Digital donations

Faced with a shortfall in aid funding, the UN's refugee agency is working to bring Islamic philanthropy into the digital age.

“Whether it’s $10 or $10,000, you want to be sure your money is going to the right place.”

Counting the global zakat pot is a tricky business. Estimates of the scale of this form of Islamic giving vary wildly, from $76bn to in excess of $1trn, complicated by the fact that much of the money is dispensed through informal handouts to people or causes. “The numbers are very blurry,” says Houssam Chahin, UNHCR’s head of private sector partnerships in the Middle East and North Africa, “and not only in terms of how much is being raised, but where it is used and how.”

More widely agreed upon is the potential this giving has to change the face of global humanitarian aid. As a pillar of Islam, zakat requires observant Muslims to give the poor 2.5 per cent of the total value of their wealth each year. In some Islamic countries, including Indonesia and Saudi Arabia, it is collected by the state. Elsewhere, Muslims can choose to donate funds to the mosque, to charities or directly to needy individuals. Mobilised effectively, this capital could help plug the widening gap between development needs and financing – and impact millions of lives.

The UN refugee agency is among those working to tap Islamic giving through its digital zakat platform. Rebranded in April last year as the Refugee Zakat Fund, since 2016 the portal has funnelled donations to refugees and the forcibly displaced in Jordan, Lebanon, Yemen and Iraq. Bangladesh, Egypt and Mauritania have also been added to the list and in August last year, the inclusion of a sadaqah jariyah initiative (collecting Islamic alms donated voluntarily) extended the fund’s reach to in-need communities in South Sudan and Somalia.

The fund is UNHCR’s first high-profile foray into faith-based giving. Backed by five fatwas, and co-governed by the Abu Dhabi-based Tabah Foundation, it offers donors a digital and sharia-compliant giving channel that goes directly to those in need. Money is disbursed in the form of cash aid to families living in extreme poverty and donors can, if they wish, pick the cause their contribution is allocated to. The fund’s impact is shared via quarterly reports posted on the portal, which also offers a zakat calculator to help visitors determine their contributions.

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The goal, says Chahin, was to create a platform that would appeal to traditional zakat donors, while still leveraging innovative technology to direct funding to where it’s needed most. With this in mind, the agency has waived its usual 6.5 per cent deduction to cover programme costs, instead agreeing to give the full amount of all zakat contributions to eligible families.

“We’re trying to create a shift, both in internal thinking and in the external perception of the UN as this western and remote organisation,” he explains. “We are serving in the field, we are on the ground helping those in need, whatever their faith, culture or ethnicity. I believe programmes like this can help to bring us closer to donors and beneficiaries alike.”

The response has been promising. In its first two years, the scheme raised $14.4m – mainly from the GCC region – with a 380 per cent leap in donations between 2017 and 2018. The fund received a huge boost in 2019, when Qatar’s Sheikh Thani Bin Abdullah Bin Thani Al Thani donated $35m, to be split between displaced Yemenis and Rohingya refugees in Bangladesh. The first tranche of just over $13m provided cash assistance to around 300,000 victims of war in Yemen. The second, amounting to around $22.2m provided an estimated 670,000 Rohingyas in Cox’s Bazar with food, shelter and healthcare.

The Qatari philanthropist stepped up again earlier this year with a new donation of $43m to support UNHCR’s work with refugees and displaced people in Yemen, Lebanon, Bangladesh and Chad.

During 2019, the fund raised more than $43m: well in excess of the initial $26m target for the whole of the year – and almost four times the amount collected in 2018. Of the total collected between January and September last year, $2.2m came during the Ramadan period, a traditional time of giving for Muslims.

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“As a sector, we’ve been speaking about Islamic philanthropy and social finance for years. The time has come for us to stop talking and do it.”

In addition to displaced Yemenis and Rohingya refugees in Bangladesh, the 2019 money also supported Syrian refugees and asylum seekers in Jordan, Egypt and Lebanon, displaced families in Iraq, and Malian refugees in Mauritania, who received predominantly multi-purpose cash assistance, as well as some basic items and essential services.

“I think we underestimated how many people were looking for a safe and easy platform to give through,” says Chahin, who adds donors are also becoming more demanding of their dollars. “Whether it’s $10 or $10,000, you want to be sure your money is going to the right place.”

Of the world’s 70.8 million displaced people, UNHCR estimates 60 per cent qualify to receive zakat, in line with rules that govern its use and distribution. So far, the bulk of the fund’s digital donations have gone to Syrian families in Jordan and Lebanon identified by the agency as being especially vulnerable. Beneficiaries are notified by text message that their money - typically around $175 a month – is ready for pick up. The cash is collected from an ATM via a pre-issued card or iris scans, and used by the families to pay for rent, education, food and other necessities: an act that also helps inject money back into the economies of host countries.

“The future of humanitarian assistance is cash: it gives people dignity and the freedom to make decisions for their family,” explains Chahin.

Other benefits are more tangible. A 2018 UNHCR report on the impact of cash aid found more than half of recipients reported improved living conditions. In Jordan, 61 per cent of beneficiaries reported reduced stress levels, and eight in ten respondents reported that their relationship with the local community was either ‘good’ or ‘very good’.

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The focus for UNHCR now is growth. The agency ramped up its zakat fundraising goal for 2019 from $26m to $44m, a target it reached by September that year, and for 2020, it is targeting $265m to support 1.6 million beneficiaries.

In an April report, it put the potential size of global zakat giving at $356bn – though admits the current market is a fraction of that – and outlined plans to draw a clearer link between this and pressing refugee needs. Part of this roadmap involves making zakat more accessible to young, digitally native Muslims through mobile apps and online platforms, and persuading donors to swap in-person handouts for giving through official distribution channels.

If UNHCR’s approach gains global traction, it could be the start of a critical shift in how humanitarian agencies leverage Islamic giving for the wider global good.

“As a sector, we’ve been speaking about Islamic philanthropy and social finance for years,” says Chahin. “The time has come for us to stop talking and do it. Let’s make it easier [for donors] to engage in making people's lives better.” — PA