Smart Investor Malaysia


Zakat, Sadaqah And Waqf: What Is It And What Is The Difference?

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“The hand which gives is better than which takes”

We always hear about the rich helping out the poor and it is normally done out of compassion and as a way to express gratitude for all the blessings that one receives throughout his life.

Rather than getting rich and enjoying the wealth on your own, sharing it with others will put a smile on others and alleviate whatever ills and hardship that they are currently facing.

Are you still confused with the terms Zakat, Sadaqah and Waqf?

What Is Zakat, Sadaqah And Waqf?


As one of the pillars of Islam, Zakat is a form of obligatory charity that has the potential to ease the suffering of others. With the literal meaning of the word being ‘to cleanse,’ Muslims believe that paying Zakat purifies, increases and blesses the remainder of their wealth.

It is a wealth tax and a means of wealth distribution, harmonizing the relationship between the individual and public interest. Each year, Muslims are required to donate 2.5% of one year’s total cumulative wealth to the poor in the form of Zakat.

There are eight categories of zakat recepients as stated in the Al-Quran.

  • Those living without means of livelihood
  • Those who cannot meet their basic needs
  • To zakat collectors
  • To persuade those sympathetic to or expected to convert to Islam, recent converts to Islam, and potential allies in the cause of Islam
  • To free from slavery or servitude, slaves of Muslims who have or intend to free from their master
  • Those who have incurred overwhelming debts while attempting to satisfy their basic needs, debtors who in pursuit of a worthy goal incurred a debt
  • Those fighting for a religious cause or a cause of God, or for Jihad in the way of Allah by means of pen, word, or sword, or for Islamic warriors who fight against the unbelievers but are not salaried soldiers.
  • Wayfarers, stranded travellers, travellers who are traveling with a worthy goal but cannot reach their destination without financial assistance


It involves donating a fixed asset which can produce a financial return or provide a benefit. Is is an endowment to a religious, educational or charitable cause, most frequently used to build schools, hospitals or religious institutions. Given its communitarian nature, Waqf is often used to fund social projects and services.

It literally means to stop, contain, or to preserve. This philanthropic activity has become one of the catalysts for Muslims’ economic activities over the centuries including Malaysia.


Sadaqah means voluntary offering, whose amount is at the will of the “benefactor”. It is voluntary charity given on an ad-hoc basis; a concept similar to putting coins into a charity donation box.

Giving Sadaqah does not mean being rich and able to give money to the poor and needy. There are many types of Sadaqah.

  • Spreading knowledge is Sadaqah
  • Sharing food is Sadaqah
  • Giving your time and energy to a good cause is Sadaqah
  • Saying a kind word, even smiling is also considered as Sadaqah

Still Confused With Zakat, Sadaqah And Waqf?

Zakat is the obligatory form of charity, whereas Sadaqah is voluntary.

For example you make a profit of RM50,000 from your investment for the year 2021, therefore you need to pay zakat of 2.5% of the total profit, which is equals to RM2,500.

But it is up to you how much you want to give for Sadaqah. You can also choose not to give Sadaqah.

Whereas Waqf is losing the ownership and management of the property/wealth from the giver to be used for a good purpose or the profit from it, to be used for a good purpose.

For example you have a empty house. You give permission for an administrator to manage the house to rent it out for free to students. Or if you allow the administrator to rent out the house, then the monthly rent is being used for a good cause.

Hope you now have a better understanding of what Zakat, Sadaqah and Waqf is all about, as well as its differences.

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