Sadaqah is a noble act of worship legislated to eliminate the spiritual diseases of greediness. But because the heart of the giver is not immune from show and insincerity, it has been emphasized that Sadaqah should always be given secretly. Certainly, Riyaa (show) and greediness are both very destructive diseases and Sadaqah that is rendered secretly is a powerful remedy to them.
This is a general term for all charities besides the obligated charity, Zakah. All acts of worship through financial expenditure are by broader definition classified as Sadaqah. In addition, Sadaqah is not limited to spending money, any good deed can be considered as Sadaqah like as we will mention later.
Allah, the Exalted One, says: "The parable of those who spend their wealth in the way of Allah is that of a grain of corn: it grows seven ears, and each ear has a hundred grains. Allah gives manifold increase to whom He pleases; Allah cares for all and knows all things" [Quran 2:261].
"By no means shall you attain righteousness unless you give freely of that which you love, and whatever you give, Allah knows it well" [Quran 3 : 92].
"And spend from what We have made you heir. For those of you who believe and spend, for them is a great reward" [Quran 57: 7].
The Messenger of Allah, upon whom be peace, said: "Sadaqah appeases the anger of the Lord and wards off the agony of death."
It is similarly related that the Messenger of Allah, upon whom be peace, said: "The Sadaqah of the Muslim increases during his lifetime. It also softens the agony of death, and through it, Allah takes away arrogance and vanity."
The Messenger of Allah, upon whom be peace, said: "There is not a day in which the obedient servants rise in the morning or two angels descend, and one of them says: 'O Allah! Compensate the one who spends freely.' The other angel says: 'O Allah! Let an annihilation come upon the one who is niggardly.' " This is related by Muslim.
The Messenger of Allah, upon whom be peace, said: "Acts of kindness protect one from ruin wrought by evil. Sadaqah given secretly appeases the anger of the Lord, and a gift to strengthen the ties of relationship increases one's life span. All good deeds are sadaqah, and those who do acts of kindness in this world are also the same people in the other world. Those who do misdeeds in this world are the same people in the other world. The first of those who shall enter Paradise are the people who do acts of kindness." This is related by at-Tabarani in al'Awsat. Manzhiri does not mention it.
Zakaah in Arabic means growth, blessing and purification. See Lisaan al-‘Arab, 14/358;, 2/399
Sadaqah comes from the word sidq (sincerity), i.e. it is a sign of sincerity of faith on the part of the person who gives it. See Fath al-Qadeer, 2/399
With regard to the shar’i definition:
Zakaah means worshipping Allaah by giving that which He has enjoined of different kinds of zakaah to those who are entitled to them, according to the guidelines prescribed in sharee’ah.
Sadaqah means worshipping Allaah by giving money without that being made obligatory in sharee’ah. The word sadaqah is sometimes used to refer to obligatory zakaah.
With regard to the difference between zakaah and sadaqah, it is as follows:
1 – Zakaah is enjoined in Islam on specific things, which are: money, gold, silver, crops, fruits, trade goods and an’aam livestock, i.e., camels, cattle and sheep.
With regard to sadaqah, it is not obligatory on any kind of wealth, rather it is what a person can give, without any specific limits or guidelines.
2 – Zakaah is subject to the conditions that one full Hijri have passed since acquiring the wealth, and that the wealth meet the minimum threshold (nisaab), and it is a specific portion of wealth which is 2.5 percent of an individual's wealth and assets.
Sadaqah is not subject to any conditions, and it may be given at any time, in any amount.
3 – Allaah has enjoined that zakaah be given to certain types of people, and it is not permissible to give it to anyone else. They are the people mentioned in the verse (interpretation of the meaning):
“As-Sadaqaat (here it means Zakaah) are only for the Fuqaraa’ (poor), and Al Masaakeen (the poor) and those employed to collect (the funds); and to attract the hearts of those who have been inclined (towards Islam); and to free the captives; and for those in debt; and for Allaah’s Cause (i.e. for Mujaahidoon — those fighting in a holy battle), and for the wayfarer (a traveller who is cut off from everything); a duty imposed by Allaah. And Allaah is All-Knower, All-Wise” [Quran 9:60]
With regard to sadaqah, it may be given to those mentioned in the verse on zakaah and to others.
4 – Whoever dies and owes zakaah, his heirs must pay it from his wealth, and that takes precedence over the will (wasiyah) and inheritance.
As for sadaqah, there are no such obligations with regard to it.
5 – The one who withholds zakaah is to be punished, as it says in the hadeeth narrated by Muslim in his Saheeh (987) from Abu Hurayrah (may Allaah be pleased with him) who said: The Messenger of Allaah (peace and blessings of Allaah be upon him) said: “There is no owner of treasure who does not pay his zakaah, but it will be heated in the Fire of Hell and made into plates with which his sides and forehead will be branded until Allaah passes judgement between His slaves on a Day the length of which will be like fifty thousand years, then he see shown his path and whether it leads to Paradise or to Hell. And there is no owner of camels who does not pay zakaah on them, but a soft sandy plain will be prepared for him and they will be made to step on him. Every time the last of them has gone the first of them will return, until Allaah passes judgement between His slaves on a Day the length of which will be like fifty thousand years, then he will see his path and whether it leads to Paradise or to Hell. And there is no owner of sheep who does not pay zakaah on them but a soft sandy plain will be prepared for him, and he will find none of them missing, with twisted horns or without horns or with broken horns, and they will be made to gore him with their horns and trample him with their hooves. Every time the last of them has gone the first of them will return, until Allaah passes judgement between His slaves on a Day the length of which will be like fifty thousand years, then he will see his path and whether it leads to Paradise or to Hell…”
With regard to sadaqah, the one who does not pay it will not be punished.
6 – According to the four schools of law, it is not permissible to give zakaah to one’s ascendants or descendents. Ascendants include one’s mother, father, grandfathers and grandmothers; descendents include one's children and their children.
Sadaqah may be given to one's ascendants and descendants.
7 – It is not permissible to give zakaah to one who is rich or who is strong and able to earn a living.
It was narrated that ‘Ubayd-Allaah ibn ‘Adiyy said: Two men told me that they came to the Prophet (peace and blessings of Allaah be upon him) during the Farewell Pilgrimage when he was distributing the zakaah and asked him for some of it. He looked them up and down, and saw that they were strong and able-bodied. He said, “If you wish, I will give you some, but those who are rich or strong and able to earn have no share of it.” Narrated by Abu Dawood, 1633; al-Nasaa’i, 2598; classed as saheeh by Imam Ahmad and others. See Talkhees al-Habeer, 3/108
Sadaqah may be given to those who are rich and those who are strong and able to earn.
Side Note: It should be noticed here that its permissible to give Zakah to those who are working and strong if they are poor or needy and the salary they receive is not sufficient for their and their family's basic needs. So if they fall into one of the eight categories that mentioned in point 3 then there is nothing wrong with giving them Zakah. Read more here
8 – In the case of zakaah, it is better for it to be taken from the rich of a land and given to their poor. Many scholars are of the view that it is not permissible to send it to another country unless that serves an interest.
But charity may be spent on those who are near and those who are far.
9 – It is not permissible to give zakaah to kuffaar and mushrikeen.
Sadaqah may be given to kuffaar and mushrikeen.
Allaah says (interpretation of the meaning):
“And they give food, in spite of their love for it (or for the love of Him), to the Miskeen (the poor), the orphan, and the captive” [Quran 76:8]
Al-Qurtubi said: In dar al-Islam (the Muslim lands), a captive could only be a mushrik.
10 – It is not permissible for a Muslim to give zakaah to his wife. Ibn al-Mundhir narrated that there was scholarly consensus on this point.
But sadaqah may be given to one’s wife.
These are some of the differences between zakaah and sadaqah.
The word sadaqah may be applied to all kinds of good deeds. Al-Bukhaari (may Allaah have mercy on him) said in his Saheeh: “Chapter: every good deed is a charity” then he narrated from Jaabir ibn ‘Abd-Allaah (may Allaah be pleased with him) that the Prophet (peace and blessings of Allaah be upon him) said: “Every good deed is a charity.”
Ibn Battaal said: This hadeeth indicates that every good thing that a person does or says is recorded for him as an act of charity.
Al-Nawawi said: The Prophet’s words “Every good deed is a charity” means that it is like charity in reward.
Taken from IslamQA.com with slight additions and changes.
Sadaqah is not restricted to any special deed of righteousness. The general rule is that all good deeds are sadaqah. Some of them are as follows:
The Messenger of Allah, upon whom be peace, said: "Every Muslim has to give sadaqah." The people asked: "O Prophet of Allah, what about the one who has nothing?" He said: "He should work with his hands to give sadaqah." They asked: "If he cannot find [work]?" He replied: "He should help the needy who asks for help." They asked: "If he cannot do that?" He replied: "He should then do good deeds and shun evil, for this will be taken as sadaqah." This is related by al-Bukhari and others.
The Messenger of Allah, upon whom be peace, said: "Sadaqah is prescribed for every person every day the sun rises. To administer justice between two people is sadaqah. To assist a man upon his mount so that he may ride it is sadaqah. To place his luggage on the animal is sadaqah. To remove harm from the road is sadaqah. A good word is sadaqah. Each step taken toward prayer is sadaqah." This is related by Ahmad and others.
Abu Zhar al-Ghafari said: "The Messenger of Allah, upon whom be peace, said: 'Sadaqah is for every person every day the sun rises.' I said: 'O Messenger of Allah, upon whom be peace, from what do we give sadaqah if we do not possess property?' He said: 'The doors of sadaqah are takbir [i.e., to say: Allahu-akbar, Allah is Great]; Subhan-Allah [Allah is free from imperfection]; Alhamdulillah [all praise is for Allah]; La -ilaha-illallah [there is no god other than Allah]; Astaghfirul-lah [I seek forgiveness from Allah]; enjoining good; forbidding evil; removing thorns, bones, and stones from the paths of people; guiding the blind; listening to the deaf and dumb until you understand them; guiding a person to his object of need if you know where it is; hurrying with the strength of your legs to one in sorrow who is appealing for help; and supporting the weak with the strength of your arms. These are all the doors of sadaqah. [The sadaqah] from you is prescribed for you, and there is a reward for you [even] in sex with your wife.' " This is related by Ahmad, and the wording is his. According to Muslim, they said: "O Messenger of Allah, upon whom be peace, is there a reward if one satisfies his passion?" He said: "Do you know that if he satisfies it unlawfully he has taken a sin upon himself? Likewise, if he satisfies it lawfully, he is rewarded."
It is related following Abu Zhar that the Messenger of Allah, upon whom be peace, said: "Sadaqah is prescribed for each descendant of Adam every day the sun rises." It was asked: "O Messenger of Allah, upon whom be peace, from what do we give sadaqah every day?" He said: "The doors of goodness are many--the tasbih [to say 'Subhaan-Allah'], the tamhid [to say 'Alhamdu lillah'], the tahlil [to say 'La-ilaha-illallah], enjoining good, forbidding evil, removing harm from the road, listening to the deaf, leading the blind, guiding one to the object of his need, hurrying with the strength of one's legs to one in sorrow who is asking for help, and supporting the feeble with the strength of one's arms--all of these are sadaqah prescribed for you." This is related by Ibn Hibban in his Sahih. Al-Bukhari related it in a shortened form and added in his report: "Your smile for your brother is sadaqah. Your removal of stones, thorns, or bones from the paths of people is sadaqah. Your guidance of a person who is lost is sadaqah."
The Messenger of Allah also said: "He from among you who is able to protect himself from the Fire should give sadaqah, even if but with half a date. If he does not find it, then with a good word."
The Messenger of Allah, upon whom be peace, said: "Allah, the Majestic and Mighty, shall say on the Day of Judgment: 'O son of man! I was ill and you did not visit me.' He will reply: 'O my Lord! How could I visit You and You are the Lord of the Worlds?' Allah shall say: 'Did you not know that My slave, so-and-so, was ill and you did not visit him? If you had visited him, you would have found Me with him. O son of man! I asked you for food and you did not give it to me.' He will reply: 'O my Lord! How could I give You food--You are the Lord of the Worlds?' Allah shall say: 'Did you not know that My slave, so-and-so, asked you for food and you did not give it to him? Did you not know that if you had given the food, you would have found that with Me? O son of man! I asked you to quench My thirst and you did not.' He will say: 'O my Lord! How could I quench Your thirst--You are the Lord of the Worlds?' Allah shall say: 'My slave, so-and-so, asked you to quench his thirst and you did not. If you had given him to drink, you would have found that with Me.' " This is related by Muslim.
The Messenger of Allah, upon whom be peace, said: "A Muslim does not plant or sow anything from which a person, an animal, or anything eats but it is considered as sadaqah from him." This is related by al-Bukhari.
The Messenger of Allah, upon whom be peace, said: "Every good deed is sadaqah. To meet your brother with a smiling face and to pour out from your bucket into his container are sadaqah."