The Eight Kinds of People Who Qualify to Receive Zakat
Congratulations! You are getting ready to pay your zakat! But wait. Who can receive your zakat? And who makes that decision?
The answer is easy: Zakat can be paid to deserving individuals or groups who fall into one or more of eight zakatable categories designated by God in the Quran.
Indeed, [prescribed] charitable offerings are only [to be given] to the poor and the indigent, and to those who work on [administering] it, and to those whose hearts are to be reconciled, and to [free] those in bondage, and to the debt-ridden, and for the cause of God, and to the wayfarer. [This is] an obligation from God. And God is all-knowing, all-wise. - Al-Tawbah, 9:60
The Quran specifies how zakat is to be distributed precisely, but grants Muslims flexibility in its payment. This guarantees the right of the needful while accommodating changes in how wealth is stored, how money is best distributed, and how different cultures change over time. The Quran also makes it possible for Muslims to pay their zakat to trusted institutions that distribute it to those who belong to one or more of the zakat-worthy categories.
It is noteworthy that God Himself identified for zakat payers and administrators the eight categories for zakat disbursement. This determination is not up to the government, scholars, or even the Prophet himself. It is reported that a man once came to the Prophet and asked him zakat.
The Prophet said: Allah permitted not even a prophet to adjudge zakat[-worthiness]. Rather, He Himself ruled on it and permitted it in eight cases. Therefore, if you belong to any of these, I shall most surely give you your right. - Abû Dâ’ûd
So, where can your zakat go?
The poor (al-fuqarâ’), meaning low-income or indigent. (Google Poverty line in the USA)
The needy (al-masâkîn), meaning someone who is going through some sort of a financial difficulty.
Zakat administrators. (whose who work on collecting, managing, and distributing Zakat may qualify, if that's their job)
Those whose hearts are to be reconciled, meaning new Muslims and friends of the Muslim community.
Those in bondage (slaves and captives) to buy their freedom.
The debt-ridden. A person who is overwhelmed with debt and is unable to pay it back. We'd pay their debt.
In the cause of God. A person or an organization that puts forth efforts and maintains an Islamic center that promotes Islamic education and other community activities geared to further the cause of Islam and Allah Ta'ala. The foundation of their work is to please Allah Ta'ala. (like for example: Jamestown Islamic Society, Inc.)
The wayfarer, meaning those who are stranded or traveling with few resources.
While zakat is not the only form of charity in Islam, it is so important that it was made the Third Pillar. Through zakat the prosperous can uplift the poor, help those who are troubled and comfort those who are in hardship. The law of zakat establishes the rights of the poor to support and help, and releases those who are held captive as slaves or as debtors. Zakat has the power to change the world. But it starts with you paying it. (Source: Zakat.org)