Zakaah in the form of prizes for memorising Qur’aan

It is not permissible to spend zakaah wealth on anything
except those who are mentioned in the Holy Qur’aan (interpretation of the
meaning):

“As-Sadaqaat (here it means Zakaah) are only for the
Fuqaraa’ (poor), and Al‑Masaakeen (the poor) and those employed to collect
(the funds); and to attract the hearts of those who have been inclined
(towards Islam); and to free the captives; and for those in debt; and for
Allaah’s Cause (i.e. for Mujaahidoon — those fighting in a holy battle), and
for the wayfarer (a traveller who is cut off from everything); a duty
imposed by Allaah. And Allaah is All-Knower, All-Wise”

[al-Tawbah 9:60]

These eight are the categories to whom zakaah may be given,
and no one else.  

Please see also the answers to questions no.
125481 and
21794. 

With regard to giving some of the zakaah wealth in the form
of prizes, if the winner is one of those who are entitled to zakaah, it is
permissible to give the prize from zakaah wealth, but if he is not one of
those who are entitled to it, then it is not permissible. 

Shaykh Ibn Jibreen (may Allah preserve him) was asked: Is it
permissible to give zakaah in the form of prizes during lectures to Muslims
and non-Muslims? 

He replied: 

Zakaah may be given to poor Muslims even if it is given as
prizes. With regard to non-Muslims, it should not be given to them if it is
known that they are stubbornly rejecting the truth; prizes may be given to
them from other sources. 

End quote from the Shaykh’s website:

http://ibn-jebreen.com/ftawa.php?view=vmasal&subid=9249&parent=786

Shaykh Saalih al-Fawzaan (may Allah preserve him) said: It is
not permissible to give zakaah to anyone other than the eight categories
whether it is for bridges, public works, schools, mosques or any other
charitable projects, because these projects may be financed through
donations and waqfs set up for that purpose. 

End quote from al-Muntaqa min Fataawa al-Fawzaan 

And Allah knows best.