer eligible applicants appear, the surplus carries into the next cycle rather than being spent to hit a target.
Before any release, the committee should record in writing the category relied on for each payment, obtain a ruling from a qualified scholar on the volunteers' wages and the debt settlement, and report the whole distribution to donors, including the two refusals.