How to Count Your Taxes as Zakat (but please don't)

An Introduction to EZ and Z4D in Muslim Organizations.

The national office of the Council for American-Islamic Relations (CAIR) encourages you to donate your zakat to them. This is not news or even the interesting part (I have discussed this before). The part worth discussing is their justification for CAIR receiving zakat. It’s no surprise that this view comes from the permissible (and oft abused) zakat category of “fisabiilllah,” which in recent years has been “extended” from meaning “jihad” (in this context) to becoming a wastebasket category that can mean anything, but mostly the effective transfer of wealth from the affluent to the affluent.  

This comes from Sh. Ahmad Kutty of Canada, quoted on CAIR-National’s website, who states:

[...] [C]ommentators of the Qur’an (mufassirun) as well as the jurists (fuqaha’), who have used the term fi sabili-llah in a far wider sense, thus extending it to include all beneficial works and projects that are of common benefit to the Ummah. They have thus included in this category such services as funeral arrangements, building and taking care of schools and mosques, establishing hospitals, building bridges, etc. In short, they definitely include institutions that provide educational or social services under this category and thus eligible to receive funds from zakah.¹ [emphasis added]

CAIR’s long-time rival in the “Muslim advocacy” space, from a more national security state and Pro-Sisi in Egypt perspective, the Muslim Public Affairs Council (MPAC) has a zakat justification that is actually more sprawling. They claim to be zakat eligible based on every category of zakat, including giving to the poor even though MPAC does not do that kind of thing (watch it if you are interested in how that works), but let’s focus on the justification for fisabilillah. 

The video, by MPAC’s late co-founder Maher Hathout, who was widely considered an Islamic scholar and was a prolific preacher and political activist in the Muslim community nationally said the following about the fisabilillah category (currently on MPAC’s website):

Fisabilillah, for the cause of God, which is really the cause of justice, liberty and human dignity are fisabilillah and so any expenditure on that is quite legitimate. [emphasis added]

Any expenditure. That is MPAC’s pitch. It is also how Muslim nonprofits often look at zakat.

No Limiting Principles

I have written about “fisabilillah extension” several times before, and while it sounds absurd and reductionist, it is accurate to describe it as if a zakat expenditure feels good, you can do it. This view tends to exacerbate social injustice and benefit the affluent disproportionately.  In a recent article I wrote, I cited a different influential scholar with a similar view of limitless elasticity of zakat used the term “expansion” of fisabilillah. In this newsletter, I will be referring to this view as “expanded zakat,” or “EZ” to distinguish it from zakat as traditionally understood by Islamic Scholars prior to the last few decades, when the pillar of zakat received the sledgehammer treatment. The EZ variant of zakat has no limiting principles at all. If everything can be EZ, maybe we should look at what you are already paying for good things, like those potholes and street sweeping. 

Yes, Your Taxes Can Be Covered

Occasionally, a Muslim donor will ask a sheykh at a zakat seminar if their taxes can pay for their zakat. That sounds ridiculous and laughable for many American Muslims, but it’s a logical question for anyone who has heard the way nonprofits and their favorite scholars have been talking about the subject. If you go off of their explanation of EZ, it’s obvious that it should include your taxes, especially the kinds of taxes that pay for services and benefits to the community. Popular Texas-based Pakistani preacher Javed Ghamdi has been telling his followers to count taxes as Zakat.  If you follow EZ logic, it’s impossible to argue otherwise.    

CAIR using Sh. Ahmed Kutty’s advocacy for giving EZ to their organization seems weirdly untargeted. CAIR does not build hospitals, bridges or operate schools. These are all good and beneficial things though, which is the new and improved definition of fisabilillah for EZ. So why not CAIR?

The reason is not that CAIR is not zakat-eligible, because if you live in a EZ world, CAIR certainly qualifies, but so do thousands of other things you have been involuntarily and voluntarily paying for anyway. It’s that you have probably already maxed out your zakat by paying your taxes, especially state and local taxes, but also some or maybe all of your federal taxes, depending on what you personally think is good and beneficial. 

Roads and bridges, filling potholes after a snowstorm, paying teachers and firefighters are all good and beneficial things. Therefore, they are EZ-eligible. 

The average American paid about $2,471 in property taxes last year, and $2,392 in federal taxes in 2018. According to another study, the average American Muslim paid about $2,070 in what appears to be completely surpurflous zakat (if you believe in EZ). Property taxes already pay for educational and social services, building bridges, county hospitals and local schools. They don’t pay for mosques, but by now, you have overpaid your zakat, so that is sadaqa. Your home’s value is not subject to zakat. But there is no reason, if you follow such interpretations, that your payment counts towards EZ. 

Who Were These Fatwas For? 

By now you may have already figured out that a fatwa about roads and bridges was not made for CAIR or MPAC. Either organization may have a stronger pitch if there were some sort of articulable limiting principle that excluded tax payments. No scholars pushing EZ bothered to develop them. 

In his widely circulated article used by various Muslim groups, Dr. Hatem El-Haj cites fatwas from places like Egypt and Saudi Arabia. For example a fatwa of the Fiqh Council (Sh. Bin Baz in Saudi Arabia) does the same kind of thing, permitting zakat be spent on building schools, roads and basic infrastructure. This has become commonplace. 

In Muslim-majority countries, zakat is often under the control of governments. Some of those countries, like Saudi Arabia, even levy it like a tax. Distribution of zakat is consequently subject to the political priorities of the government in charge. Islamic Scholars are often government employees. So if it’s government policy to divert zakat funds to pay for development projects over “hand to hand” zakat for the poor, they can reimagine zakat and create EZ, and they have been doing precisely this for decades. So if you are inclined to agree with these fatwas, it’s reasonable for you to also count your taxes paid in the United States as EZ. That is exactly what happens in some Muslim-majority countries. 

An Introduction to Z4D

Other than governments, international non-governmental organizations (NGOs) have been interested in zakat, even creating the buzzword “Z4D”- as in “zakat for development.” This was a direct challenge to “hand to hand” distribution of zakat, considered old-fashioned, giving zakat to living human beings. There are traditionally no zakat eligible projects (except jihad) or organizations. Zakat is to be used for human beings. But reinterpretation of zakat was needed to get zakat to fit with modern development ideology. NGOs (Muslim or not) would then come in and dole out construction contracts and hire social workers, conflict mediators, or whatever they deem would be good to do. Before they can do that, you need to change zakat from what it was, into something that can be molded like putty to fund never-ending projects. EZ and Z4D work just fine.

According to one paper extolling the virtues of Z4D, the person who did the most doctrinally to help Z4D is the former Grand Mufti of Egypt, Ali Gomaa. His fatwas on allowing zakat to fund a publishing house, a hospital, and even “research” helped open the doors to EZ and Z4D. For those who do not remember the Arab Spring, Gomaa is best known for his reputation as a war criminal and cannot travel to certain countries for fear of prosecution. Gomaa lends his name to the United Nations for zakat. 

In a prior article about Islamic Relief USA, I pointed out that Islamic Relief’s zakat policy restricts costs to 12.5% but does not allow any and all costs (which is how Islamic Relief USA handles it). However, there is more to Islamic Relief’s policy than that. Islamic Relief Worldwide (IRW) has fully adopted development ideology in their zakat policy as well. IRW functionally practices both EZ and Z4D ideology, where 100% of zakat can go to expenses like salaries and construction contractors. While I have not confirmed this from all of the listed scholars for Islamic Relief, it appears not all of the scholars named by Islamic Relief have even read or are familiar with the contents of the policy, which is plainly incoherent. While most large US-based international zakat collectors don’t bother to create a zakat policy that limits them in any way (I am told some have them in the works), they are primarily based on EZ and Z4D ideology rather than traditional hand to hand distribution.  

Towards Developing Standards

Through my time writing about Muslim nonprofits, I have been approached by various organizations about helping them develop their zakat policies. I did not start this newsletter with a view towards developing a nonprofit consulting service and I am not about to start. I am an Islamic Estate Planning Attorney that writes a newsletter about Muslim nonprofits. The goal of this newsletter is to help donors understand what they are considering donating to, and if there is real legitimate value in these organizations. 

To do it right though we need for sector-wide standards to help donors and actual zakat beneficiaries, rather than accommodate EZ or Z4D.  Donors never asked for EZ or Z4D, neither did the poor or the needy, who would rather have the cash.  Governments and international NGOs, wanted this, then the movement went on to political organizations and just about anyone else who wants money for whatever reason.  Donors don’t need to play along. 

As we as a community develop standards, it’s important the advocates of EZ and Z4D not be considered. Of course, Muslims who like development or giving money to governments can give non-zakat funds for these things. Once a scholar or nonprofit leader feels comfortable with the notion that zakat should be blown up so completely that paying taxes to pay for police helicopters, vector control, new bicycle paths and a new high school track field fulfills the fard of zakat, there is not much to work with.  

Standards and a system of accountability should be for donors so they can make apples to apples comparisons between charities, and so they do not use their zakat as a way to exacerbate wealth disparities.

There are some efforts by scholars, especially in Europe to create zakat standards that I think are worth looking at. I will be addressing that in a future article. 

1. I had discovered his view was not as expansive as the quote states, so for example he would not approve of conference swag or fundraising costs. What the precise limits are and why those limits exist are unknown to me. CAIR has informed donors it has a zakat policy that restricts some expenses while maintaining all expenses are inherently zakat-eligible.