Glossary
Purification (tazkiyah)
تزكيةDefinition
Donating to charity the portion of investment income attributable to a company's incidental impermissible earnings.
Many shariah-screened stocks pass the activity screen but still earn small amounts of interest on cash holdings. Purification requires the investor to estimate that portion of dividends (and sometimes capital gains) and give it as charity without expecting reward.
Index providers like DJIM and S&P Shariah publish annual purification ratios for screened stocks. AAOIFI standards make purification mandatory for compliant equity ownership.