In the Torah-sphere of social obligations there are two general terms and concepts: tzedakah (righteousness) and Gemilut Chassadim. These two terms are closely allied in meaning and are often interchanged. In actual practice, however, there is a cardinal difference between them. Maimonides explains these terms as follows1:
The word tzedakah is derived from tzedek, which means justice or righteousness. Justice means to grant everyone who has a right to something that which he is entitled to, and to give every being that which corresponds to his merits. But in the Books of the Prophets, fulfilling the duties imposed upon one with regard to others is not called tzedakah in conformity with the first sense. For when giving a hired worker his wages or paying a debt, this is not called tzedakah.
On the other hand, fulfilling duties towards others, i.e., duties imposed upon one on account of moral virtues (such as remedying the injuries of those that are injured), is called tzedek. With reference to the returning of a pledge, therefore, it is said that "it shall be tzedakah unto you" (Deuteronomy 24:13). For when one walks in the way of moral virtues, he does justice unto his rational soul, giving it the due that is its right. And because every moral virtue is called tzedakah, it says: "He believed in G-d and it was accounted to him as tzedakah" (Genesis 15:6), i.e., the virtue of faith. This applies likewise to the dictum: "It shall be tzedakah unto us if we take care..." (Deuteronomy 6:2 5)
Chessed (the singular of chassadim - kindness) denotes an excess in whatever matter excess is practiced. In most cases, however, it is applied to excess in beneficence. Beneficence includes two notions: (a) the exercise of beneficence toward one who has no right at all to claim this from you; and (b) the exercise of beneficence toward one who deserves it, but in a greater measure than he deserves it.
Thus, while tzedakah refers to every good action performed because of a moral virtue with which one perfects his soul, chessed applies to beneficence taken absolutely.
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