The Role of Islamic Social Financing in Humanitarian Action

10/06/2015 10:27 BST | Updated 09/06/2016 10:59 BST

The recent Briefing Paper from Global Humanitarian Assistance 'An Act of Faith: Is Islamic charitable giving a promising new resource for future humanitarian assistance?' makes for interesting and pertinent reading. The very nature of the question that it asks points to a paradigm shift in thinking with regards not only to fundraising for humanitarian causes but ultimately program implementation as well. The former to some extent determines the latter in terms of resource allocation and implementation.

We are all too aware of the number and scale of humanitarian crises facing our world today, not least in Syria where an estimated 220,000 people have died in the four year conflict at a rate of more than one death every ten minutes and now in Yemen. These spiralling needs mean we also have a record shortfall in assistance with US$7.5billion of humanitarian funding requirements going unmet last year. More than ever, humanitarians are having to start thinking creatively about how humanitarian assistance is raised, processed and used.

One thinking that has emerged over the last few years has been the potential for Islamic Social financing led by zakat. Islamic financing is a surprisingly underexplored territory. Surprising because previous estimates suggest that anywhere between US$200 billion and US$1 trillion is spent in the form of Islamic charitable giving (zakat) across the Muslim world each year, and the Global Humanitarian Assistance (GHA) programme's research published today indicates that this area of finance is potentially in the hundreds of billions of dollars, with a significant proportion already going on humanitarian efforts.

These numbers speak not only to the duality of increasing religiosity and wealth in the Muslim world, but also the globalisation of increasing poverty made more immediate through social media. It is estimated that ¼ of the Muslim world is living on less than $1.25 a day (calculated by IRIN based on 2011 HDI) with new spaces opening up in the Muslim world such as Somalia, Syria, Mali (and so on) for humanitarian and peace-building responses.

The concept of charity is central to social justice, which is a sacred value in Islam and a central tenet of the faith. Indeed the Qur'an considers an act of charity as more than just a good deed because of its function in balancing social inequalities. The Qur'an also has numerous references to the importance of creating a just society and provides a framework for justice in inter-personal relationships, toward the poor and needy, and connections between communities and nations.

Zakat, the mandatory Muslim practice of giving 2.5% of one's accumulated wealth for charitable purposes every year, is one of the main tools of Islamic social financing. It is explicitly intended to reduce inequality and is widely used in Muslim countries to fund domestic development and poverty-reduction efforts. There are clear parallels to be drawn between the eight individual categories of eligible recipients of Zakat listed in the Qur'an and people in need of humanitarian assistance.

The GHA findings show that it is currently impossible to accurately find out how much zakat is being collected globally, where it is being spent, and what opportunities it could present for the humanitarian world. With estimates ranging from the tens to hundreds of billions of dollars, and only a handful of countries formally reporting a proportion of the zakat that is given by their populations, there is a lot of work to do.

However the World Humanitarian Summit does offer an opportunity to take on the challenges to discuss as it strives to seek alternate sources of funding. Islamic Social Finance contributions have to be part of the discussions of humanitarian funding going forward. The task for the WHS is to offer models of operation and partnership.

(this was originally published here for the World Humanitarian Summit)