The compulsory alms are 2.5% of the income that are collected each year and given to the poor; it is obligatory when a certain amount of money is reached or exceeded.
Although the compulsory alms are given every year; however, voluntary charity is a part of a Muslim's daily life. Every Muslim is obliged to give charity to boost his piety and spread wealth and goodwill among the whole community.
Prophet Muhammad said that every good deed is charity - even a smile in the face of others is charity.
Prophet Muhammad in his global Hadith that defines the Charity said:
"There is no person who does not have the obligation of doing charity every day that the sun rises."
Upon which he was asked: "O Messenger of Allah, from where would we get something to give in charity so often?"
Prophet Muhammad replied: "Indeed the gates to goodness are many:
Glorifying Allah,
Praising Allah,
Magnifying Allah,
Saying 'There is no god but Allah',
Enjoining the good and forbidding the evil,
Removing any source of harm from the road,
Listening to the aggrieved,
Guiding the blind,
Showing the seeker his need,
Striving as far as your two legs could carry you and with deep concern to give succour to him who asks,
Carrying with the strength of your arms (the burdens of) the weak,
"And your smiling in the face of your brother is charity,
Your removing of stones and thorns from people's paths is charity,
And your guiding a man gone astray in the world is charity for you."
All these are acts of charity which are an obligation on you."
The narrow meaning of Charity
Charity, as most people believe, consists of money or various objects given by the rich to help the poor. Based on that narrow meaning, Charity divides people into the receivers and the givers. This division may motivate among the receivers feelings of weakness and among the givers feelings of pride.
Prophet Muhammad puts a unique concept of charity
But the saying of Prophet Muhammad takes charity out of its narrow meaning and opens up a vast and limitless ways of charity by emphasizing that every good deed is charity. And by prompting that voluntary charity is a part of every Muslim's daily life. This is a unique concept of charity.
This unique concept of charity which includes all good deeds however small they may be, allows every person whether rich or poor, to become givers and receivers on an equal basis. Indeed every act of giving is charity, even a smile in the face of your fellow.
The Charity even to the animals:
Prophet Muhammad was asked if acts of charity even to the animals were rewarded by Allah in the Hereafter.
Muhammad replied: 'yes, there is a reward for acts of charity to every beast alive.'
But what if you can not do anything of the above? Another Hadith:
The Prophet said: 'Charity is a necessity for every Muslim.'
He was asked: 'What if a person has nothing?'
The Prophet replied: 'He should work with his own hands for his benefit and then give something out of such earnings in charity.'
The Companions asked: 'What if he is not able to work?'
The Prophet said: 'He should help poor and needy persons.'
The Companions further asked 'What if he cannot do even that?'
The Prophet said 'He should urge others to do the good.'
The Companions said 'What if he lacks that also?'
The Prophet said 'He should hold himself from doing evil. That is also charity.'
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In the Quran,
Verse 8:63 says that Money can not reconcile their hearts, but Allah could
And as for the believers Allah reconciled, brought together, their hearts, after old feuds had divided them. Had you expended all that is in the earth, you could not have reconciled their hearts, but Allah reconciled their hearts, through His power. Truly He is Mighty in His kingdom and sovereignty, His way prevailing, He is the Wise, nothing being beyond the scope of His wisdom.
And verse 3:92 says that Allah then prompted the believers to spend in the cause of Allah, saying: you will not attain unto piety i.e. that which is with Allah of reward, honour and Paradise until you spend of that which you love of your wealth and property; and whatever thing you expend, Allah knows of it, and He will requite it accordingly. Allah is aware thereof just as He is aware of your intentions, i.e. whether you intend with it His Countenance or other people's praise.
Verse 8:63, Shakir translation
And (Allah) united their hearts; had you spent all that is in the earth, you could not have united their hearts, but Allah united them; surely he is mighty, wise.
Verse 3:92, Shakir translation
By no means shall you attain to righteousness until you spend (benevolently) out of what you love; and whatever thing you spend, Allah surely knows it.
