"It is not permissible to give zakat to a non-Muslim." (Al-Maqasid, 4:13)
Not surprisingly, the quotation is being misused by Islamophobes such as Bobby Spencer and others. Their problem seems to be that they focus solely on zakat while ignoring the fact that there's also sadaqah, the voluntary charity that can be given by Muslims to anyone. What follows below is the thread of a conversation over at Daily Kos where this issue came up. The first comment was written by a person calling themselves "Berkeley Moon":
Do you know, for example, that Islam compares wealth in a society to blood in the body? It must be circulated in a healthy society/body. If too much blood is congealed in one place in the body, the body dies. The body also dies if there is too little blood in a part. It is the same with a society. Too little or too much wealth in a part of the society means the society sickens and may die.
To which "Old Man Mountain" wrote:
Interesting... Can you please quote the verse(s) that outline this concept? Thanks.
There is no specific verse in the Qur'an... that mentions this concept; there may be some ahadith that do, although I couldn't find anything through an online search of the best of the hadith databases (USC's MSA website). However, you can find the concept fleshed out in The Secret of Islam, pp. 17-18.
To which "Old Man Mountain" replied:
That link appears to outline... the justification for zakat tax. Now I've done some reading up on this in the meantime, and it seems that although there are some exceptions (like if there is potential to make a convert), by and large...
"It is not permissible to give zakat to a non-Muslim" (Al-Maqasid, 4:13).
I'm just an old guy, sometimes grumpy, but I just don't see what is so "beautiful" about that - unless of course one is a Muslim. I must say the teacher above sure makes it sound flowery.
And here is my latest (and, insha'allah, last) response:
I think part of the problem... is that there's a lot more to this topic than what you've read. First, the passage I linked to used the analogy of wealth in a society to blood within one's body with respect to zakat; however, the passages where I'm familiar with this analogy are normally on the topic of Islamic business practices. The use of this analogy is applicable to both areas.
Next, the quotation you used, "It is not permissible to give zakat to a non-Muslim." (Al-Maqasid, 4:13), is from a book on fiqh or Islamic jurisprudence. It's not a quotation from the Qur'an, if that's what you were thinking.
In Googling the quotation (because I was unfamiliar with it off-hand), I see that it's used in a negative manner by Islamophobes; what I don't see is that these same people don't have a more full understanding about charity within Islam. Zakat is merely one form of charity within Islam. Zakat is the compulsory charity that is required of Muslims; non-Muslims are not expected to pay any zakat whatsoever. In this regard, I don't have any problems with the idea that "it is not permissible to give zakat to a non-Muslim." It is a charity raised by and distributed back to the Muslim community.
However, zakat is only one type of charity in Islam; the voluntary, non-compulsory form of charity in Islam is known as sadaqah. Sadaqah can be given to anyone, Muslim or non-Muslim. Whereas zakat is a prescribed amount (2.5% of one's wealth), sadaqah is limitless. In Islam, even a smile is sadaqah. :) So there's more to Islamic charity than just zakat.