Zakat is one of the five core pillars of Islam and a compulsory act of worship.
It is the requirement that any Muslim who owns wealth at or over a certain threshold (called the Nisab) should donate a portion of that wealth (specifically 2.5%) to those who are eligible to receive zakat.
Zakat should be calculated and paid once each lunar year.
For further information please refer to Zakat FAQs
Sadaqah is the general term used to describe voluntary charitable giving.
There is no minimum or maximum amount a Muslim is expected to give, but certain factors increase the merit of sadaqah, such as giving a greater portion of one's wealth, giving anonymously and giving during the holy month of Ramadan.
Sadaqah can be defined further into two categories, Sadaqah Wajibah and Sadaqah Nafl, both of which have separate rulings.
Sadqah Wajibah is charity which is binding in nature. This form of sadaqah is similar to zakat in that it must be given to those in need (as defined by the Qur'an), however it is not a condition for the beneficiary to be Muslim.
Sadqah Nafl is charity which is not binding in nature but is optional. This form of sadaqah does not need to be spent on any specific categories nor does it have to be spent on Muslims.
Sadaqah-al-Fitr is a duty upon every sane Muslim, who possesses the value of Nisab.
This charity is due before Eid-al-Fitr Salah and the amount that must be given is equal to 1.6kg of wheat or 3.2kg of barley.
This can arise if one wishes to express gratitude by making an oath of giving charity.
This is an action which becomes necessary due to one imposing it upon oneself.
This is compensation for missing Salah or Sawm (fasting) for a person who cannot perform them due to medical conditions, being terminally ill or deceased.
The amount due for each missed Salah or Fast is equal to 1.6kg of wheat.
Kaffarah becomes binding as a form of redemption if a person breaks a fast intentionally without valid reason, breaks an oath, or kills someone.
This is also known as Qurbani or sacrifice. It is compulsory upon all mature Muslims who, on the day of Eid al-Adha possess Nisab.
One may slaughter goats or sheep, which constitute one sacrifice each, or one may slaughter a larger animal (i.e. cow or buffalo) which will be counted as seven sacrifices each.
There are two types of Dam.
One is like Udhiyyah in the sense that it is a religious requirement on adult Muslims which is the sacrifice of a sheep or goat. The only difference is that it is specific to people who are performing Hajj.
The second type of Dam is like Fidyah. It’s a means of compensation for mistakes in Hajj, but the difference is the magnitude of the mistake. Fidyah is given in lieu of minor mistakes while Dam is in lieu of major mistakes.
Meaning 'for Allah'.
Lillah comprises any form of charity given in the cause of Allah on a pure voluntary basis and does not have the condition of having to be passed into the possession of a person, as it can be given to institutes such as Masjids, Madrassas, Wells, Hospitals, Schools, Orphanages etc.
This is an endowment of property or investment for a charitable purpose, whereby the assets are retained with the profits applied for the charitable purposes.
This can be during one's lifetime or bequeathed in one's will.
When executed, the donation becomes the property of Allah (and thus has specific rules regarding it), and its beneficiaries are to remain those named as the cause (e.g. the poor, orphans, students, the people of a certain locality, etc.).
This is the sacrifice of an animal or two as thanks to Allah for the birth of a child.
1 animal is sacrificed for a girl and 2 for a boy.
Sadaqah Jariyah means a continuous, flowing and ongoing charity.
It is one of the most rewarding acts we can do in our lives as the benefits of giving this type of charity can be reaped in this lifetime and after one has passed away.
Sadaqah wipes out sins like water extinguishes fire
Prophet Muhammad (PBUH)