Purification is a small but important piece of halal-screened equity investing. The mechanics are simple; the spiritual logic deserves understanding.
What it is: when a halal-screened stock pays a dividend, some small fraction of that dividend often represents incidental impure income, typically interest the company earned on its cash holdings. Purification means donating that fraction to charity without intent of reward.
Why it exists: AAOIFI Standard 21 permits investment in companies whose primary business is permissible even if a small fraction (under 5%) of revenue is from impermissible sources. The threshold makes practical investing possible: nearly every large publicly-traded company has some incidental interest income from treasury holdings. Without the threshold, halal equity investing would be impossible. With the threshold plus purification, it works.
How to compute: each halal-screening provider (Zoya, Musaffa, the fund issuer for HLAL/SPUS/Amana) publishes a per-share purification rate. Multiply your dividends received by the rate to get the amount to purify. The HalalRates purification calculator handles the math.
When to purify: many investors purify annually alongside their zakat calculation. Others purify each dividend payment. Both are acceptable.
How to purify: donate to charity. The intent is not to seek reward (since the money was never fully yours). Many investors keep a dedicated charity account just for purification funds; this makes the accounting clean.
Why it matters: the spiritual purpose is to keep your earned wealth halal. The impure fraction is not penalized as sin; it is simply not yours to keep. Donating it cleanses the holding. This is a discipline of integrity, not punishment.
Editorial. Mufti review on purification methodology replaces this when corpus content covers it.