Praise be to Allah, and peace and blessings be upon the most noble of all prophets and messengers of Allah, our Prophet Muhammad, and upon his family and companions.
Zakah is a financial obligation, payable on specific funds, imposed by Almighty Allah to achieve wise purposes and sublime objectives. It brings benefit and prosperity to the payer, the receiver and the Muslim community in general. Almighty Allah has enumerated in the Noble Quran the areas of its utilization, saying:
]إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّهِ وَابْنِ السَّبِيلِ فَرِيضَةً مِنَ اللَّهِ وَاللَّهُ عَلِيمٌ حَكِيمٌ[
“Zakah is only for the destitute and the needy, those who administer it, those whose hearts need winning over, to free slaves and help those in debt, for Allah’s cause and for travelers in need. This is ordained by Allah; Allah is Knowing and Wise.”
Given the complexity of the needs of those entitled to receive zakah (zakah eligibles) in the modern era and the inadequacy of the zakah paid by wealthy Muslims to fulfill the needs of poor Muslims, the need has emerged to find a means by which zakah money can be allocated and invested to benefit the largest possible number of the poor. I will address the following three topics in this study.
The First Topic: Setting Aside Zakah Money in Funds Providing Financing and Insurance for Zakah Eligibles. This includes setting up funds for interest-free loans specifically for microfinance, or funds offering financial guarantees, or cooperative insurance against credit risk and defaults in order to help zakah eligibles embark on business activities.
The Second Topic: Investing Zakah Money in Financing and Insurance Funds. This includes investment of zakah money in profit-seeking funds for the realization of abovementioned objectives so that the proceeds go to zakah eligibles.
The Third Topic: Disbursal of Earmarked and Invested Money, and Payment of Its Zakah
I ask Allah to prevent us from error and to enable us to please Him in speech and action.
 Sūrah al-Tawbah verse: 60.
 Editor’s note: These shall be referred to as “zakāh eligibles” in the rest of the paper.
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