Keeping Zakat separate: what trustees need to be able to show

Zakat is a restricted fund with religious conditions on top. Trustees need records that prove both, from the moment a gift arrives to the moment it is spent.

29 September 2026Kode by Kraftzakatcompliance

A charity that accepts Zakat is making two promises at once. One is religious: the money goes only where Zakat may go. The other is legal: money given for a specific purpose is a restricted fund, and the Charity Commission is clear that using restricted funds for other purposes is a breach of trust (Internal financial controls for charities, CC8). The records that satisfy one will largely satisfy the other.

Where Zakat may go

The Qur'an names eight categories of recipient (Surah at-Tawbah 9:60): the poor, the needy, those who administer it, those whose hearts are to be reconciled, freeing those in bondage, those in debt, in the cause of Allah, and the traveller. How those categories apply in practice, and whether any Zakat may cover administration, are questions on which scholars differ. Take advice, decide your position, and publish it. Several large charities publish a Zakat policy for exactly this reason; Islamic Relief UK's is one example.

What trustees need to be able to show

That Zakat was identified when it arrived. The donor chose Zakat, and the gift was recorded as Zakat, not sorted out later from a bank statement.
That it was never pooled. A separate fund, with its own balance, not a tag on general income.
Which appeals can receive it. Each appeal marked as Zakat-eligible or not, so a donor cannot give Zakat to an appeal it may not fund.
How it was spent. Each distribution recorded with where it went and which category of recipient it served.
What is left. A balance that reconciles: received, minus distributed, equals held.

Controls that make it hold

Make "Is this Zakat?" part of the donation form, not an email the donor sends afterwards.
Stop Zakat being accepted on appeals that can't take it, rather than relying on staff to move it later.
Record distributions at the time, with the category, not in a year-end reconciliation.
Handle Gift Aid on Zakat consistently with your policy, so the Gift Aid follows the same rules as the gift.
Review the Zakat fund balance at every trustee meeting.

Show donors, not just auditors

A short public report of Zakat received and distributed by category, with no personal details of recipients, answers the question many donors are too polite to ask. It also means your records are ready whenever a trustee, an auditor or the Commission asks.

Where Zakat may go

What trustees need to be able to show

That Zakat was identified when it arrived. The donor chose Zakat, and the gift was recorded as Zakat, not sorted out later from a bank statement.

That it was never pooled. A separate fund, with its own balance, not a tag on general income.

Which appeals can receive it. Each appeal marked as Zakat-eligible or not, so a donor cannot give Zakat to an appeal it may not fund.

How it was spent. Each distribution recorded with where it went and which category of recipient it served.

What is left. A balance that reconciles: received, minus distributed, equals held.

Controls that make it hold

Make "Is this Zakat?" part of the donation form, not an email the donor sends afterwards.

Stop Zakat being accepted on appeals that can't take it, rather than relying on staff to move it later.

Record distributions at the time, with the category, not in a year-end reconciliation.

Handle Gift Aid on Zakat consistently with your policy, so the Gift Aid follows the same rules as the gift.

Review the Zakat fund balance at every trustee meeting.