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Dispersement of Zakat
The Prophet (peace be upon him) is reported to have said: "Allah verily did not accept the judgment of a Prophet (peace be upon him) or anybody else in [the distribution of] Zakat, so He gave the Judgment on it. He divided it into eight parts."
This Hadith refers to Surah Al-Taubah 9:60: "Sadaqah (i.e. Zakat) are for the poor, and the needy, and those employed to administer [the funds], and those whose hearts have been reconciled [to the truth], and for those in bondage, and those in debt, and in the cause of Allah, and for the wayfarer; [thus is it] ordained by Allah, and Allah is full of knowledge and wisdom."
Dispersement of Zakat in kind
Muslim jurists who insist on payment in kind deliberate that Zakat is an act of worship and as such can only be done the very same way outlined in the Sunnah. Therefore, payment must be made with the same Zakat item. On the other hand, the Hanafi jurists and others allow payment in kind [by giving another type of item of like value] on grounds that it makes no difference in so far as relief to the poor is concerned. (Al Bahr, Vol. 2). Zakat can be given in kind or cash.