As far as Islamic Sharia is concerned, zakah is the third pillar of Islam and it is obligatory like salah (Arabic for: prayer). Zakah is obligatory on those who have the nisab (Arabic for: the minimum amount that a Muslim must have before being obliged to zakah). A Muslim is obliged to pay zakah on his or her wealth if the conditions (namely, having the nisab and the passage of one full lunar year while having the nisab) are met.
In his response to this topic, Dr. Monzer Kahf, a prominent economist and counselor, states that ‘Zakah is the third pillar of Islam. It is obligatory on each Muslim, male or female, provided its conditions are met. To be subject to Zakah, one must own (outside exempt items that will follow) an amount called nisab that equals approximately Euro 1000. Once a Muslim owns this amount, he or she will then look at the lunar year later (i.e. after the passage of 354 days), if then the said amount (e.g., Euro 1000) or more is still available, then he is required to pay zakah on all the amount he has at the rate of 2.5 percent. This is repeated every year on that same date. This date sets what we call the fiscal year for one’s zakah. This means zakah is on savings and wealth.
Exempt items include every part of income a person spends (in contrast to what he or she saves), residence (whether owned or rented), personal and household items (like cloth, furniture, appliances, and personal and family transportation means, be it a horse, a car or a plane as long as it is for personal transportation), and women jewelry as long as it is in reasonable amounts and in use (in contrast to being hoarded or excessive compared to her peers).
In other words, zakah is required on savings, long-term savings (like managed retirement plans, investment, shares, business assets, and inventory).
Of course, live stock and farm products are also subject to zakah though the rates of their zakah are a little different (generally higher).
There is also zakah of `Eid Al-Fitr that is required before the end of Ramadan. It is obligatory on the head of the household. It is like a toll obligation per member of the household, the value of 2.24 kg of wheat, rice of a similar basic staple on the land. Here the nisab is just having food of the day and any extra to give away.
Zakah is due to be given to any of the eight categories that are mentioned in Almighty Allah’s saying, [The alms are only for the poor and the needy, and those who collect them, and those whose hearts are to be reconciled, and for [freeing] the captives and the debtors, and for the cause of Allah, and (for) the wayfarers; a duty imposed by Allah. Allah is Knower, Wise] (At-Tawbah 9:60).
Reading this verse carefully, one will notice that it is essentially different persons in need (of course except for collectors/distributors), this is why there are many sayings of the Prophet (peace and blessings be upon him) that only mention the poor and needy. Hence, I would say that it is due to be given to Muslim charities that specialize in helping the poor and needy, especially at our time because there are many of these around the world.