An Act of Faith: Humanitarian Financing and Zakat

Chloe Stirk
2015

Summary

This report sheds some light on the purpose, scale and potential of Zakat for financing humanitarian response. It provides a basis on which to open up discussions around how that potential might be maximised – both by increasing the overall volume of Zakat collected and improving the mechanisms available to channel Zakat to the humanitarian response.

The report draws on evidence gathered through case studies and existing research to provide an indication of the scale of Zakat’s value and its potential for humanitarian response. It outlines some of the key barriers to increasing humanitarian funding available through Zakat and to improving the way in which it is channelled to support the humanitarian response. It also offers some recommendations for humanitarian donors and agencies, and those responsible for collecting and distributing Zakat, to consider in overcoming these barriers.

Recommendations:

  • Humanitarian organisations and institutions interested in increasing the volume and use of Zakat for humanitarian assistance will need to engage with Islamic academics, scholars, theologians, regulators, finance experts, fund/foundation managers, practitioners and agencies to ensure understanding across all actors. This will include debating issues around Zakat and the humanitarian principles, as well as addressing logistical barriers and how they might be overcome.
  • Anecdotal evidence from both Muslim and non-Muslim aid agencies suggests that some are cautious about using Zakat for humanitarian response due to a lack of clear guidance on how it can be used. Recommended policies, rooted in Islamic religious scholarship, would help address these concerns. Opening up discussion and sharing learning are the first steps to developing such guidance. This should focus initially on identifying the challenges charities face in managing and implementing Zakat in the modern context, and then begin to develop a set of shared solutions.
  • Due to the inherent nature of Zakat as a transfer of resources between individuals, as well as the myriad ways in which it can be paid, it is unlikely that it can ever be fully reported or accountable. However, in order to maximise its efficiency and effectiveness in humanitarian settings, and to ensure complementarity between different funding sources, better communication and coordination channels need to be established to improve links between the collection of Zakat and its disbursement in crisis situations. IATI and OCHA’s FTS are developing standards, outreach and support for government and private donors to report humanitarian assistance; this could be offered to Zakat donors or institutions. Encouraging the use of more traceable, transparent and formal channels for Zakat could also help to address some of the potential negative impacts of counterterrorism measures on humanitarian operations.
  • A joint approach to mobilising funding through Zakat and Islamic social financing could help to ensure complementarity and appropriate allocation of resources across humanitarian and development programming, and could provide new opportunities for humanitarian and development actors to work more closely together.
  • Scholars and researchers have repeatedly shown that there is more Zakat available than is currently being collected. International efforts should therefore focus on mobilising new resources to meet growing need rather than redirecting existing resources away from their current objectives.

 

Source

Stirk, C. (2015). An Act of Faith: Humanitarian Financing and Zakat. Briefing Paper. Bristol: Global Humanitarian Assistance.