Zakah: Investment of zakah money

Q723 :I plan to establish a trust out of zakah and charity (i.e. sadaqah) money and invest such funds in some profitable business. My plan is to distribute the annual earnings of the business to deserving students on merit. How far is this acceptable, taking in view that this will serve the community for a longer period?

A723 : The idea of setting up a trust fund and investing the proceeds to ensure annual returns which can be given to the poor is a very sound one. However, zakah money cannot be used for such a purpose. The reason is that zakah money must be paid to its beneficiaries when it is due. Once you set aside your zakah liability, it no longer belongs to you. How, then, do you allow yourself to dispense with it in a way which you determine? This money belongs to Allah and He has given you instructions on how to distribute it. It must be distributed straight away. Moreover, its beneficiaries must be put in possession of it. When you put it in a trust fund, you are taking it away from its beneficiaries without their consent. May be they need it for a more immediate use. How can you, or indeed anyone for that matter, deny them that privilege. Moreover, when you invest zakah money, you are actually putting it at risk of loss. This is not acceptable from the Islamic point of view. It may be true that the likelihood of loss is very slim indeed. But as long as there is a risk, then no human being can claim the authority to expose zakah money to such a risk. You may, however, put the voluntary donations for charitable purposes into such fund and invest that money, provided that the investment is a very low risk one. You may consider in this respect buying some property and letting it out. This is indeed a very low-risk investment. Moreover, the returns are sure. If you opt for such an action, the charitable donation you make will earn you more reward as long as it is in operation.

Our Dialogue ( Source : Arab News - Jeddah )