How does zakat alleviate poverty?
Zakat is a dutiful act prescribed by Allah on wealthy Muslims, who have reached the nisab threshold. It is an act of piety and purification but it can also be an extraordinary tool in the fight against poverty and deprivation.
Some of the peculiarities of zakat make it ideal for this endeavor. Zakat is given/distributed as cash – in easily transactional liquidity. This means that it targets and elevates the purchasing power of a poor person enabling them to participate in the economy. Zakat is taken from wealth that is ‘held’ for a year, which would otherwise be unused. It takes redundant wealth and redistributes it to the poor who are more likely to use it in the real economy.
Much of the world’s inequality lies in the fact that wealth is concentrated, held and accumulated by a small number of people, however zakat is able to free and liquidate that wealth and enable it to be used to lift people out of poverty – en masse. It is one of the largest forms of wealth transfer to the poor in existence.
Zakat is not seen as a charitable gift given out of kindness or generosity, but as a dutiful act; a systematic form of giving. This is because perverse poverty at a societal level is seen as a consequence of greed. A particular type of greed arising from the accumulation and concentration of wealth. Zakat is a way to address this problem through purifying that hoarded wealth and using it to alleviate poverty.
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