I used an LLM to help draft this post and it likely contains >10% AI-generated text, but I’ve edited/rewritten it extensively and endorse it.

A quick note aimed at people going through AIM's incubation programme (or otherwise founding new effective charities), though it may be of broader interest.

I think designing for zakat compliance is an underexplored lever, and being intentional about it early could open up a range of interventions and orgs that wouldn't otherwise get considered. These might not be the most cost-effective options relative to current best-in-class charities, but they have two attractive properties: they're potentially more (or at least differently) scalable, and they aren't competing for the same pool of funding. Zakat is restricted funding, so a zakat-compliant org is tapping a largely separate source rather than dividing the existing effective-giving pie.

The catch is that very few effective charities work on interventions, or in the locations and with muslim-super-majority populations, that could feasibly be zakat-compliant. New Incentives, Spiro, Taimaka, and First Embrace are among the plausible candidates (in addition to GiveDirectly who sometimes run zakat-compliant programs). But even where eligibility is conceivable, none of them are actually compliant right now. A big reason is that it's hard and costly to retrofit zakat compliance if you haven't built your internal systems for it from the outset. Tracking funds, ensuring they reach eligible recipients (asnaf) within a year of receipt, respecting requirements like tamlīk (transfer of ownership to the recipient), holding the funds in non-interest-bearing accounts, and being able to demonstrate all this to scholars and donors is much easier to design and implement from scratch than it is to try and morph-into later.

There could be big upsides to trying to go this route. There currently aren't any GiveWell-recommended zakat-compliant charities, so there's a real first-mover advantage in that early-on this could be a major source of funding. And it's plausible that the next-best zakat-compliant option is often something like GiveDirectly (where it qualifies), which means an effective zakat-compliant charity could plausibly be several times more cost-effective than where that money would otherwise go.

The scale is what makes this worth considering: estimates put annual zakat obligations somewhere in the region of $400bn–$1tn, but perhaps only 5–10% of what's owed is actually paid in a way that's tracked and directed effectively. A genuinely cost-effective option, paired with a decent advertising spend, could help unlock a meaningful share of the remaining ~90%. Even modest movement on that percentage represents enormous sums relative to current EA global health spending.

None of this is a claim that every founder should pivot to zakat compliance. It's a claim that the option is currently undervalued, cheap to preserve if you think about it early, and very expensive to recover if you don't. If your intervention, geography, and beneficiary population are even plausibly in scope, it's worth at least scoping the requirements before you lock in your systems

There are also a bunch of downsides/things to consider here:

• Whilst running a zakat-compliant ‘effective charity’ might be very cost-effective relative to other zakat compliant charities, you might have to be significantly less cost-effective than the most cost-effective charities - and I’m not sure how to value this tradeoff between cost-effectiveness and access to restricted/new funding.
• Other than GiveDirectly, other effective charities that could be zakat compliant are still not going to be seen as zakat-compliant by the most orthodox/conventional scholars.
• Some people view this type of funding source as a signal that your org is not impartial, which might be a reputational risk or cost you potential funding etc