Should Zakat Be Used for Humanitarian Finance?

On March 26 a very interesting document “An Act of Faith: Humanitarian Financing and Zakat” prepared by Chloe Stirk was launched at an event hosted by Development Initiatives and Muslim Charities Forum in London. The paper echoes the concerns expressed by UN Humanitarian Summit at the ever-increasing demand and supply gap for humanitarian funds. For instance, the paper points out, “the total funding requested from international donors within the United Nations (UN)-coordinated humanitarian appeals system more than doubled between 2011 and 2014. While international humanitarian funding has increased to record levels in response, the financing gap appears to be getting bigger: the proportion of appeal requirements met in 2014 was the lowest since 2001 (58 percent), and the volume of unmet requirements was the highest on record (USD 7.5 billion).” Adding to the on-going humanitarian crises in Iraq, Syria, Yemen, the Nepal disaster has further enhanced the need for resources.

Among other sources, the World Humanitarian Summit process is looking at faith-based finance in general and Islamic social finance in particular, that includes zakat and waqf as possible solutions. As has been reported in these blogs earlier, figures on zakat mobilized in Muslim societies do offer hope. Countries like Saudi Arabia, Malaysia, Sudan and Indonesia alone, for which actual official data is available, raised over USD 4 billion, USD 630 million, USD 220 million and USD 217 million respectively during the latest year. While the estimates provided in the paper may appear to be too optimistic at a staggering range of US$200 billion and US$1 trillion (given that a very large percentage of zakat is paid at individual level), the fact remains that even the officially reported numbers (together, the four countries mobilized over USD 5 billion per year) can potentially make a huge difference. The paper compiles data from a variety of sources, primarily from IRTI Islamic Social Finance Report 2014 seeking to highlight the possibilities offered by zakat in terms of mobilizing and channeling additional financial resources to support international humanitarian response. In addition it identifies a number of potential barriers that will need to be overcome if it is to fully realize its humanitarian potential. These fall broadly under two main categories:

1) Logistical: These include barriers to streamlining and formalizing how zakat is collected, by whom, and how it is channeled to the humanitarian response community. The logistical barriers are well understood by professionals in the sector and include (i) transparency issues with zakat collection and utilization, given that a huge part of zakat is managed privately by individuals for a variety of reasons; (ii) increasingly complex and restrictive counter-terrorism measures making institutional transfers of zakat resources extremely difficult; (iii) perceived trade-off between centralized coordination and flexibility of localization. Some of these barriers are indeed rooted not in subjective preferences but in religious piety and purity of action. For instance, “Donate by one hand, while the other hand does not know” may encourage private action. Similarly, when a zakat payer believes that his/her liability and obligation extends well beyond making a payment to ensuring that the contribution flows into the right hands, (s)he may be inclined to avoid institutional zakat managers, unless they are highly transparent and credible.

2) Ideological: The key barrier here relates to addressing the conflicting opinions on whether non-Muslims can benefit from zakat and where it can be used. It is pointed out, if zakat is limited to be used only for Muslims, this would be in direct contradiction to the humanitarian principle of impartiality, namely that “humanitarian action must be carried out on the basis of need alone, giving priority to the most urgent cases of distress and making no distinctions on the basis of nationality, race, gender, religious belief, class or political opinions.”

What does Shariah say regarding use of zakat funds to help the victims of humanitarian crises? For example, given that Nepal is predominantly a Hindu nation, what explains the presence of zakat-funded NGOs from Indonesia, such as, Dompet Dhuafa Republika, Rumah Zakat and PKPU in Nepal? Dr Yusuf Al-Qaradawi, a well-known contemporary scholar, in volume II of his treatise Fiqh Al-Zakat extensively deals with this issue in Chapter 9. According to him, there is hardly any disagreement on the position that the following categories of individuals must NOT be paid zakat. These include the rich, those capable of earning, the disbelievers and apostates who fight against Islam and the descendants of the Prophet (p). The holy Quran is explicit in proscribing any zakat payment to individuals who are at war with Islam. Regarding the non-Muslims who are at peace with Islam and the Muslims, there seems to be conflicting opinions, the reasons for which may be traced to the well-known saying of the Prophet (p) reported from Mu’adh, “God prescribes zakat on their wealth, to be taken from the rich among them and rendered to the poor among them”. Some scholars believe that the pronoun “them” refers to Muslims. However, as Qaradawi says, this saying does not clearly exclude non-Muslim poor, since it may simply mean that zakat should be collected and distributed in the same area. Indeed, this saying is often quoted to support the policy of localized zakat management. He also notes that there is absolute nothing against payment of other forms of charitable contributions to non-Muslims. A few contemporary scholars opine that zakat may be paid to non-Muslims after the needs of Muslims are met. They seem to favor a priority for Muslims over non-Muslims in zakat distribution, on the ground that zakat is contributed by Muslims only.

Considering some recent initiatives, it appears that the opinion of the scholars associated with some formidable institutional players, e.g. the Islamic Development Bank, Islamic Relief Worldwide, is not to discriminate between Muslims and non-Muslims. The generalized nature of the verse in the Qur’an that defines the eligible beneficiaries of zakat is cited as the basis.

“The offerings (zakat) given for the sake of Allah are (meant) only for fuqara (poor) and the masakeen (needy), and ameleen-a-alaiha (those who are in charge thereof), and muallafat-ulquloob (those whose hearts are to be won over), and for fir-riqaab (the freeing of human beings from bondage), and for al-gharimun (those who are overburdened with debts), and fi-sabeelillah (for every struggle) in Allah’s cause, and ibn as-sabil (for the wayfarer): (this is) an ordinance from Allah- and Allah is all knowing, wise.” (9:60)

The eight categories of eligible beneficiaries as above do not contain an explicit qualifier that the beneficiary must be a Muslim. A case in point is the recent joint initiative of the Islamic Development Bank and the Islamic Relief Worldwide to help the victims of the devastating earthquake in Haiti that killed around 200,000 people and left 1.5 million homeless. Islamic Relief Worldwide that is primarily funded by zakat has been a major humanitarian organisation on the scene and has spent over USD 20 million on programs in Haiti over the last five years. One of its programs to rehabilitate quake-damaged government schools is supported by IDB funding of US $4 million. Three Indonesian zakat-funded institutions, the Dompet Dhuafa Republica, Rumah Zakat Indonesia and PKPU in addition to several others, e.g. Islamic Relief, Muslim Aid were present in Nepal offering humanitarian assistance. While Islamic Relief USA launched an appeal to raise USD100K Dompet Dhuafa had plans to spend USD40K for relief efforts in Nepal. These examples demonstrate that notwithstanding reservations among some sections of jurists, the verdict among humanitarian professionals working with world’s leading zakat-funded institutions is rather clear.

A poor and needy does not need an additional qualifier to be assisted with zakat.

Mohammed Obaidullah | August 20, 2015

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