All perfect praise be to Allah the Lord of the Worlds. May Allah`s peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
The ruling of Sharia regarding the Zakah on the funds of trade unions and charitable societies depends on defining the owner of the funds themselves.
If the funds are owned by the members of these unions and societies in their capacity as contributors and in the event of withdrawing a member takes his money or share, then these funds are liable for what is called Zakah of Khalitain (Zakah on the basis that the funds are the property of different people). In this case, the funds are treated as one unit and the administration of the Union`s Fund gives the Zakah due on the whole amount on behalf of all the members, each according to their share. This is attested to by the following narration, whereas Anas narrated :
Abu Bakr wrote to me what was made compulsory by Allah's Messenger (PBUH) and that was (regarding the payments of Zakat). Neither the property of different people may be taken together nor the joint property may be split for fear of (paying more, or receiving less) Zakat. Ibn Hajar al-Haithami said: "The reliable opinion of the Shafie jurists regarding the Zakah of Khalitain is that the property of different people is treated as one property." {Tohfat al-Mohtaaj, vol.3, pp.259}.
However, if the owner of the funds is undefined; rather, it is a public entity-in case the funds of the union and the charitable societies are donations, which don`t belong to their donors anymore-then they aren`t liable for Zakah. This is because these funds take the same ruling of endowed wealth, which isn`t liable for Zakah. The Hanafie Imam al-Khasani said: "Endowed cattle and horses aren`t liable for Zakah because their owner isn`t defined. In other words, possession, which is a key condition in Zakah, is missing. Thus, it isn`t permissible to act freely with that which you possess not." {Badai` al-San`ei, Vol.2:P.9}. It was also stated in the Hanbali book {Matalib Uli al-Nuha, vol.2, pp.16}: "No Zakah is due on cash bequeathed to charity or to buy an endowment with, because the owner, here, isn`t defined." And Allah the Almighty Knows Best.