Answered by Mufti Muhammad Taqi Usmani
What is the Islamic legal judgment about charities (run by Muslims) registered as NGO’s (Non-Governmental Organizations) collecting and distributing zakat money? Is it lawful (in Islam) for such organizations to use part of the collected zakat money to cover their administration costs (involved in the collection and distribution of zakat)? Some people have claimed that NGOS should not collect or distribute zakat in the absence of Al-Khilafah, (because the Khalifa is the only person who has the right to do so). What is the Islamic opinion about such claims?
It is permissible for non-government organizations to collect and distribute zakat money among those entitled to receive it on the condition that they fully observe the Islamic rules and principles concerning Zakat and take due care that the money so collected is duly given to the needy.
However, it is not permissible for such private organizations to spend the zakat money to cover their administration costs. It is true that the Holy Qur’an has allowed to give some part of zakat money to “A’milin” i.e. the persons appointed by the government to collect zakat. But it is applicable only in the context of an Islamic State which duly manages collection and distribution of zakat. This principle cannot be extended to the employees of private organizations.
The wisdom behind this difference between government and non-government organizations is that in the case of a true Islamic State the persons employed for the collection of Zakat are under constant observation and monitoring of the government itself which can ensure that those employees are not committing any misconduct and that the money allocated for them does not affect much on the interest of the needy for whom the levy of zakat is originally meant. On the contrary, if the same principle is allowed for private organizations there is no recognized authority to check that the zakat money is not spent excessively on the administrative expenses.
Therefore, if private organizations elect to collect and distribute zakat they can do so only on charitable basis and no amount from the zakat money should be spent on their employees or on their administration.