Zakat in Islam is part of Sharia. One way to reduce and even eradicate poverty is by the Islamic principle of Zakat.
What does Zakat mean?
Zakat is one of the five pillars of Islam. As a Muslim you follow these principles. As a Muslim you follow these principles in the same way as you would follow the 10 commandments as a Christian.
Islam has five pillars
The first is the Shahada, it means that you declare that there is only one god and that Mohammad is his prophet.
The second pillar is praying five times a day. Muslims pray five times a day.
The third pillar is Ramadan. Ramadan is fasting for one month in a year during the month of Ramadan.
The fourth pillar in Islam is Zakat.
The fifth pillar is the pilgrimage to Mecca, once in your life if you can afford it.
Zakat is the fourth pillar of Islam. According to this, as a person who has the money and/or any wealth in another form, pay the poor 2.5 percent out of the wealth. This 2.5 percent is not part of taxes or any other charity. You can pay money to your local mosque or a school, but that is not considered to be Zakat. Zakat is only for the poor and the needy, paid by the wealth.
What is the reason to pay Zakat? In Islam there is the principle that the society is responsible for its environment and its people, not just the government. As a society you have the collective responsibility to take care of the poor and needy just like sadaqah donation which has similar reasons to help the needy factions of society.
If everybody would pay their dues of 2,5 percent there would be no need for any benefits culture setup by the government, the society would take care of that.