This guide is about bookkeeping. What zakat may be spent on, and who may receive it, is for the mosque’s imam or scholars to decide. The books only need to record that decision and show it was followed.
What a restricted fund is
In the books, a restricted fund is money given for a stated purpose. The giver chose the purpose, so the money can be spent only on it. A building fund, a zakat fund and a fund for Ramadan meals are restricted; the general fund, which pays the electricity bill and the staff, is not.
Charity rules in several countries treat a gift given for a stated purpose as restricted to it, so keeping funds apart is about more than tidiness. Your accountant can tell you what applies to the mosque.
One fund per purpose
- Give each fund a plain name and one sentence on what it’s for, agreed by the board and written down.
- Note who can approve spending from it and who can see its records. Help and zakat requests carry personal details, so they need a short list of people.
- Don’t open a fund for every small campaign. A fund earns its place when givers are asked to give to it and money will sit in it.
Record the purpose when the gift arrives
The fund is decided when the gift arrives, not later. An envelope marked for the building fund goes against the building fund in the Friday count; an online gift goes against the fund the giver chose. Receipts and year-end statements should show the fund too, so givers can see where their gifts went.
If a gift’s purpose is unclear, ask the giver, or follow a written rule the board has agreed for unmarked gifts. Moving a gift to another fund afterwards needs the giver’s agreement, and a note in the books of who agreed and when.
One bank account can hold many funds
Funds are kept apart in the books, not necessarily in the bank. Many mosques keep one account and let the ledger show each fund’s balance; some keep a separate account for zakat or a building fund, so the balance is visible at a glance. Either works, as long as the ledger shows for each fund what came in, what was paid out and what is left.
Spending from a fund
- Each payment names its fund. A builder’s invoice is paid from the building fund; a help payout is paid from the fund its request was approved against.
- Payouts carry their approval. For a help or zakat payout, record the request, who approved it, the amount and the date, and keep the person’s details to the few people who handle requests.
- A fund never goes below zero. If the general fund must borrow from a restricted fund for a few weeks, the board approves it, the books record it as a loan between funds, and it is paid back on a set date.
Reporting
A short monthly report for the board gives each fund’s opening balance, money in, money out and closing balance. A building fund also shows its pledges: what was promised, what has come in and what is overdue. When a campaign reaches its goal, or the project changes, the board decides what happens to any money left over, tells the givers, and records the decision in its minutes.
Mistakes to avoid
- One donations line for everything, with the funds worked out later from memory.
- Paying a bill from whichever fund has money, meaning to settle up later, with no record.
- Recording help payouts without the request they answer.