To donate or not to donate! Charitable spending by Muslim charities
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By Grahame Anderson
From 15 May till mid-June the holy month of Ramadan will see British Muslims worshipping the third Pillar of Islam by giving away a portion of their wealth to charity. Known as ‘Zakat’, it’s also a form of self-purification and a chance to help the poor and needy.
Muslims believe this helps a person acknowledge everything comes from God on loan, and we do not really own anything ourselves. Freeing oneself from love of possessions, money and self-admiration is part of this, as is behaving honestly and with compassion. Zakat in essence is the systematic giving of 2.5 per cent of one’s wealth each year to benefit the poor. The percentage rate only applies to cash, gold and silver, and commercial items. There are other rates for farm and mining produce, and for animals.
Giving for Ramadan
Ramadan is the time when percentage wealth is calculated, and Zakat is donated. But how is this done? Where does the money go and how can individuals be sure their money is genuinely helping others? In recent years we’ve seen an emergence of specialist Muslim charities who both accept these donations and guide individuals responsibly toward genuine causes. With charity and giving in mind however, the focus has been on just how transparent these organisations are, and are they claiming more for expenses than for their actual charitable causes? Asian Sunday has been finding out.
UK registered charity Penny Appeal was launched in 2009 in Bradford to provide poverty relief across Asia, the Middle East and Africa. Its goal is to offer water solutions, mass feeding, orphan care support and the provision of emergency food and medical aid.
A spokesperson told me: “Penny Appeal has a 100 per cent Zakat policy, meaning every single penny of a Zakat donation will go directly to those who need it most. Other than Zakat, one of our most popular projects this year has involved selling 20,000 tins of Palestinian dates at £10 each. Aside from the £5 that goes to poor Palestinian farmers to buy the dates, a further £2.50 per tin goes to help our Love Palestine campaign. What’s more, the tins turn into money boxes so people can support the campaign throughout the year.
“Also, new for this year, is a dedicated campaign called WOW which advocates for women and provides livelihood programmes as well as helping victims of domestic abuse. People can see a full list of our campaigns on our website and our accounts are available to download from the Charities Commission site too.”
Their annual return for April 2017 disclosed the charity employed 118 people, also using the services of 103 volunteers and a payroll figure of £2,5996.989. In terms of spending a total of 67 per cent or £12,565,902 went on charitable activities, with £4,909,973 or 26 per cent designated to income generation and governance. A total of £1,153,173 or six per cent was retained for future use.
Asian Sunday understands the UK charity Islamic Aid based in London has a 100 per cent policy, meaning every penny given goes to help the poor. They say for every £1 given they spend £1.10 on their project work with poor people. They can do this because admin costs are ‘very low’ and they can reclaim the tax people have already paid on donations through gift aid. Islamic Aid aims to be open and transparent providing an Annual Report and Accounts along with a yearly Review.
Their annual return to the Charity Commission for 30 June 2017 disclosed charitable spending of £3,511, 298 amounting to 84 per cent. Income generation and governance totalled £283,893 or seven per cent, with £404,977 or 10 per cent retained for future use. They employed four people and 25 volunteers with wages at £17,743
Islamic Relief Worldwide
Islamic Relief is an active member of several highly reputable organisations including Accountable Now, HAP International and People in Aid. It also holds consultative status with the UN Economic and Social Council.
A spokesperson explained: “We believe we need to be transparent about how we are spending the donations entrusted to us. We are accountable both to our beneficiaries and to donors about the work we are doing and its effectiveness. That is why we publish our annual report and audited accounts online, detailing our sources of funding and areas of expenditure. We have been highly commended by the Institute of Chartered Accounts in England and Wales for outstanding transparency and communication in our accounts.
“In 2016, for every £1.00 we spent, 86 pence was directed straight to charitable programmes, with four pence going toward support or indirect costs. Seven pence generated funds to secure more resources for everything we do.
“Every pound we spend on fund-raising generates an average of £5 to increase our impact. Around One pence was spent on press campaigning for policy changes aimed at benefiting poor communities, increasing self-reliance and prosperity and reducing the need for aid in the future. Two pence was spent on trading and investment.
“When it comes to salaries we aim to strike a good balance between attracting capable senior staff and ensuring we deliver aid professionally and effectively. Prudent management of funds ensures as much as possible reaches our beneficiaries in poor countries.
“This year we are asking our supporters to help us save lives, for the love of Allah, by giving their Zakat to Islamic Relief. Zakat has the power to transform lives and Islamic Relief utilises Zakat donations to support those facing a daily fight for survival due to poverty, disasters and conflict.”
A close look at the Islamic Relief worldwide group and charity balance sheets as at 31 December 2016, revealed a total expenditure of £112,522,405 with income standing at £105,576,484. A total of 45.3 per cent of money spent was designated toward protecting life and dignity with 14.8 per cent providing access to health and water. A further 16.7 per cent was used caring for orphans and children.
For every £1 donated to Muslim Aid in London, newly registered with the Charity Commission, 88 pence go toward programmes with nine pence spent on fund-raising, and three pence on running costs. The charity is one of the top 20 UK relief and development agencies, alongside Christian Aid, Save the Children and Oxfam. Their main aim during this year’s Ramadan however, is to raise £6million, for life-saving work with new-born babies in Gaza, drought affected communities in Somalia and Syrian refugees.
So, to conclude, there is no doubt that the charities listed work hard in delivering aid and use donations to support some really good causes. The question is however, are the charities making your money work the hardest it can?
The answer for this for many will differ and therefore, the best way to decide who deserves your donation the most, is to look at the facts and figures and how the charity runs its operations.
By looking at the complete facts and figures, and comments from the respective charities we hope this can help you the public be able to make an informed decision of whether the charity is working hard enough for your donations.
The advice is always ensuring your donation goes to a charity who are fully transparent and offer experienced guidance.
Should you require more information the Charity Commission’s website holds details of charitable organisations up and down the UK, the work they do and a full set of detailed accounts, so you know exactly how your money is spent.
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