Segregate and control Zakat vs Sadaqah (ledgers, banking, donor intent)
This criterion evaluates whether the organization maintains strict separation and control over Zakat and Sadaqah funds across ledgers, banking, and donor intent capture. For UK reporting, Zakat is treated as a restricted fund under Charities SORP (FRS 102). Minimum compliance requires segregated fund accounting within the General Ledger (GL), while separate bank accounts are best practice. Trusteeship requires safeguarding donors’ trusts by segregating Zakat from Sadaqah (Qur’an 23:8; 70:32) and ensuring collection is handled with integrity (Qur’an 9:103). Mixing funds leading to misapplication risks unjust consumption (Qur’an 2:188; 4:29). Additionally, Sadaqah may be restricted or unrestricted depending on donor terms; the system must capture that restriction separately from the ‘Zakat vs Sadaqah’ type to honour the covenant (Qur’an 5:1).
- How does the organization ensure that Zakat funds are financially segregated from Sadaqah and other operational funds?
- Show how you record a restricted Sadaqah appeal separately from general Sadaqah and from Zakat in your finance system.
- Provide the current and previous donation form wording/version and evidence of donor consent capture for Gift Aid.
- Can you demonstrate how Zakat and Sadaqah transactions are recorded in separate and distinct ledgers or accounts within your financial system?
- Show the journal entries and ageing report for any inter-fund Qard Hasan, and board minutes approving it.
- Do you maintain dedicated bank account(s) for Zakat? Provide statements.
- Is the segregation and management of Zakat funds reviewed or audited, either internally or externally?
- Do partner grant agreements require fund segregation and reporting by fund? Show a sample agreement and report.
- Documented financial management policy specifying the handling of restricted funds like Zakat.
- Chart of Accounts showing distinct account codes for Zakat, Sadaqah (Restricted), and Sadaqah (Unrestricted).
- Donation page/form screenshots with version control and Gift Aid wording.
- Monthly Gift Aid reconciliation to bank statements and fund ledger.
- Inter-fund debtor/creditor schedule with ageing and board minutes for approvals.
- Bank statements for Zakat-dedicated accounts (if applicable).
- Partner annual compliance certificate and sample partner ledger extract (ring-fenced Zakat).
- System configuration screenshots: fund posting rules, approval workflows, and exception reports.
- Sample financial statements (SoFA) distinguishing Zakat funds.
| Level | Rating | Description |
|---|---|---|
| 5 | 5/5 | Complete separation with dedicated bank accounts, external assurance covering Zakat & restricted Sadaqah, and transparent public reporting. |
| 4 | 4/5 | Clear separation in ledgers with system validation rules preventing cross-posting; good documentation and controls over inter-fund transfers. |
| 3 | 3/5 | Basic separation exists (separate GL codes) and Sadaqah restricted appeals are tracked separately, but controls are manual or limited. |
| 2 | 2/5 | Minimal separation with significant commingling of funds or reliance on spreadsheets. |
| 1 | 1/5 | No separation between Zakat and Sadaqah funds. |
Related Criteria
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📋 **Version updated: 1.0.0 → 2.9.7** **Changes:** Updated islamic_references from mizan-297.json
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