Shariah methodology
How do I calculate purification for dividends?
Steps to estimate and document the non-permissible portion of dividends for purification.
The short answer
Calculate purification by applying a screening percentage that reflects the share of non-permissible income in the company’s total revenue. Multiply that percentage by the dividend you received to get the donation amount. Different scholars or vendors may use slightly different percentages and dates.
A typical calculation
Find the vendor’s non-permissible income percentage for the company. If a company is reported as 2% non-permissible and you receive a £100 dividend, the non-permissible portion is £2. You would then donate that £2 following your chosen purification method.
Shariah-compliance considerations
Our platform uses AAOIFI Shari'ah Standard No. 21 as a practical default for shares and the screening conventions noted there. Purification remains a scholarly practice; consult a qualified scholar if you need a religious ruling.
What this means in practice
- 1Use a reputable vendor or fund report to find the non-permissible income percentage for each company.
- 2Multiply that percentage by each dividend received to find the purification amount.
- 3Record the donation and the calculation method used in your records.