Zakat and the enormous potential of Islamic charity. A guest post by Jihad Hajjouji, Modou Fall, Paul Callan, and Anja Tranovich of Dalberg Global Development Advisors. This article was first published in The National on June 11th 2016.
The Muslim world is one of economic extremes. It has some of the world’s richest countries and some of its poorest.
Nearly half the countries the UN classifies as least developed – countries with the lowest incomes and greatest economic vulnerability – are members of the OIC (Organisation for Islamic Cooperation), including 18 in Sub-Saharan Africa. However, alongside this poverty, the OIC also includes some of the richest countries in the world and some of its most generous donors.
This dichotomy raises an obvious question: how can resources be better mobilised to meet the needs of the most disadvantaged populations in the world?
Zakat and Sadaqah, the main forms of Islamic giving, could dramatically increase funds available for development. At a global level, as little as a quarter of all Zakat and Sadaqah spending across the Muslim world each year could push every single Muslim above poverty. Most OIC countries could alleviate the worst effects of abject poverty with proper domestic Zakat collection and management.
So, what would it take to put charity to use in helping the poor and promoting development?
First, we must raise awareness that Islamic charity can reduce poverty as well as fund projects such as building mosques and that prosperous communities can send charity to countries in need. Second, any project should be able to pool the fragmented charity funding to spend it productively and efficiently. Third, the project should distribute Islamic charity effectively.
While the culture of giving and helping the needy is deeply rooted in Muslim communities around the world, the ways in which Islamic charity is being used remain very limited.
This is due in large part to current donor preferences: our interviews with multiple Muslim charities reveal that the majority of donors prefer their funds to go towards building mosques, despite efforts by some charities to channel funds towards other needs.
While building mosques is a highly regarded contribution in Islam, addressing other needs of the poor is also consistent with the principles of Islamic charity. In addition, Islamic tradition allows for Zakat or Sadaqah to be spent abroad in countries where people might be in greater need.
Many Islamic donations are given in relatively small amounts, through different channels, which dilutes their potential impact. Pooling these funds together would go a long way to help put Islamic charity to more productive use on behalf of the donors.
One promising example in the Muslim world is the UAE’s Zakat Fund, which was founded in 2003 to spread awareness among the Emirati population, collect Zakat and develop and spend its revenues in Sharia-compliant channels to contribute to the social development of the UAE.
The fund’s services stand out as some of the most advanced in the Muslim world: they include an annual media awareness campaign, a wide range of informational materials available through mobile application and online, statistics and documents on Zakat disbursement and ATM machines in malls to accept deposits along with Zakat calculation services.
An effective charity has to answer many questions such as who are the people in most need of charity?
Is a direct cash transfer the best way to meet their needs or would an investment in a community infrastructure help them best? Who is best-positioned to distribute this charity or implement the intended charitable project? Donors often don’t have the information needed to make these decisions confidently.
While many countries have entire ministries dedicated to Zakat and Sadaqah, many suffer from ineffectiveness or poor capacity. These institutions will need to revamp both their internal organisation and their services to donors and recipients. They must do so to build trust.
If governments, businesses and religious leaders can harness the power of Islamic charity, we could put an end to abject poverty in the Muslim world once and for all.
Jihad Hajjouji, Modou Fall, Paul Callan, and Anja Tranovich work at Dalberg Global Development Advisors.