Charity has great significance in Islam; it is one of the clearest indications and most truthful signs of the sincerity of one's faith, as souls were created to love money and strive to save it, so whoever spends his money and contradicts his instinct, it is a proof of his faith and sound belief. Regarding this, the Prophet, sallallaahu ‘alaihi wa salam, said: “…and charity is a proof,” which means it is proof of sound faith – that is, if he intends it for the sake of Allah The Almighty, not for showing off or for enhancing one's reputation.
This is why many texts show the virtues of charity and spending for the sake of Allah The Almighty, and urge the Muslim to give charity, seeking the reward from Allah The Almighty.

One of the specific characteristics of the righteous servants of Allah The Almighty is spending on the poor and the needy; Allah The Almighty Says (what means): {Indeed, they were before that doers of good.They used to sleep but little of the night And in the hours before dawn they would ask forgivenessAnd from their properties was [given] the right of the [needy] petitioner and the deprived.} [Qur’an 51:16-19]

Allah The Exalted has promised – and He is the Generous who does not break His promise – to compensate those who spend for His Sake; He Says (what means): {Say, "Indeed, my Lord extends provision for whom He wills of His servants and restricts [it] for him. But whatever thing you spend [in His cause] - He will compensate it; and He is the best of providers ].}[Qur’an 34 :39] And He promised to multiply their rewards many times for them, Allah The Almighty Says (What means): {Who is it that would loan Allah a goodly loan so He may multiply it for him many times over? And it is Allah who withholds and grants abundance, and to Him you will be returned.} [Qur’an 2:245]

Giving money is one of the types of Jihad (striving in the cause of Allah The Almighty); rather, Jihad with money precedes Jihad with one`s self in all the verses that mentioned Jihad except in one place in the Qur’an. The Prophet, sallallaahu ‘alaihi wa salam, said: ”Fight the polytheists with your wealth, yourselves, and your tongues.” [Abu Daawood]

There are many Hadiths (narrations) in the Sunnah (Prophetic tradition) which encourage giving charity and clarify its reward are a comfort to the eye of the believers and a delight to the hearts of the charitable, for they state that charity is one of the best acts of worship that is beloved to Allah The Almighty. Ibn ‘Umar narrated that the Messenger of Allah, , said: “The most beloved acts of worship to Allah are: happiness that you bring to a believer’s heart, relieving his distress, paying off his debt or driving away his hunger.” [Al-Bayhaqi] [Al-Albaani: Hasan]

Charity elevates its giver to the highest rank; the Prophet, sallallaahu ‘alaihi wa salam, said: “This worldly life is for four categories of people: a man to whom Allah has given wealth and knowledge, so he fears his Lord, maintains ties of kinship with this money, and he knows the rights of Allah regarding it, this one is truly in the best rank ...” [At-Tirmithi]

Charity protects its giver from calamities and misfortunes, and saves him from distress and hardship; the Prophet, sallallaahu ‘alaihi wa salam, said: “Performing good deeds protects from bad ends and calamities, and those who act righteously in this world will be the good people in the Hereafter.” [Al-Haakim] [Al-Albaani: Saheeh]

Consider this Hadith which signifies the multiplied reward of charity: The Prophet, sallallaahu ‘alaihi wa salam, said, “No one gives charity out of his honest earning –and Allah accepts only what is from lawful earning – but The Most Merciful accepts it with His right hand even if it is only a date, and then fosters it as one of you fosters a colt or a young she-camel, till it becomes like a mountain or even greater.” [Muslim]

Charity extinguishes sins, and expiates evil deeds; the Prophet, sallallaahu ‘alaihi wa salam, said: “Charity extinguishes sin as water extinguishes fire.” [At-Tirmithi]

It is one of the greatest causes for attaining blessings in money, the increase of provision, and compensation from Allah The Almighty with what is best. The Prophet, sallallaahu ‘alaihi wa salam, said: “Allah The Almighty Says, ‘O son of Adam, spend and I will spend on you.” [ Muslim]

It is also protection from the punishment of Allah; the Prophet, sallallaahu ‘alaihi wa salam, said: “Protect your selves from the Fire, even with one half of a date.” [Al-Bukhari]

Spending in charity is an indication of the sincerity of one's faith, strength of certitude, and having good expectations from the Lord of the worlds. Besides, it has many other virtues, which make the believer look forward to the reward of Allah The Almighty and overlook the whispers of the devil who frightens him with poverty, and beautifies for him stinginess and miserliness. Allaah The Almighty Says (what means): {Satan threatens you with poverty and orders you to immorality, while Allah promises you forgiveness from Him and bounty. And Allah is all-Encompassing and Knowing} [Qur’an 2 :268]. We ask Allah The Almighty to enable us to spend for His Sake, and to protect us from being stingy, for He is able to do all things.
Article source: http://www.islamweb.net/emainpage/
 
 
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