Kapparot, with chicken or with Tsedaqa?

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In many communities, there is a Minhag of doing Kapparot. What is the best way to do it: with chicken or with money for charity?
First of all, we need to clarify that there is no Mitsva in the Tora to perform the Kapparot or to do any kind of animal sacrifice in the eve of Yom Kippur. In our days, as Maimonides explains  “en sham el-la teshuba”, there is nothing else but Teshuba to atone for our sins.  Teshuba, is a mental, emotional process of retrospection, admission, and confession of our flaws that eventually needs to generate a behavioral change.
Kapparot made with chicken is a practice which was initiated by people -not by the rabbis- that apparently started at the time of the Geonim (year 800-1000 CE).  The Kappara made with chicken suppose to inspire our Teshuba. By seeing the Shechita (slaughtering) of the chicken, we realize our own mortality, the fragility of our lives and we reflect on the appropriateness of doing Teshuba while being alive. This is, by the way, the frequent explanation for the effect that the qorban – in the times of the Bet haMiqdash- had in the sinner consciousness. Soon after some Jews started to use animals for Kapparot some prominent Rabbis raised their voices against this practice. Maran Rabbi Yosef Caro (1488-1575) in his celebrated book Shulchan Arukh -the supreme Code of Law for Sephardic Jews- specifically disapproved the practice of Kapparot with chicken in the eve of Yom Kippur. 

Why?

√ First, mishum darke haemori “because it is a practice that belongs to idol worshipers” . (Many cults, even today -Macumba, Vodoo, etc- use a small chicken as sacrifice to their deities see for example: “Elleggua” a major god-warrior of Santeria which must be paid homage by sacrificing to it a small chicken). 
√ Second, the fact that the Kappara performance looks like the Korbanot performance, made the rabbis very concerned: because even if something only looks like  haqrabat chutz, offering a sacrifice outside of the Bet haMiqdash, is a very serious sin.
√ Third, the Chakhamim warned against another risk when doing the Kapparot with poultry. Since so many people were doing Kapparot on Ereb Yom Kippur, the Shechita could not be done with enough care and attention in terms of the checking of the the knives and other ritual details. This is by the way, the point that was brought by Rabbi Obadia Yosef, who formerly supported the Kapparot, to discourage the practice of Kapparot with chicken. Rabbi Yosef recommended  to make kapparot with Tsedaqa (see  http://www.ynet.co.il/articles/0,7340,3450191,00.html). 
√ There is yet another point to add to the disadvantages of chicken’s Kapparot: many years ago, poor people would take the chicken home and eat it. Giving these chickens to the poor at least would be considered Tsedaqa. But today, there is no almost no one that will take these chicken home and eat them.  What is more, even the people who did the Kapparot would not eat these chicken because they believe the animals are now somehow impregnated with all their transgressions.  In other words, on top of all the above mentioned considerations there is also the risk of violating the prohibition of Bal Tashchit (to kill an animal unnecessarily), a Biblical prohibition.
The best way of doing Kapparot, in my opinion, is with Tsedaqa (=charity for needy people).  In this case, none of the above mentioned problems would apply and in addition to Kapparot you will be fulfilling the Biblical commandment of Tsedaqa.