The Almighty God decrees in the Quran:
“The obligatory charities are for the needy, the desperate (masakeen), those employed to collect the obligatory charity (zakat) and those to warm their hearts (to Islam); and are used for (freeing) the captives, for the indebted, for the cause of God, and for the travelers. This is an obligation made by God. God is All-Knowing and He judges correctly.” (At-Tawbah 9:60)
The zakat is given directly to the first four classes of people, whereas funds are raised by using the zakat for the next four classes of people.
The root meaning of the word masakeen is “to become still after movement”. Such people once had the means to earn their own subsistence, but then they had to stop earning for various reasons. The sick, the old, the disabled, the jobless or any other desperate people fall into this category.
All the spendings that are made to support the religion of God is in fact for the cause of God, and the other categories are also included in this. So, this class mentioned here as “the cause of God” must be for the spendings of war. God commands to make war against those who start a war against us (Baqarah 2:190). Therefore, we can call this fund “the defense fund”.
The indebted are a different class than the needy or the desperate. An example to them is the owners of businesses who are in urgent need of cash for a short time period. If they are provided with enough amount of money, they can overcome the financial difficulty, continue their business and stand on their own feet. So, they will start making profit again, and be back in the financial cycle being able to give zakat in a short time.