The ruling on money associations and the zakah due on them after a year has passed since their establishment
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His Eminence the Shaykh: I joined a group in a money association, and we are approximately thirty people. Each of us pays one thousand riyals per month,Then they draw lots, meaning: so that each person receives the funds when his turn comes, whether in the first, second, or third month, and so on. My turn in this association is in the coming Ramadan. We have now been in it for five months, and my share is twenty-one thousand riyals, and I have a debt of twenty thousand riyals on it. So the question is: What is your opinion of this association? Is there zakah due on the share of the person who receives the thirteenth turn after the year? And is there zakah due on this amount for me?
As for the association, it is permissible and there is nothing wrong with it, because it falls under the category of cooperation and kindness to one's brothers. It is a pure loan, and it does not involve taking a benefit, as some people imagine. Therefore, I pay one thousand riyals and only one thousand riyals come back to me, and I do not benefit. The benefit that returned to me, I did the same for others, because I lent and I lent.
As for zakah, it is obligatory for a person to pay zakah on his wealth, even if he is in debt. So when the time for his zakah comes, whether in Ramadan or otherwise, you should calculate what you have of debts owed to you by people and pay zakah on it. However, if you wish, you may pay it out with your wealth, or if you wish, you may record it so that when you collect the debt, you pay it out.
As for the association, it is permissible and there is nothing wrong with it, because it falls under the category of cooperation and kindness to one's brothers. It is a pure loan, and it does not involve taking a benefit, as some people imagine. Therefore, I pay one thousand riyals and only one thousand riyals come back to me, and I do not benefit. The benefit that returned to me, I did the same for others, because I lent and I lent.
As for zakah, it is obligatory for a person to pay zakah on his wealth, even if he is in debt. So when the time for his zakah comes, whether in Ramadan or otherwise, you should calculate what you have of debts owed to you by people and pay zakah on it. However, if you wish, you may pay it out with your wealth, or if you wish, you may record it so that when you collect the debt, you pay it out.