Is it permissible to invest zakaah funds?

Question

Praise be to Allah.

It is obligatory to give zakaah
to those who are entitled to it, who are mentioned in the verse in which
Allah, may He be exalted, says (interpretation of the meaning):

“As-Sadaqaat (here it means
Zakaah) are only for the Fuqaraa’ (poor), and Al‑Masaakeen (the poor) and
those employed to collect (the funds); and to attract the hearts of those
who have been inclined (towards Islam); and to free the captives; and for
those in debt; and for Allah’s Cause (i.e. for Mujaahidoon — those fighting
in a holy battle), and for the wayfarer (a traveller who is cut off from
everything); a duty imposed by Allah. And Allah is All-Knower, All-Wise”

[al-Tawbah 9:60].

Zakaah is the right of these
categories of people over the wealth of the rich. So long as any of these
categories is present, they must be given their due. Investing zakaah funds
delays giving zakaah to those who are entitled to it, or prevents it being
given to them altogether, if the project incurs losses and the capital is
lost.

Therefore contemporary scholars
have ruled that it is not permissible to invest zakaah funds.

Shaykh Ibn ‘Uthaymeen (may Allah
have mercy on him) was asked about the ruling on some charities investing
zakaah funds.

He replied: With regard to
investing it in the purchase of real estate and the like, I do not think
that is permissible, because what should be done is to meet the need of the
poor person who is entitled to it at present. As for the poor in the future,
that is up to Allah.

End quote from Liqa’ al-Baab
al-Maftooh (1/67)

The scholars of the Standing
Committee were asked about a charity that wants to invest its funds.

They replied: If the wealth
mentioned in the question is zakaah funds, then it must be given to the
categories who are entitled to it according to sharee‘ah when it reaches the
charitable organisation. But if it is not zakaah funds, then there is no
reason why it should not be invested in the interests of the charity,
because that will further benefit the aims of the charity and those who
donate to it. End quote.

Fataawa al-Lajnah ad-Daa’imah
(9/403, 404)

They were also asked:

Can a global Islamic charity
invest zakaah funds that may be put in the bank until they are spent, and
the investment thereof will not affect their being spent on the categories
of zakaah recipients stipulated in sharee‘ah, on the basis that they will be
invested in “liquid” or “unfrozen” schemes, so that it will be possible to
withdraw the funds when necessary, and they will be invested in areas that
are well-established and proven to be trustworthy – although we do not say
that they are guaranteed – so that they will not be akin to dubious
investments? Moreover the charity is not a real person or several person who
represent themselves; rather it is a virtual entity and the people involved
are working for the good of Islam and the Muslims.

They replied:

It is not permissible for the
trustee of a charity to invest zakaah funds. What is required is to spend
them on the categories stipulated in sharee‘ah, after ascertaining that they
are being given to those who are entitled to them. That is because the
purpose of zakaah is to meet the needs of the poor and pay off debts of the
debtors, and because investment may be detrimental to these interests or may
cause severe delay in giving it to those who are entitled to it.

End quote from Fataawa al-Lajnah
ad-Daa’imah (9/454, 455

Those who regard it as
permissible to invest zakaah funds stipulate that that should only be done
after meeting the urgent needs of those who are entitled to zakaah. It says
in the resolutions of the Fiqh Council:

It is permissible in principle
to use zakaah funds in investment projects which will end with those who are
entitled to it taking possession of the zakaah, or which belong to the
Islamic organisation that is responsible for collecting and distributing
zakaah, so long as that is done after meeting the immediate needs of those
who are entitled to it and so long as there are sufficient guarantees to
prevent loss.

End quote from Majallat al-Majma‘
al-Fiqhi

It is very difficult, if not
impossible, to say that this condition could be met, because the number of
poor and needy, mujaahideen striving for the sake of Allah, wayfarers,
debtors, and those whose hearts are to be softened, exist in the millions.
So zakaah must be given to these people, and it is not permissible to delay
it.

And Allah knows best.