Zakāt is one of the Five Pillars of Islam. It is a fard (obligatory) tax required of Muslims, amounting to about 2.5% of one's wealth over the course of a year.
The word itself comes from the Arabic ‘to purify’, as in the Qur’an: “take from their wealth so that you might purify and sanctify them” (9:103). By recognising that one’s wealth is a gift from Allah and giving away a portion of it to others, a Muslim purifies the rest of his or her wealth from greed and miserliness. The verse given above from chapter 70 also highlights the concept that zakat is a right which the poor have over the wealthy; it is the duty of the wealthy to fulfil this responsibility to those who are less fortunate.
The Qur’an is clear about who may receive zakat: “alms are only for the poor and the needy, and those who collect them, and those whose hearts are to be reconciled, and to free captives and debtors, and for the cause of Allah, and for travellers” (9:60). Charities who collect and disburse zakat seek the advice of reputable Islamic scholars to ensure that they are spending zakat funds on projects which fulfil these conditions.
In the time of leader ‘Umar ibn ‘Abdul ‘Aziz, it is said that the zakat distributors travelled far and wide, but were unable to find anybody poor enough in the region to receive the zakat. This shows the true power of zakat: if everyone paid, and the funds were used wisely to change the root causes of poverty, global hunger and destitution could be ended.