It is Ramadhan time. The time of putting the other first. The time of Zakat, Infaq and Sadaqah (ZIS).
Islamic way of “giving” in general and zakat in particular serves as a means of embodying the values of generosity, compassion and selflessness besides redistributing wealth, alleviating poverty, encouraging philanthropy, stimulating economic growth and preserving social order. However, to achieve such desired goals a lot of conditions fall in place. It is generally believed that zakat has to be disbursed to the eligible as and when collected. Such a belief does not allow for sustainable upliftment of the mustahiq. Be that as it is. One time support and direct money transfer can not generate long term results on all these fronts. Accordingly, we have to look for ways and means of “turning around” the way we do charity and what we do with charity in general and zakat in particular. Thus, it will be in place to allude to contemporary practices in the Islamic world in the realm of charity that can be beneficially adopted and made relevant in Kashmir. Some insights are presented below:
Contemporary Zakat Practices in the Economic realm – Global Zakat-based micro-finance:
One example of Zakat-based micro-finance in action is the Islamic Relief Worldwide organization’s program in Indonesia. The program provides small loans to entrepreneurs and supports them in starting or expanding their businesses. The loans are based on Islamic finance principles, with no interest charged, and repayment is structured according to the borrower’s income. The program also provides training and support to help borrowers develop their businesses and manage their finances (Abushouk, 2018).The loans are designed to support sustainable development and help borrowers become financially self-sufficient.
The Islamic Relief Worldwide organization’s program in Indonesia has several unique features. Firstly, it is based on the principles of Shariah-compliant finance, which ensures that the program is consistent with Islamic ethical standards. Secondly, the program is designed to promote entrepreneurship and economic development among the poor, rather than just providing immediate relief. Thirdly, the program is implemented in partnership with local organizations, which helps to ensure that it is responsive to local needs and context. The program has had a significant impact in Indonesia. For example, in Aceh, the program supported the establishment of a cooperative that produces and sells organic rice. The cooperative has become a successful business, providing employment for local farmers and improving the livelihoods of the members. In addition, the program has supported the establishment of small businesses, such as tailoring and food stalls, which have created jobs and contributed to the local economy (Islamic Relief Worldwide, n.d.).The Islamic Relief Worldwide organization’s program in Indonesia has demonstrated the potential of Zakat-based micro-finance to support sustainable development and financial inclusion among the poor. The program provides an excellent model for other Zakat-based micro-finance initiatives, which can learn from its approach and adapt it to local contexts.
Another example is the Al-Amal Microfinance Bank in Yemen, which is funded entirely by Zakat and other charitable donations. The bank provides micro-loans to small businesses and farmers, helping them to grow their businesses and improve their livelihoods. The bank’s Shariah-compliant financing model has enabled it to reach a wide range of clients, including those who might not have access to traditional banking services (IFC, 2014).
Zakat-based micro-finance has several advantages over traditional micro-finance. Firstly, it is based on the principle of social justice, which is at the core of the Zakat system. Secondly, it enables Zakat funds to be used for sustainable development projects, rather than just providing immediate relief. Thirdly, it promotes financial inclusion among the poor, who may not have access to traditional banking services. Finally, it helps to create jobs and stimulate economic growth, which benefits the wider community.
However, Zakat-based micro-finance also faces some challenges. For example, there may be a lack of transparency and accountability in the distribution of Zakat funds. In addition, some argue that the focus on entrepreneurship and business development may lead to neglect of the most vulnerable groups, such as the elderly, disabled, and orphans (Abushouk, 2018).
Zakat-based investment funds: Some organizations are creating investment funds that enable Muslims to invest their Zakat funds in socially responsible projects. One example is the Global Sadaqah Fund, which is based in Malaysia and invests Zakat funds in projects that promote education, healthcare, and sustainable development (Abushouk, 2018).
Global Sadaqah is a Muslim-focused crowdfunding platform that uses the concept of Sadaqah to mobilize resources for social causes. The platform is designed to connect people in need with donors who are willing to contribute towards a range of charitable causes. The platform is built on the principles of transparency, accountability, and efficiency, with the aim of ensuring that donations are used in the most effective way possible.
One of the unique features of Global Sadaqah is that it enables donors to track their donations and see how their contributions are being used. Donors can select the cause they wish to support, and the platform provides regular updates on the progress of the project. The platform also enables donors to give directly to individuals in need, bypassing the traditional channels of charity organizations. This approach has been successful in reaching people who may not have access to mainstream charity organizations or who have been excluded from the formal banking system.
The platform has also been used to support a range of initiatives, including education, healthcare, and disaster relief. For example, Global Sadaqah has partnered with the Rohingya Education Centre in Malaysia to provide education to Rohingya refugee children. The platform has also supported initiatives in countries such as Yemen, Syria, and Somalia, providing aid to those affected by conflict and disaster.
Zakat crowdfunding platforms: Digital technologies have enabled the creation of Zakat crowdfunding platforms, which enable individuals to donate Zakat funds to specific causes or projects. One example is LaunchGood, a Zakat crowdfunding platform that has raised millions of dollars for charitable causes around the world (Khan, 2019).
LaunchGood is a global crowdfunding platform that enables individuals and organizations to raise funds for social causes, including charitable initiatives that are eligible for Zakat. The platform was founded in 2013 by Chris Blauvelt and Omar Hamid, with the aim of creating a more accessible and inclusive platform for charitable giving.
One of the unique features of LaunchGood is its focus on community-driven initiatives. The platform is designed to enable individuals and organizations to connect with their communities and mobilize resources for causes that are important to them. This approach has been successful in enabling a wide range of initiatives, from supporting refugee communities to funding education programs in developing countries.
Zakat-based social impact bonds: In some countries, Zakat institutions are exploring new models of Zakat distribution, such as social impact bonds. These bonds enable investors to finance social programs, with returns tied to the achievement of specific social outcomes. One example is the first Zakat-based social impact bond, which was launched in Malaysia in 2019 to support early childhood education (Ibrahim, 2019).
Zakat-based peer-to-peer lending: Some organizations are creating peer-to-peer lending platforms that enable Muslims to lend their Zakat funds directly to entrepreneurs and small businesses. One example is KapitalBoost, a Singapore-based platform that facilitates Shariah-compliant lending and supports the growth of small and medium-sized enterprises (SMEs) (Khan, 2019).
Overall, these case studies illustrate the diversity of contemporary Zakat practices and the innovative approaches that Zakat institutions are taking to address social and economic challenges. While there are still challenges to be addressed, including issues of accountability, transparency, and social justice, these examples demonstrate the potential for Zakat to have a positive impact on individuals, communities, and society as a whole.
From the above discussion we can discern some best practices for adoption in our context.
The management of zakat requires a paradigm shift from a focus on charitable giving to the impact of expanding the rights of recipients. It is necessary to move from individual spending on basic needs to a broader focus on productive activities, such as student capacity building, training, and the provision of initial capital for small and medium enterprises. This shift requires a programmatic and professionally managed approach that goes beyond the traditional zakat model of one-time, individual consumptive donations for short-term needs. Sustainable approaches are emphasized, seeking to empower the mustahik and transform them to be muzzakki so as to sustain sources of income in the long term. The concepts of Mustahiq and Muzzakki are central to the Islamic principles of charity and social justice. The former refers to the people in need of financial assistance, while the latter refers to those who are capable of giving charity. One way to achieve this is by distributing ZIS (Zakat, Infaq, and Sadaqah) in different activities such as economic, education, health, and humanitarian support.
In terms of economic activities, micro-activities such as animal husbandry, small food courts near public places, and fishermen can be supported. Mustahiqs can operate these activities in groups and receive dividends of 10 to 15% each. This would provide them with a sustainable source of income and improve their economic condition. Education is another area where the distribution of ZIS can be utilized. Scholarships linked to performance can be provided to students to enable them to pursue their education. This would help in capacity building and increase the chances of employability for the Mustahiqs. In the health sector, ZIS can be utilized to provide medical needs support, own diagnostics, and networking with doctors for health clinics and camps. This would improve the access to healthcare for the Mustahiqs.
Islamic micro-finance can also provide financial inclusion through sharia-compliant approaches. Interest-free contracts can be offered, and the financing can be done through donations based on tabarru, deposits including wadiah, qard hasan, and musharakah. Islamic cooperatives, baitul maal, qard hasan, and waqf can also play a crucial role in operationalising micro-finance in Kashmir. Sukuk, an Islamic bond, can be used as a commercial instrument to attract financing. Unlike conventional bonds, Sukuk requires underlying assets to be present and grant partial ownership in them. This provides investors with the right to receive profits and corresponds to the value of assets, making it sharia-compliant. Sharia-compliant financial inclusion is critical, with a focus on redistribution of wealth through zakat, sadaqa, waqf, and qard hasn. Risk-sharing should be emphasised as a substitute for debt-based financing through micro-finance, small and medium enterprise financing, and micro-insurance. Islamic micro-finance offers interest-free contracts.
Welfare organisations, local authorities/Imams should encourage general public individuals to make a will (wasiya) for up to one-third of their property for donation to established bait-ul-maals, with a drive targeted first at retirees and the terminally ill. This could result in significant donations of land, jewellery, books and many assets. Further ways and means can be worked out to target 1/10 of gross provident fund (GPF) nomination from every employee for the community waqf fund, with charitable trusts facilitating the process. Additionally, a drive could be initiated to create a monthly fund from all those eligible for zakat in the form of qard hasn investments, so people do not see zakat as their primary contribution. Recently some scholarships have been instituted from the will of college principal. This model needs to be replicated – every employee/businessman – should write a will committing some percentage of1/3rd owned property for community cause. Hundreds of institutes/scholarships/langars could be run annually from such contributions. The large scale practice of choosing to write wills would help in better care of old neglected parents as children would lose from inheritance percentage mentioned in will. Besides wills other mechanisms are there for willing conscious people to help the needy from their resources. The Quran asks for distributing whatever is in excess. Almost every middle class women/employee has excess clothes (I know hundreds who have clothes for the whole villages or ten lifetimes or who afford to use them as single use diapers. Why not tax women clothes to prevent such obscenity?). Thousands of excess land needn’t wait till death for getting wills executed.
Disabled people and old widows who cannot work could be connected with self-help groups that are given micro-finance. Eidi (gifts given during Eid), guilemeuth (assistance given to bride/bridegroom) or money given on special occasions or as a token for congratulation should be substituted by membership of interest free credit cooperative (such as Crescent Cooperative Limited Anantnag) doing Shariah-compliant interest-free transactions, with membership giving individuals a share in the cooperative and its earnings for life. Mosques and local bait al-mals need to create local funds for small-scale enterprises. Begging can be eliminated in at least ten villages in every district within a year by registering all the needy individuals and announcing a zero beggar certificate for such villages.
Further, to create self-sufficiency among populations, it is important for individuals to become investors and shareholders in Agri/livestock farms, also known as Agri/livestock banks, which have already been set in place here. By doing so, we can receive free or, to begin with, heavily discounted quality milk, mutton, and vegetables. Contributions received by charity trusts and institutions can be channeled into such endeavours. Pre-booking of Qurbani animals through established organisations or direct linkages in villages with farmers of interested people should also be encouraged. This will create hundreds of new farms every year without burdening the state exchequer and give market facilities to local farmers. Muslims have been commanded to rear sheep/goat or poultry. Additionally, every volunteer should have a share in agri/livestock farm. This will allow individuals to get discounted/free Qurbani animals, mutton, chicken, fish, vegetables etc. for all who get such shares. By investing and becoming shareholders in these Agri/livestock farms, individuals can contribute to creating self-sufficiency in their communities and reduce their dependence on external sources for food and resources.
Invest, invest and invest should be the mantra for local bait al-mals and organisations who really want to do charity on sustainable basis. Local mosque linked bait al-mals /taziyat committee linked initiatives can help create/sustain at least two jobs in their localities. We need thousands of persons in domestic help market, thousands in community kitchens (if we had facility at local level to get hand made rotis or routine dishes prepared, imagine how many jobs could be created and hash-nosh conflicts avoided and children better attended to and employee women employees stressed with kitchen chores eased). One year’s funds collected for mosque building could help build thrice or more number of mosques if part of such funds raised went into investments.
Ulama, jurists, contributors and managers of charities/zakat all need to sit together to study exiting models, broaden scope of activities, do needful for legal and juristic compliance and evolve new shariah compliant models to make use of huge funds otherwise grabbed mostly by professional beggars and those accustomed to get idle wages/support from organisation. Zakat should not create lifelong zakat dependent beneficiaries or new class of pensioners but make beneficiaries independent of it. Let us track where our charities are spent. All services including medical and educational ones (fees for students/that are managed by charities can be arranged by one time investments. Let us ask how many sheep farm, dairy farms, polyhouses, industrial units and other job creating units have been established from the funds collected by beneficiaries.
Let this Ramdhan be a game changer and strengthen hands of institutions that invest and sustain and thus better fulfil purposes of charities. Zakat is best spent collectively or institutionally. Modern facilities if made use of can transform largely ignored and unprofessional charity management sector currently dependent on regular contributions of donors and doing mostly cash transfers and that too meagre to sustain beneficiaries and often keep applicants waiting due to lesser funds or no mechanism to multiply resources with them. Let us pledge to pre-book qurbani animals, milk, mutton, vegetables and support farmers from today. That is what Ramadhan reminds us of – fellow feeling or identifying with the hungry/needy.
Disclaimer: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.