Zakat Policy

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Penny Appeal USA Zakat Policy

  1. All zakat donations received by Penny Appeal USA are internally tagged as zakat and are ring-fenced for use exclusively for zakat-eligible programs.
  2. When a zakat donation is designated to a certain program by a donor, this restriction will be respected and the funds are used solely for the donor’s intended purpose, unless doing so becomes impossible due to external circumstances.
  3. When a zakat donation is not designated to a specific program by the donor, Penny Appeal USA allocates the funds to specific projects matching one of the eight categories of zakat-eligible programs as outlined in the Quran (see below).   Note that Penny Appeal USA strongly encourages donors to make their donations unrestricted this way, as it provides us with the greater flexibility to respond to urgent needs.
  4. Zakat-eligible projects are identified based upon need and in accordance with the eight categories noted in the Quran (9:60):
    1. ‘al fuqara’ (the poor)
    2. ‘al masakin’ (the chronically needy / indigent)
    3. ‘al amilina alayha’ (the administrators of zakat funds)
    4. ‘al mualafati qulubhum’ (those that incline their hearts towards good)
    5. ‘f’il riqabi’ (freeing of slaves / those in bondage)
    6. ‘al gharimina’ (those in debt)
    7. ‘f’il sabili-llahi’ (in the way of God)
    8. ‘al sabili’ (the traveler)
  5. In line with category C (“the administrators of the funds”), a portion of the zakat funds collected are eligible to be allocated toward covering operational costs.  To date, Penny Appeal USA is proud to have taken 0% overhead related to all Zakat donations.  We continue to aspire to this number as our benchmark, while mandating internally that our overhead never exceeds 12.5% of all incoming zakat donations.
    1. We are able to maintain this level of overhead for zakat by drawing from our pool of unrestricted sadaqa funding.  If you support our low-overhead Zakat policy, we ask that you make a donation allocated to “Where Most Needed” to help defray our operations expenses at pausa.org/donate.
  6. As Penny Appeal USA follows the best-practice nonprofit model of localization of aid, we often rely on on-the-ground partners within the countries in which we work for logistics and distribution.  These organizations often, understandably, require their own expenses in order to operate.  However, Penny Appeal USA factors in these expenses to our overall overhead cap of 12.5%, so that this percentage is not exceeded for the totality of a donation.  For example, if a donor gives $100 to Penny Appeal USA, between our organization and all partners the overall overhead will not exceed $12.50.
  7. Penny Appeal USA agrees with the position that Zakat donations are intended for distribution as immediately as is feasible, rather than for accumulation by the distributor.  However, we regularly take steps to balance this commitment with our obligation to honor the intentions of our donors, as well as shifting realities on the ground in the countries in which we operate.  As such, we make every effort to disburse zakat funds as rapidly as possible, with the intention of not later than within one calendar year of their collection, recognizing that circumstances outside of our control may occasionally necessitate a longer holding period of the funds.