We are obligated to be more scrupulous in fulfilling the commandment of charity than any other positive commandment because charity is the sign of a righteous man, the seed of Abraham our Father, as it is said, “For I know him, that he will command his children …to do righteousness” (Genesis 18:19). The throne of Israel is established and the religion of truth is upheld only through charity, as it is said, “In righteousness shall you be established” (Isaiah 54:14). Israel is redeemed only through charity, as it is written, “Zion shall be redeemed with judgment and they that return of her with righteousness” (ibid. 1:27).^[1]

Tzedakah is derived from צדק  (tzedek) - meaning righteousness, justice, or fairness, but has come to mean charity in English.

The words justice and charity have different meanings in English. How is it that in Hebrew, one word, tzedakah, has been translated to mean both justice and charity?^[2]

This translation is consistent with Jewish thought as Judaism considers charity to be an act of justice. Judaism holds that people in need have a legal right to food, clothing and shelter that must be honored by more fortunate people. According to Judaism, it is unjust and even illegal for Jews to not give charity to those in need.^[2]

Thus, giving charity in Jewish law and tradition is viewed as obligatory self­-taxation, rather than voluntary donation.^[2]

Giving charity is an obligation in Judaism (Leviticus 25:35-38, Deuteronomy 19:20-24). This obligation means providing charity to both Jew and non-Jew. In many homes one will find a tzedakah box - a box or other container where coins are dropped in and collected for charity. It is a tradition for Jews to give tzedakah on Yom Kippur, Shemini Atzeret, Pesach, Shavuot, and Purim as well as during other celebratory events such as weddings.

[O]ne who helps fulfill the poor person has a letter added to Tzedek, and it becomes "tzedakah ('charity')." This is the secret of, "The merciful man does good to his own soul" (Mishlei 11:17). Acts of kindness show that one is under Judgment but has perfected it with Chesed. Then it turns into Mercy.^[3]

According to halachah, everyone (including the poor) is to give 10% of one's net income. One may give more than 10% but no more than 20%. If one cannot give that amount, any amount will be satisfactory. One is forbidden from giving so much that one becomes impoverished. The obligation to perform tzedakah can be fulfilled by giving money to the poor, to health care institutions, to synagogues, or to educational institutions.  It can also be fulfilled by supporting your children beyond the age when you are legally required to, or supporting your parents in their old age. It is acknowledged that not everyone who asks for tzedakah is truly in need so there is some legitimate basis for doubting a beggar's sincerity. It is permissible (and some say ethical) to investigate a charity before offering any donation.

Everyone has an obligation to avoid becoming in need of tzedakah. A person should take any work available to him/her even if the work is "beneath" him/her to avoid becoming needful of tzedakah. Of course, if one is truly in need of tzedakah, one is obligated to accept any that is offered. Contrary to popular belief, Jewish scholars, teachers, and rabbis must earn an income from employment other than teaching Torah and relying on tzedakah.

The idea of tzedakah implies that the recipient deserves the gift. … When a Jew gives tzedakah, he is in a sense confirming a partnership with G-d to care for others. This is an obligation, it is not an act of kindness, chesed.^[4]

This idea is spelled out in the Zohar:
Hence he that gives tzedakah to the poor makes the Holy Name complete as it should be above, since tzedakah is the tree of life... This applies only to charity done for its own sake, for then the doer links together tzedakah with tzedek so that the whole forms the Holy Name, since tzedek is not established without tzedakah. (Zohar, Vayikra, Section 3, Page 113b)^[4]

The Zohar assumes, as did Maimonides, that the root of the word tzedakah is indeed tzedek. The only thing which is different is that tzedakah contains an additional letter hei. This letter comes from the Divine name, the Tetragrammaton. Therefore, the person who gives tzedakah becomes partners with G-d, and his action is permeated with divinity here on earth, while he completes the Divine name above.^[4]

There are different levels of tzedakah described in the Talmud that were organized into eight levels by Maimonides (Rabbi Moshe ben Maimon/Rambam) in his Mishneh Torah (Laws of Charity, 10:7-14).
1. Enable the recipient to become self-sufficient (i.e. loans, grants, employment).
2. To give without knowing the recipient's identity and the recipient does not know one's identity.
3. To give knowing the recipient's identity but the recipient does not know one's identity.
4. To give without knowing the recipient's identity but the recipient knows one's identity.
5. To give before being asked.
6. To give after being asked.
7. To give less than one should, but giving cheerfully.
8. To give begrudgingly.

In practice, most Jews carry out tzedakah by donating a portion of their income to charitable institutions, or to needy people that they may encounter; the perception among many modern day Jews is that if donation of this form is not possible, the obligation of tzedakah still requires that something is given.^[5]

As for the more limited form of tzedakah expressed in the biblical laws, namely leaving of gleanings from certain crops, the Shulchan Aruch argues that Jewish farmers are no longer obliged to obey it. Nevertheless, in modern Israel, rabbis … insist that Jews allow gleanings to be consumed by the poor and by strangers, and all crops (not just gleanings) by anyone and everyone (free, not bought nor sold) during Sabbatical years.^[5]

In addition, one must be very careful about how one gives out tzedakah money. It is not sufficient to just give to anyone or any organization, rather, one must check the credentials and finances to be sure that your Tzedakah money will be used wisely, efficiently and effectively.

We learn this from both the [Tanach] (Proverbs 22:22 - Do not rob a poor man because he is poor, and do not crush the poor man in the gate.) and from Talmudic-era commentaries including [Bamidbar] Rabba 5:2 [Do not rob the impoverished because he is impoverished]. It is taught that tzedakah money was never yours to begin with, rather, it always belongs to the recipient, and hence you have an obligation to give it and to give it away to places that use it efficiently and effectively.^[5]