An important principle of Islam is that everything belongs to God; wealth is therefore held by human beings in trust. Obligatory charity or zakah means both "purifications" and "growth." Our possessions are purified by setting aside a proportion for those in need and for society in general. Like the pruning of plants, this cutting back balances and encourages new growth.
Each Muslim calculates his or own zakah individually. This involves the annual payments to those in need of 2.5% of one's assets, excluding such items as primary residence, car and professional tools. Zakah is a unique concept, compare to other forms of giving, in that it redistributes the wealth of society; when applied correctly, it effectively eliminates poverty.
God places great emphasis on taking care of the needy in society; He says in the Qur'an: "Those who spend of their wealth (in charity) by night and by day, and in secret and in public have their reward with their Lord, on them there shall be no fear, nor shall they grieve." (Qur'an 2:274)
Giving beyond the obligatory charity is expected upon every Muslim and may take many forms. The Prophet said, "Even meeting your brother with a smile is an act of charity." The Prophet further said that when one has nothing to give, he can stay away from evil; that too is charity.
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