Giving Zakah in the form of specific items, not cash
25-8-2015 | IslamWeb
Question:
Assalammu Allaikum, There is a zakaat collecting organisation in our area (a big village) by way money and they are distributing the zakaat as follows (a) feeding student (not religious studies) with breakfast for poor or needy (b) scholarship expences for students other than religious knowledge (c) monthly subsidy to under priviledged families to procure their daily needs of food items (d) providing amenities for living building houses, kitchens, toilets (e) providing electricity and drinking water facilities with a payment to the government authority (f) employment and business opportunities such as groceries, sewing machine, book shops (g) medical assistance for who are permanently ill or in need of emergency treatment. Should the distribution of zakaat for above be given in the way of money or other means for example can the organisation built the house for the needy or give the required money to the needy to build the house. I would also like to know whether the collected zakaat for the year has to be distributed that year it self or if there is a balance after distribution can balance added to the zakaat the next year.
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His Slave and Messenger.
It is not permissible to pay the Zakah to anyone other than the eight channels stated in the Quran. Allaah The Exalted says (what means): {Zakah expenditures are only for the poor and for the needy and for those employed to collect (Zakah) and for bringing hearts together (for Islam) and for freeing captives (or slaves) and for those in debt and for the cause of Allaah and for the (stranded) traveler – an obligation (imposed) by Allaah. And Allaah is Knowing and Wise.} [Quran 9:60]
The ownership of Zakah must be fully transferred to the correct channels, so it is not valid to buy goods with it according to the view of the majority of the Fiqh scholars. It must instead be paid to such a person, and he would receive ownership of it and spend it however he needs.
Wahbah Az-Zuhayli 
said, “Transfer of ownership is a condition for the validity of the Zakah. It should be paid to the eligible recipients to be under their full ownership. It does not suffice to grant the right of benefit or feed the eligible recipients unless by way of transfer of ownership. ... This is because the Quranic verse (give Zakah) used the Arabic word Eetaa’ (giving) which denotes transfer of ownership. Moreover, the Quran uses the word Sadaqaat for Zakah, and giving Sadaqaat involves transfer of ownership. Also, the verse in Soorah At-Tawbah [Quran 9:60] uses the preposition for, which implies ownership.” [Al-Fiqh Al-Islaami]
So it should have been demonstrated that paying Zakah to the entities you referred to in the question lacks ownership transfer in some cases. For example, feeding students does not involve ownership transfer, so it is not a legitimate channel for paying the Zakah. Moreover, some of the students may have an adequate source of wealth, and these students are not among the eligible recipients of Zakah. One is not qualified to be an eligible recipient of Zakah by being a student alone. In addition, it is impermissible to pay the tuition of poor students from the Zakah fund because this lacks transfer of ownership.
Moreover, Zakah must not even be paid to a poor student so he can pay his tuition unless the following conditions, which we have mentioned in many Fataawa, are met:
First, the student must be seeking religious knowledge, or secular knowledge which falls under the category of collective obligations of the Muslim community.
Second, he must fit to acquire the knowledge and expected to excel in it.
Third, he must be unable to carry on with his studies and work in such a way that if he works to earn a living, he has to drop the studies. Please, refer to Fatwa 233155.
Likewise, what you mentioned about building houses, kitchens, paying utility bills to the government on behalf of the poor instead of offering the Zakah funds to them as highlighted above, the condition of ownership transfer is missing and it is invalid. As for paying the Zakah directly to the poor and needy to build a house, the scholarly view adopted on Islamweb is that there is nothing in the Sharee'ah that prohibits offering Zakah to the poor so they can buy or build a house, because accommodation is among the necessities and basic needs which are indispensable to human life, and which people's lives depend on, as everyone knows. There are two conditions that must be fulfilled in this case. The first is that the poor person does not have a suitable accommodation for him and his dependents. Second, he must be unable to find accommodation even if by renting at a rate that does not consume an unreasonable portion of his earnings. If these two conditions are met, it is permissible to pay Zakah to that poor person to buy a house. The same applies to the sick person who cannot afford medication or treatment. The charity fund must pay the Zakah money to the eligible recipients without delay as it is acting on behalf of the Zakah-giver, and so it is obligated to clear him of liability from that obligation immediately and pay the Zakah to the eligible recipients without delay.
It should be noted that the majority of the scholars – the Maalikis, Shaafi‘is, and Hanbalis – held that the transfer of ownership is obligatory in Zakah. The Hanafis, on the other hand, maintained that it is permissible to pay the equivalent of the due Zakah instead. A group of scholars held the same view but with the condition that it serves the best interests of the poor and needy and there is a desired benefit and a real need. There is no blame on the organization if it follows this scholarly view. Please, refer to Fatwa 53408.
Allaah Knows best.