Zakat policy

The A & A Rainbow Hearts Around The World Foundation recognizes the importance of transparent and accountable management of zakat funds based on the overarching principles set forth in the Quran and Sunnah from a theological perspective, and furthermore in Poland in the regulatory aspect of the Law of April 6, 1984 on Foundations (Journal of Laws 1984 No. 24 position 97, as adjusted) and tax law.

The policy provides a consistent approach to Zakat funds, and detailed and relevant guidelines are disseminated centrally. This policy will help the A & A Rainbow Hearts Around The World Foundation:

• in indicating which projects are eligible for zakat,
• to clarify issues related to our zakat activities, such as questions about support costs or zakat payments to different types of beneficiaries,
• developing processes to ensure that the collection, financial transparency, allocation, distribution, monitoring and impact of zakat funds within the A & A Rainbow Hearts Around The World Foundation are transparent, participatory, efficient and in accordance with Islamic principles
• increase internal and external transparency in the collection, financial transparency, allocation, disbursement, monitoring and impact of zakat funds.

The overall objective of the Zakat Distribution Policy is to ensure that the global zakat activities of the A & A Rainbow Hearts Around The World Foundation are fully in line with Islamic teachings, thus enabling the Foundation to fulfill its obligations in the best possible way.

Specific objectives are:

• Ensuring proper trust management from the theological and charitable trust law of zakat funds.
• Provide clear guidance to Foundation trustees, management and staff on how zakat should be collected, accounted for, allocated, distributed, monitored and the impact of the socioeconomic value of zakat on strengthening communities/societies.
• Provide transparency and accountability to stakeholders on how they should expect the Foundation to collect, allocate and distribute zakat.
• Improve internal and external communication regarding the Foundation's distribution of zakat and its impact.
• Ensuring that the Foundation's zakat activities are carried out in the most transparent and Islamic-compliant manner possible.
• Enable the Foundation to use zakat within our programs in a way that ensures maximum impact and effectiveness in reducing suffering and poverty.

As a foundation trying to collect zakat we should:

• Make efforts to remind local Muslim communities of the importance of paying zakat and who is obligated to pay zakat.
• Provide clear and accessible guidelines and support for donors in calculating how much zakat they are required to pay. This could take the form, for example, of leaflets, brochures, a hotline or website sub-site at www.rainbowhearts.com.pl, an online application, etc.
• Provide training to fundraising volunteers on the obligation to pay zakat and the basic elements of zakat calculation. Fundraisers should be well trained on organizational protocols in zakat management and reporting so that they can provide clarity and understanding to stakeholders, and inform fundraising staff which Foundation projects are eligible for zakat.

4.1 Zakat funds, the Act on Foundations and tax law

Fundusze Zakat są przekazywane na określony cel i mogą być wykorzystywane wyłącznie na cele kwalifikujące się do zakat, zgodnie z definicją w ośmiu kategoriach zakat. Zapisy księgowe Fundacji powinny rozróżniać dochody i wydatki między funduszami zakat a innymi funduszami.

Funds usually obtained and they are:

4.1.1. Limited or unlimited

It is necessary to consider whether Zakat funds are restricted or unrestricted funds, and if they are unrestricted, whether they should be designated funds.

4.1.2. Restricted funds

Restricted funds are subject to conditions set by the funder or restrictions imposed by the donor or the Foundation itself during marketing campaigns

Unrestricted funds are spent or applied at the discretion of the donors/trustees to accomplish any purpose of the charity. Unrestricted funds may be used to supplement expenditures made from restricted funds.

4.2 Marketing and fundraising

The A & A Rainbow Hearts Around The World Foundation will respect the wishes and conditions that donors place on their donations. However, in the case of zakat, the Foundation's policy encourages the donation of zakat to the general zakat fund.

This is due to the need to ensure that zakat is issued as soon as possible (since the obligation is not fully fulfilled until the entitled person receives zakat). Moreover, Allah (may He be exalted) has already imposed several conditions on zakat. Therefore, donors should be advised against imposing further conditions on zakat, which may prevent it from being issued in the quickest and most efficient manner to those who need it most.

Accordingly, the Foundation's fundraising policy for zakat is as follows:

• The Foundation encourages donors to contribute zakat without additional restrictions.
• The Foundation will avoid in its fundraising or marketing materials (e.g., on the website or in flyers) options that allow donors to give zakat to restricted funds.
• Zakat funds for specific sectors and countries should be made available only after the Foundation has confirmed that such projects can be implemented in accordance with the zakat policy (at the moment, all zakat funds are implemented in Nigeria in communities where hunger kills anywhere from a few to dozens of people every day).
• In situations where the Foundation is unable to honor the donor's wishes (e.g., because of the Foundation's wish to transfer zakat to a country where the Foundation does not have zakat distribution projects, or if the donor's conditions conflict with our zakat policy), the Foundation may:

a) Inform the donor that the Foundation may not be able to spend zakat as requested and encourage the donor to donate zakat to an alternative fund

b) refuse to accept a donation on the grounds that we are unable to spend zakat as requested

c) in the event of unexpected changes in the Foundation's ability to work in certain areas where the Foundation implements zakat distribution projects, resulting from various types of restrictions imposed by the authorities, the Foundation must inform the donor of the fact and obtain permission from the donor to use the funds in other ways or transfer them to another community

All communications with donors that constitute direct marketing of Zakat must comply with local laws and regulations regarding privacy and electronic communications. Communications with donors must also comply with the Data Protection Law (RODO).

The Quran clearly defines eight categories of people who are entitled to receive Zakat:

Alms are only for the poor, the needy, those who manage them, those whose hearts need victory to free the slaves and help the indebted, for God's cause and for travelers in need. God is omniscient and wise (Al Quran, sura Tawbah, verse 60).

These limits are set by Allah (may He be exalted), and the Foundation believes that we - as zakat administrators - will be held accountable by Allah (may He be exalted) for how we distribute zakat funds and the extent to which we adhere to the conditions and parameters set by Allah.

Accordingly, the A & A Rainbow Hearts Around The World Foundation must distribute zakat only to eligible (directly or through projects) that are relevant to the categories described above. When allocating zakat to projects or applying for zakat funds to be used for projects, the Foundation must provide justification as to how this project meets the zakat criteria.

The categories themselves are clearly defined, but their definition and interpretation - especially in the contemporary context - require some clarification.

1.1 Fuqara & Masakin (poor and needy)

1.1.1. Poverty is a condition in which a person is unable to meet his or her basic needs. This can be assessed through local consultation and needs assessment.

1.1.2 The Foundation recognizes that by mentioning both fuqara (poor) and masakin (needy or extremely poor), Allah (May He be Exalted) ensures that we meet the needs of both the poor and the extremely poor. Therefore, it is very important that the needs of the poorest be taken into account and prioritized whenever possible when determining projects to be funded by zakat.

1.1.3 The Foundation will use zakat to provide adequate assistance to meet the basic needs of those entitled.

1.1.4 The foundation believes that zakat can and should be used for emergency relief activities, such as providing food, shelter, clothing, medicine and health care, water and sanitation, and other items or basic activities that can help alleviate poverty or suffering for those affected.

1.1.5 Zakat funds cannot be used in cases where additional conditions are required to receive them (e.g., in the case of "cash for work" projects).

1.1.6 Where possible, Zakat should also be used in a way that provides long-term solutions to poverty or the needs of the disadvantaged. This can be achieved by developing sustainable livelihood projects, through education or health care, or by supporting other sustainable development activities for the poor and needy (e.g., building a school or orphanage, or constructing an irrigation system in the desert to grow vegetables).

1.1.7 The Foundation will focus on implementing zakat in areas where there is a clear Muslim majority among the population. However, as a humanitarian organization, the Foundation will do so in a way that does not discriminate against people based on race, religion, sect, gender or ability, as it is bound by the internationally recognized humanitarian principles of impartiality, neutrality, independence and humanity. In order to provide the same level of assistance to non-Muslims in such situations, additional funds must first be sought from other sources. If other funds are not available, zakat can be used.

1.2 Amileena alaiha (zakat administrators)

The A & A Rainboe Hearts Around The World Foundation is the legitimate administrator of zakat. In fact, the Foundation is an entity committed to respecting, protecting and fulfilling the rights of the beneficiaries on whose behalf Zakat Funds were collected.

1.2.1 Accordingly, the Foundation is authorized to collect a reasonable portion of 12.5% of zakat funds to cover the costs of implementing zakat-eligible projects. Costs are incurred primarily for awareness-raising and zakat fundraising activities, and then administering these funds to ensure that they reach those eligible for these funds.

1.2.2 Costs incurred by the Foundation are defined as direct costs, direct support costs or indirect costs. The Foundation must determine which costs are related to Zakat projects and those that qualify to be charged to the allowed administrative fee from Zakat Funds.

• Direct costs are first-line implementation costs, which include program and office costs.
• Direct support costs are directly related to the project, but are shared among different projects/services. Therefore, in order to determine the actual cost of implementation, these costs should be billed to Zakat as necessary.
• Indirect costs include IT, HR or financial costs that cannot be directly linked to the project.
• Costs related to fundraising, marketing, event sponsorships, influencers, general training and management costs do not qualify for inclusion in the 12.5% administrative cost category.

1.2.3 Any funds collected by the Foundation office from Zakat to cover administrative costs (direct support or indirect costs) may not exceed the agreed allocation of 12.5%.

1.2.4 To ensure transparency and accountability, the Foundation's program and finance functions should report on the use of Zakat funds. The Foundation must demonstrate consistency, accountability and transparency in its internal environment and reporting for Zakat purposes.

1.3 Mu'allafati quloobuhum (reconciliation of hearts)

The Foundation is inspired by Islamic values and actively seeks to educate our supporters on Islamic values and teachings on poverty alleviation. However, as a humanitarian organization, we do not engage in any propaganda activities. Accordingly, the Foundation does not engage in any zakat activities under the category of mu'allafati quloobuhum.

1.4 Riqaab ("liberation of the slaves")

Where the Foundation finds people suffering from a modern form of slavery - such as bonded labor, forced labor or human trafficking - Zakat funds can be used to liberate people from such forms of slavery (provided they do not benefit "slave owners" who have violated national or international law).

1.5 Gharimeen (indebted persons)

1.5.1 Zakat can be used to help people in debt under the following conditions:

a) the debtor must be in need of financial assistance (those with assets sufficient to cover the debt cannot receive assistance). However, the debtor does not have to be destitute, but simply does not have enough income or assets to pay his debt.

b) the debt should be due immediately. Those whose debts can be deferred may still be eligible for zakat, but may be considered less of a priority than those in need of immediate assistance.

1.5.2 Zakat funds can be used to pay off long-term / bad debts. For example, in microfinance programs, the Foundation can create a bookkeeping allowance against individual loan records using zakat funds if a person has incurred such debt.

1.5.3 The foundation will develop and use processes and criteria to verify that only those who are truly in debt receive support.

1.6 Fi sabeelillah (in the name of Allah)

1.6.1 The Foundation believes that it is permissible to fund municipal social welfare measures and programs to reduce poverty and hardship in disadvantaged communities, such as:

a) sources of pure water

b) health clinics and centers

c) Purchase of specialized medical equipment,

d) Temporary food production points (e.g., bakeries),

e) water storage reservoirs,

f) schools

g) training centers,

h) seed banks,

i) communal farmland, hydroelectric dams

Projects involving social welfare will promote the principle of community empowerment through ownership. The Foundation will strive to adhere to the following conditions when financing communal social assets with zakat:

a) The vast majority of rights holders can be classified as eligible to receive zakat (i.e., poor, needy, travelers, etc.).

b) An assessment of the rights-holder community has been conducted, demonstrating the need for the asset in alleviating poverty and suffering.

c) The consent of the target community to develop or implement the proposed project should be obtained.

d) The project should ensure that rights holders can act as effective and responsible asset managers.

e) Upon completion of the project, ownership and management of the assets are transferred to the local community (e.g., a local cooperative made up of a group of people), with an agreement to protect the intended use of the assets for the community and those in need. The agreement should clearly state that no needy person will be turned away.

f) Municipal assets should always remain non-profit property and serve the general welfare.

g) These assets cannot be owned by one person or one group of people.

1.6.2 The Foundation will use zakat to fund essential service providers, such as teachers, doctors, health care workers, disaster recovery personnel, instructors, agricultural specialists, who provide essential services directly to rights holders, specifically meeting their needs or deprivations, under the following conditions:

a) A service provider is not an employee who provides general operational support and management, but someone who works on the direct implementation of the project.

b) An assessment and consultation was conducted with the rights-holder community, demonstrating the need for the service (to protect life and alleviate poverty and deprivation).

c) The Foundation pays only the necessary service providers for a limited time (no longer than the end of the project).

1.6.3 Zakat funds can be used for education and training purposes to directly teach people about issues and skills to lift them out of poverty. For example, learning how to start their own business, farming methods, tailoring, animal husbandry, health issues, hygiene and sanitation awareness, and other livelihood options.

1.6.4 Any costs that are specific and limited to the distribution or implementation of zakat goods/projects (e.g., gasoline for delivery of goods, short-term rental of transportation/storage space, etc.) and are not part of the long-term assets or costs of the A & A Rainbow Hearts Around The World Foundation may be covered by zakat.

1.6.5 Zakat funds can be used in conflict transformation projects that seek practical solutions that bring peace to communities, leading to a significant reduction in the level of hardship faced by people living in these areas.

1.6.6 However, under this category, the Foundation will not fund communication or mediation activities due to the difficulty of determining and measuring the direct benefits of these initiatives for those actually in need.

1.7 Ibn as-sabeel (travelers)

1.7.1 The foundation defines travelers as people who are at least 70 kilometers from their home and unable to reach their destination (including refugees and internally displaced persons) and who have been cut off from their property, assets or source of income.

1.7.2 This applies to refugees who have not resettled and do not fall into the fuqara and maskin (poor and needy) categories.

1.7.3 The foundation can use zakat funds to provide sufficient food, clothing, shelter, transportation, education, health care and any other needs.

The foundation should conduct research to determine the level of poverty in the countries in which it operates. The foundation should focus on areas where poverty is greatest in a country and the Muslim community is the majority.

• The Foundation will not allocate funds to each zakat category equally, as some categories are not directly applicable to our mission.
• The Foundation will not use zakat funds to finance any type of endowment or similar investment projects.
• The foundation's position is that zakat cannot be given for loans or other business ventures.
• Fundusze Zakat mogą być wykorzystywane na projekty, które są zarówno krótkoterminowe (np. natychmiastowa pomoc humanitarna), jak i długoterminowe (takie jak wieloletnie programy utrzymania).

The term "reserves" is used to describe that portion of a charity's funds that is freely available for its operating purposes and is not subject to commitments, planned expenditures and spending limits. Reserves do not include endowment funds, restricted funds and earmarked funds.

• Zakat Funds held have a direct impact on the calculation of free reserves.
• Zakat funds (less than 12.5% of total zakat funds) should be excluded when calculating the Foundation's free reserve items.

The A & A Rainbow Hearts Around The World Foundation believes that zakat should be the cornerstone of our work, as one of the fundamental pillars of Islam. The Foundation is in a unique position to help Muslims fulfill their obligations by raising funds for the zakat fund, and then protect the lives and dignity of our brothers and sisters, strengthen communities and lift people out of poverty around the world.

Accordingly, the A & A Rainbow Hearts Around The World Foundation takes seriously the responsibility imposed on them by donors, beneficiaries and Allah (may He be exalted) Himself to distribute zakat in accordance with Islamic values and teachings. This policy is intended to ensure that A & A Rainbow Hearts Around The World Foundation's global zakat activities are fully in line with Islamic teachings, thereby enabling the Foundation to fulfill its responsibility in the best possible way.