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Zakah and Financial Issues (Live Session)

Prof. Dr. Monzer Kahf
23 October, 2016

Dear Brothers/Sisters,

Thank you very much for joining us in this Live Fatwa session. We would like also to thank our guest, Dr. Monzer Kahf, for answering all the questions directed to him. You will find the answers of your questions below.

Tuesday, Oct. 25, 2016 | 16:00 - 18:00 GMT

Session is over.
DISCLAIMER
Views expressed by hosts/guests on this program (live dialogue, Facebook sessions, etc.) are their own and their appearance on the program does not imply an endorsement of them or any entity they represent.  

I am wondering if it allowed to use usurious bank loans to start business?



Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh

My answer is definitely NO as this is a pure Riba which is prohibited in the Qur’an and the Sunnah.

Wa Allahu A’alam

Is it ok to use Zakah money to build a clinic?



Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh

If the clinic is exclusively for the poor and needy, it is permissible to use Zakah for building it because having a clinic is a necessary vehicle for providing health service including medicines. I say that knowing that there is another opinion that does not allow it. Here we need to expand the argument a little. Services, health, education , transportation, etc. are part of contemporary life. Services are considered properties in our Shari’ah. So you can buy them and sell them and finance them through Islamic banking and finance. Why not give them on the basis of making the poor own them also as he/she owns physical things when you give him food or cloth.

Wa Allahu A’alam

Wa Alhamdu Lillahi Rab al Alamin

Should charities use zakah money for administrative purposes?



Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh

My answer is NO. Charities receive Zakah on agency basis from Zakah payers; they cannot use part of Zakah for its administration. This is as if the Zakah payer himself takes part to himself for giving it to the poor. Allah in the Qur’an ordered us to give the Zakah  and be sure that it reaches its destination. This is why we cannot take any wage for ourselves to make it reach to poor. Only a government has the right to activate the item of worker on Zakah العاملون عليها in distribution Zakah to the deserving categories as mentioned in the Verse 9:60 of the Qur’an.

Wa Allahu A’alam

I am about to reach 65. Can I use special insurance companies to secure a pension?



Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh

At this age, insurance companies do not give you any good pension anyway. Insurance is not permissible, according to majority, because as an exchange contract it contains Gharar (ambiguity) in regards to its final outcome (in this example how many payments of pension you will receive because we do not know when one is going to die).

If Islamic insurance is available, you should go for it. if it is not available and you need really insurance (any kind of insurance) you may go for conventional insurance provided you avoid Riba (interest). Any pension insurance contract  done with any insurance company is based solely on interest in addition to the probability of life expectancy because you pay now an amount of money and they give you back an annual or periodical amount, the difference is interest.

This does not include two kinds of pensions: the obligatory pension that is done in many countries like the social security in America and the employment pension that many companies have for their workers. These both are based on employment.

Wa Allahu A’alam

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Is it permissible to put my money in a western bank?



Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh
If there are Islamic banks that fulfill all the needs of Muslims in the community, many scholars would rightly argue that it becomes not permissible to deposit in a conventional Bank whether in saving or current account regardless of the issue of earning interest (earning interest is not permissible from conventional bank or from any other person). But whenever there are needs that cannot be fulfilled by Islamic banks, either because they do not exist or because their services are bad or insufficient, it is permissible to deposit in other banks provided a Muslim does not take or give interest which is exactly the Riba that is prohibited in the Qur’an.
One last point is worth mentioning: if you have to deposit large sums and to extended period, the Second Islamic Banking Conference held in Kuwait is 1982 determined that in such cases it is better to take the due interest and give it to charity than depositing in current account that does not generate interest or leaving it to the bank itself. This is based not on double standard but rather on weighing evils. That is when one is faced with two evils and has to choose one of them, the lesser evil is taking the interest and giving it to charity, not that we, without any need, deposit in a conventional bank and take the interest to charity.
Wa Allahu A’alam

Is it ok to invest zakah money?



Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh

Only a government, when it takes charge of collection and distribution, it may decide to invest part. Such a decision cannot be left to the Zakah payer himself/herself. The due amount of Zakah is the right of the poor now, not the right of the poor of tomorrow and if the government takes such a decision, it is because it guarantees the living needs of the poor now. Also charitable organizations which receive Zakah from individual Muslims have no right to invest it, they are only agent of the Zakah payer.

Wa Allahu A’alam

My dad died before he pays his annual zakah. What should we do?



Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh

If the Hawl is due, i.e.,  the Zakah is due on your father before he died, the amount of Zakah for that year becomes due on him. In this case, the heirs must pay it like other debts to other persons. Some scholars even argue that the debt of Allah is stronger in the requirement to be paid than the debts to people. Also there are scholars who say that now the property belongs to heirs and they are not responsible for the neglect of the deceased. Well it is true technically! But He is your father and even if you make Sadaqah on his behalf, he will be rewarded for it, Zakah is definitely more important.

Wa Allahu A’alam

Can I deduce my debt from my zakah?



Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh

The question is excessively vague; the debt that is on you is deductible from the total Zakatable properties (including cash) if it is going to be paid out of them. But if it is going to be paid out of future income, it is not deductible. Example: you have cash 10,000 on which the Hawl has passed and Zakah is now to be calculated. You also have a debt on 240,000 on your house, it is due on monthly payments of 1000 for 20 years. Ask yourself: is this debt going to be paid out of the 10,000?! It is very likely that only 1000 is going to be paid out of the cash that you have. If the date of its payment is before your next salary, then you deduct only 1000 and calculate the Zakah on 9000. But if the date of the payment is due after you get your next salary, you should not deduct this installment because actually like all other installments it is going to be paid out of future income.

But if the debt is to you, not on you, and the debtor is able to pay it and recognizes his/her indebtedness to you, this becomes a strong debt and you have to add it to the Zakatable items you own now and pay Zakah on it as any other Zakatable item that you own. This debt is a part of your wealth. If the debt is doubtful to be collected, you may not include it in the calculation of Zakah to the extent of the doubt (e.g., 20%. 50%, 705, 100%).

Wa Allahu A’alam