Our association depends on donations to fund its services and develop its projects.
These donations include sadaqah [voluntary alms], gifts and zakat on wealth. To spend the money according to Islamic principles, we wish to inquire about the following:
1. Is it obligatory to distinguish between sadaqah and zakat money?
2. What are the expenditures of each?
3. Is it permissible to spend the funds of zakat and sadaqah on constructing the association's mosque and its service complexes?

Based on what is mentioned in the question, we inform you that:

1.It is obligatory to distinguish between sadaqah and zakat funds because there are differences between them, including the different channels for their distribution which is the main concern of your association.

2.The circle of recipients of sadaqah is wider than that of zakat. Zakat is distributed exclusively among Muslims. This is derived from the hadith narrated by Abbas (may Allah be pleased with them both), "Zakat is to be taken from the rich amongst the Muslims and returned to their poor" [Recorded by Bukhari and Muslim]. Moreover, it is exclusively paid to the eight recipients mentioned in the Qur`an Zakah expenditures are only for the poor and for the needy and for those employed to collect [zakah] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveler - an obligation [imposed] by Allah. And Allah is Knowing and Wise. [At-Tawbah, 60]

This means that the recipients of sadaqah may include the eight channels mentioned in the above verse as well as others who may be either Muslims or non-Muslims.

3. Concerning the construction of the mosque and service complex, they must be financed from sadaqah and not from zakat funds, since zakat is primarily spent on people and not buildings, for [deserving] worshippers and not for mosques. This is because the basic principle of zakat is to fulfill the needs of the poor and those in need and to maintain their livelihood since the Prophet made specific reference to them in the hadith mentioned above. The majority of scholars stipulated that zakat must be transferred to the possession of the poor, enabling them to spend it on their needs of which they are more knowledgeable than others. This aim cannot be achieved if the funds are spent on the construction of mosques or service complexes.

The ruling

Based on this, the construction of mosques and service complexes must be financed from the funds of sadaqah and not from those of zakat.
Allah the Almighty knows best.