Baitulmaal was the department that dealt with the revenues and all other economical matters of the state, denotes to the Islamic institution of public money, in which money is collected from wealthy and spent on the welfare of destitute or common people. Currently, it may be run by the state or by the welfare organizations.
Prophet Muhammad, (pbuh), established the common brotherhood of Muslims soon after the Hijrah (migration) to Medina from Mecca. Each resident of Medina became a helper (ansar) to each individual who migrated with Prophet Muhammad (pbuh). The rich muslim took charge of the poor ones and soon the economic disparity was removed with the interdependency.
Prophet Muhammad (pbuh) started the Baitulmaal (a central financial treasury) after the establishment of the first Mosque, Masjid Nabawi (Mosque of Prophet Muhammad), which served as the center of collection and distribution for zakat (charitable tax) and sadaqa (additional contributions).
During the time of Khalifah Umar, the Baitulmaal became larger and it played the role of the Public exchequer for the entire Islamic State. Khalifah Umar then invented the new system of salary and welfare, etc. For example, the poor or unemployed, could get an amount of money from the Baitulmaal. Even women, who were either pregnant or nursing and had no one else to take care of them, received a monthly stipend from the Baitulmaal.