The Alms of Fitr (Fitra)
Abdullah Ibn-i Abbas, may Allah be pleased with them, narrates:
Allah's Messenger, peace and blessings upon him, commanded the alms of fitr so that the fasting person would be cleansed of vain, ugly and haphazard words and so that it would provide the poor with provision. Whoever gives this before the prayer of festival ('Iyd prayer), it is accepted of him as alms. And whoever gives it after the prayer of festival, then, it is like one of the alms given at other times. (Ibn-i Majah, Zakat: 21)
With the alms of fitr, in other words with fitra, we offer thanks for the blessing that we have successfully completed the worship of fasting. For this reason, another name for the Ramadan Festival is 'the Festival of Fitr'. In this festival, the iftar (the meal eaten to break fasting at sunset) of the fasting for a month is eaten. Just like the iftar that we eat every evening of Ramadan, the iftar we eat at the end of this month as a divine banquet has many mysteries.
The joy the believer feels in the festival is similar to the joy that s/he feels the instant s/he reaches his/her Lord. The alms of fitr is an expression of that joy.
Just as a joyful person gives presents to people, so too does the believer who completes his/her fasting and has gotten closer to his/her Lord have the opportunity to experience that joy once more by giving the alms of fitr.
So, the alms of fitr, which we give in Ramadan, has two benefits: one for us, and one for the needy:
The benefit pertaining to us is that it is a kaffarah (compensation) for our shortcomings and it helps to cleanse them. Allah forgives them on account of that alms. This way, the poor also get some of their needs met, however few they might be.
In the hadith (saying of the Prophet), it is stated as a stipulation for attaining those blessings that the alms should be given before the prayer of festival. Believers are encouraged to do it.