Is there zakah due on cooperative associations among individuals?
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Question:
We are a group that has agreed to establish a fund in which we collect a monthly contribution—a monthly sum from each of us. We gather this money and engage in a profit-sharing partnership (mudarabah) with it. We are preparing it for a day, may Allah prevent it, when one of the accidents that occur, such as being run over, happens, and we pay the blood money (diyah) for the relative from this money.
So my question is: Is there zakah due on this money, given that it is set aside for that purpose?
Answer:
If it is for the public benefit, then no, there is no zakah in it. If you collect these funds, with each person donating a portion for the sake of public interests—such as charity, or covering the fines that may fall on some of you—and the intention is not to profit from it, but rather to benefit you and your relatives, without the need to take profits from it, but rather your intention is the public benefit of your group; then this has exited ownership and become charity. If one of you or an outsider manages it using a profit-sharing partnership (mudarabah)—buying and selling in it so that it grows—there is no harm. It remains entirely for the benefit, with no one having a right to it, but rather it is for the benefit, and there is no zakah in it; because it is prepared for charity for the poor, the needy, and the victim of a disaster through blood money (diyah) or otherwise. This is if your intention is this, then there is no zakah in it.
However, if the intention is for it to grow for you, and for you to divide it up and take its profits; then this is your money, and zakah is due on it. But as long as it remains as in the apparent question: your intention is the benefit of the poor, the needy, and the one run over, so that you pay his blood money (diyah) and similar benefits from it, then there is no zakah in it; because it is all charity.
We are a group that has agreed to establish a fund in which we collect a monthly contribution—a monthly sum from each of us. We gather this money and engage in a profit-sharing partnership (mudarabah) with it. We are preparing it for a day, may Allah prevent it, when one of the accidents that occur, such as being run over, happens, and we pay the blood money (diyah) for the relative from this money.
So my question is: Is there zakah due on this money, given that it is set aside for that purpose?
Answer:
If it is for the public benefit, then no, there is no zakah in it. If you collect these funds, with each person donating a portion for the sake of public interests—such as charity, or covering the fines that may fall on some of you—and the intention is not to profit from it, but rather to benefit you and your relatives, without the need to take profits from it, but rather your intention is the public benefit of your group; then this has exited ownership and become charity. If one of you or an outsider manages it using a profit-sharing partnership (mudarabah)—buying and selling in it so that it grows—there is no harm. It remains entirely for the benefit, with no one having a right to it, but rather it is for the benefit, and there is no zakah in it; because it is prepared for charity for the poor, the needy, and the victim of a disaster through blood money (diyah) or otherwise. This is if your intention is this, then there is no zakah in it.
However, if the intention is for it to grow for you, and for you to divide it up and take its profits; then this is your money, and zakah is due on it. But as long as it remains as in the apparent question: your intention is the benefit of the poor, the needy, and the one run over, so that you pay his blood money (diyah) and similar benefits from it, then there is no zakah in it; because it is all charity.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.