Among the considerable signs of showing gratitude to Allah are Zakah and charity. When a Muslim pays his Zakah or spends something in charity, his soul is purified from miserliness and he rises to the peaks of magnanimity and honour. This very act of spending money in charity and Zakah is a great sign of showing gratitude to Almighty Allah. Of course, all Muslims are commanded to show gratitude to Allah night and day.
Dr. Muzzamil Siddiqi, former President of the Islamic Society of North America (ISNA) states: Almighty Allah says: (Speak to My servants who have believed, that they may establish regular prayers, and spend (in charity) out of the Sustenance We have given them, secretly and openly, before the coming of a Day in which there will be neither selling nor befriending. It is Allah Who hath created the heavens and the earth and sendeth down rain from the skies, and with it bringeth out fruits wherewith to feed you: it is He Who hath made the ships subject to you, that they may sail through the sea by His Command; and the rivers (also) hath He made subject to you. And He hath made subject to you the sun and the moon, both diligently pursuing their courses: and the Night and the Day hath He (also) made subject to you. And He giveth you of all that ye ask for. But if ye count the favors of Allah, never will ye be able to number them. Verily, man is given up to injustice and ingratitude.) (Ibrahim 14: 31-34)

Allah has given us many things. His blessings are countless. We should be thankful to Him all the time. We should also show our gratitude by doing good to others, by helping the poor and by spending in His cause.
A believer does good deeds recognizing Allah’s goodness to him/herself. A believer’s way with wealth is that he/she enjoys it with moderation and spends it to seek Allah’s blessings in the Hereafter. Almighty Allah says: (But seek, with the (wealth) which Allah has bestowed on thee, the Home of the Hereafter, nor forget thy portion in this World: but do thou good, as Allah has been good to thee, and seek not (occasions for) mischief in the land: for Allah loves not those who do mischief.) (Al-Qasas 28: 77)
In the Qur’an there are five words used for charity: Zakah (obligatory charity), sadaqah (charity), khairat (good deeds), ihsan (kindness and consideration), infaq fi sabil Allah (spending for the sake of Allah).
Why is there so much emphasis on charity and generosity? Because charity elevates the human personality by removing selfishness, greed and materialism. It creates compassion, care, love and kindness. It makes a person more thankful to Allah. It helps those who are in need and it provides funds for good causes and for community projects.
The Qur’an says that all Prophets of Allah preached Salah and Zakah: (And We made them leaders, guiding (men) by Our Command, and We sent them inspiration to do good deeds, to establish regular prayers, and to pay Zakah; and they constantly served Us.) (Al-Anbiya’:73)
Almighty Allah has promised many blessings for those who help the poor and give in His cause. Allah says in the Qur’an: (The Believers must (eventually) win through, Those who humble themselves in their prayers; Who avoid vain talk; Who And who are payers of the poor-due) (Al-Mu’minun 23: 1-4)
Almighty Allah also says: (Those who believe, and do deeds of righteousness, and establish regular prayers and pay zakah, will have their reward with their Lord: on them shall be no fear, nor shall they grieve.) (Al-Baqarah 2: 277)
The Prophet (peace and blessings be upon him) said: “Never does charity cause wealth to diminish.” (At-Tirmidhi, Hadith no. 2247)
There are also many warnings against those who do not spend in the way of Allah: ( They who hoard up gold and silver and spend it not in the way of Allah, unto them give tidings (O Muhammad) of a painful doom, On the day when it will (all) be heated in the fire of hell, and their foreheads and their flanks and their backs will be branded therewith (and it will be said unto them): Here is that which ye hoarded for yourselves. Now taste of what ye used to hoard) Almighty Allah also says: (And spend something (in charity) out of the substance which We have bestowed on you, before Death should come to any of you and he should say, “O my Lord! Why didst Thou not give me respite for a little while? I should then have given (largely) in charity, and I should have been one of the doers of good.” But to no soul will Allah grant respite when the time appointed (for it) has come; and Allah is well-acquainted with (all) that ye do.) (Al-Munafiqun 63: 10-11)
Zakah is an obligatory charity:
Zakah is obligatory like Salah. There are some Muslims who do not pay Zakah and there are some who give whatever they feel like giving, without observing the rules of Zakah. Muslims must learn the rules of Zakah, just as they learn the rules of Salah. Briefly the rules are as follows:
Zakah is obligatory on those who have the nisab (i.e. the minimum wealth owned for one year). It is about 3 ounces of gold or its cash value. Muslims should calculate carefully all their wealth. After deducting their personal and family expenses whatever is left they must give Zakah on it. The ratio of Zakah on cash, gold and silver is a minimum of 2.5%. The personal belongings such as residential home, car, clothes, furniture, computer, books etc. are exempt from Zakah.
Zakah is for the 1. Poor, 2. Needy, 3. Those who administer the Zakah, 4. Those whose hearts are reconciled for Islam (new Muslims etc.), 5. To free the slaves, 6. Those unable to pay their debts, 7. Travelers rendered helpless, 8. In the Way of Allah. These categories are mentioned in the Qur’an in Surah At-Tawbah verse number 60.
Those who have enough for their basic needs should not take Zakah. One should not give Zakah to his/her own parents, children or dependants. Zakah is also to help the needy Muslims only. Non-Muslims can be helped from sadaqat and other charities.
Sadaqatul Fitr or Zakahul Fitr:
This is a special charity for the month of Ramadan. All those who are supposed to give the Zakah must give sadaqatul Fitr in Ramadan for themselves as well as on behalf of their dependants. This charity should be given during Ramadan or before the `Idul Fitr prayer.