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One of the most important institutions and the special gift of divine religions including Islam is charity institution. Charity may overcome many social problems like poverty and disarray of the income and expenditure. This research is intended to investigate the factors influencing charity and the charity function behavior according to the teachings of Islam and to estimate empirically charity function in Iran. Regarding theoretical and empirical studies on religious expenditure and Islamic taxes; and considering Islamic rules and statistical limitations, the selected explanatory variables are income, wealth, age of householder and religious capital. The charity function is estimated using a panel data consisting of provincial data during the years 2000-2007. The estimation of an exponential charity function shows that charity is an increasing function of provincial per capita income, wealth and religious capital. Using direct data on charity and entering religious capital and wealth as effective factors on charity are of innovations of the paper which differentiates current research from the other studies.

Keywords: Charity, Charity function, Income distribution system in Islam, Religious capital

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