Are Charities Permitted to Use Donations for Administrative Purposes?
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Are Charities Permitted to Use Donations for Administrative Purposes?

Questioner

Joseph

Reply Date

Mar 04, 2019

Question

We are working in a charity organization and we run different projects from the money we collect from people. Can we use part of this money for administrative purposes in the charity organization?

Mufti

Answer


Can Charity Organizations Use the Money for Administrative Purposes?

In the Name of Allah, Most Gracious, Most Merciful. 

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.


In this fatwa:

1- If this money is classified as Zakah, it must be distributed only to people and projects that are Zakah-eligible.

2- If this money is classified as charity, it may be used administrative purposes within reasonable limits. 


Answering your question, Sheikh Mustafa Umar, President of California Islamic University, states:

Firstly, may Allah reward you for the great line of work you are involved in.

Regarding the potential to use charity money for administrative purposes, it must first be determined whether or not this money is classified as Zakah or not.

Zakah is a special type of charity that is an obligation on Muslims who can afford to pay it. For example, if someone has saved $10,000 in their bank account, they must pay 2.5% of that [$250] after one year as Zakah.

Since this money is classified as Zakah, it must be distributed only to people and projects that are Zakah-eligible. This Zakah money usually cannot be used for administrative purposes such as advertising your organization, paying honorariums for speakers, paying for large banquets to encourage people to donate, etc. [there are some exceptions which would qualify].

On the other hand, if someone voluntarily gives money as charity to your organization, then this is not Zakah. They will be greatly rewarded for their charity and they may give any amount or any percentage.

Only Zakah has a fixed rate and is an obligation. This donation may be used in any manner that qualifies as ‘charity’. It is completely understandable that a charity organization has administrative costs and this money may be used by them for that purpose, within reasonable limits.

Lastly, it is mentioned in the Quran that some of the money collected as Zakah may also be used to pay the workers who collect Zakah. However, Muslim scholars have stipulated very strict conditions regarding what type of people fall into this category.

The main condition they have mentioned is that this must only be done under a true Islamic state under a legitimate Caliph. The reason for this restriction is to prevent abuse. Anyone could claim they are collecting and distributing Zakah and then pay themselves through that money which was intended for the poor.

Therefore, most, if not all, charity organizations today are excluded from being able to use Zakah funds for this.

May Allah bless you for the work you do and help you to acquire enough ‘general donations’ to fund your administrative costs.

Almighty Allah knows best.




About Sheikh Mustafa Umar

Sheikh Mustafa Umar is the President of California Islamic University.

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