Is a gift to relatives better than charity to distant people, and can this ruling be generalized, especially since the hadith "Had you given it to your maternal uncles, your reward would have been greater" indicates that a gift to a close relative who is not in need is better than charity to a distant person who is in need, so how does this align with Islam's encouragement of charity?

The aforementioned hadith (definition) does not indicate an absolute preference for giving gifts to relatives over giving charity to strangers. Rather, it varies according to circumstances. Giving a gift to a relative is better if they are in need, as it then becomes both charity and an act of maintaining kinship ties. Scholars have mentioned that Maymunah's maternal uncles (may Allah be pleased with her) were in need of a servant. However, circumstances may necessitate prioritizing a stranger over a relative if the stranger is in greater need.