Crowdfunding: The future of Islamic social finance?


The role of Islamic social finance assumes great significance, especially in countries with high poverty levels among Muslims. The main objective of Islamic philanthropy such as Zakat (compulsory tax on wealth), Sadaqat (charitable acts), Waqf (endowment), etc, is to meet the needs of the poor and to curb ever-rising levels of relative poverty. To fulfill this objective, it is essential to know to what extent Islamic social funds can meet the resource requirements for poverty alleviation, and whether the current distribution of Islamic social funds to the poor have been effectively managed and distributed. UMAR MUNSHI explores.

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Will you believe it if I tell you that the total amount of Islamic social funds given yearly is so huge that there should be zero poor Muslims? Yet the poorest communities and countries are Muslim! According to the IDB ’s research institute, global Zakat collections alone are estimated to come up to a total of at least US$500 billion a year. This is about 20 times more than total global humanitarian aid. The beautiful system of Zakat alone should be sufficient to eradicate poverty, and we have not even touched on other forms of Islamic social finance.

Let’s analyze some mind-boggling numbers in relation to Sadaqat. On a conservative side, if every mosque raises only US$1,000 a week, multiplied by 52 weeks multiplied by one million mosques = US$52 billion a year. In reality, it may even be much more. Clearly, we are a wealthy Ummah , but unfortunately this is not manifested in the lives of the millions of poor Muslims.

Muslims give the most but remain the neediest. It is clear that our current distribution system for Islamic social finance is terribly broken. Clearly also, a huge portion of Muslim donation proceeds are somehow lost, not knowing exactly where it ends up.

Based on the numbers and observable impact (or lack of it), the trust that we have in bodies that deal with Islamic social funds needs to be reexamined. In many cases, our trust is abused for selfish gain. Even for those who are sincere and honest, there is a lack of understanding and procedures in place to prevent leakages and fraud.

One avenue to start a powerful change is through crowdfunding. Crowdfunding is not a new concept and the largest platforms move billions of dollars every quarter. Most importantly, crowdfunding provides platforms that are transparent and with progress updates on campaigns – features which are clearly needed to improve the traditional Islamic social finance system. Crowdfunding has been highly successful in non-Muslim jurisdictions such as the US, Europe and China. Islamic crowdfunding, on the other hand, has only started to gain momentum, with a handful of Islamic crowdfunding platforms starting to generate considerable traction and impact. Some of the selected examples of newly emerged Islamic social finance crowdfunding platforms include and, among others. is a newly established crowdfunding platform that lends voice and support to displaced people worldwide, focusing on Zakat distribution. Recently, the crowdfunding platform was launched specifically for Islamic charity, where it hosts campaigns from the top charities and institutes globally for the Ummah or ‘the crowd’ to give Sadaqat, Zakat and even cash Waqf . With the impact tracking features of, it will allow donors to see how their money is being utilized and receive regular updates on their contributions via emails and in their donor dashboards. Updates inform donors on the current status of their donations and help to keep track of its impact. Unlike traditional donation systems, donors can now know that their money is dealt with responsibility and care.

Further reiterating on the importance of, its charity campaign partners include reputable names such as Bank Islam Malaysia (Sadaqa House), Institut Jantung Negara (National Heart Institute Malaysia), JREC schools for Rohingya refugee children and more. This Ramadan, has partnered with the IDB and the Islamic Solidarity Fund for Development to invite the world to join in and contribute to two of their most impactful programs, including the Alliance to Fight Avoidable Blindness (AFAB).

The main aim of the AFAB is to reduce the prevalence of cataracts and improve access to eye care in 12 sub-Saharan African countries, with most having a Muslim population above 50%. It focuses on reaching the most vulnerable people in greatest need, and concentrates on helping rural areas by using mobile teams to bring cataract surgery to the people who need it most – a strategy that removes the costs and risks these people face when they have to travel to the city. Approximately 80% of cases are actually preventable or curable.

Under the AFAB, a cataract operation takes 10 minutes and costs just US$15 for one eye. Imagine giving only US$15 online on from the comfort of your own home, and you are able to give the gift of sight to poor and needy individuals. Apart from helping the patients when you donate, you are also able to positively transform the lives of the communities and families of these patients. This is because not only is the sight of those suffering restored, but also their livelihoods, independence and confidence. Children who had to guide blind family members are now free to go back to school and play with their friends, while their relatives can care for themselves and return to work or go back to their fields on their own.

Finally, after seeing the positive impacts it can create for the Islamic social finance system by addressing the negative issues prevalent in the traditional Islamic social finance system, what is needed now is to create greater awareness and momentum for It is noteworthy to point out that is not meant to replace the traditional mosques and charitable organizations.

In fact, it is meant to complement and assist them to fulfill their role better by raising funds for and with them in a more effective and transparent manner. As gains momentum, it will automatically ensure that the role of giving, distributing and receiving is responsibly upheld by all of us together.

On this blessed month of Ramadan where good deeds are multiplied, let us all circulate good and make this positive change together.

Umar Munshi is the founder and managing director of Ethis Singapore and Ethis Ventures Malaysia. He can be reached at [email protected].

This article was first published in Islamic Finance news Volume 15 Issue 25 dated the 20th June 2018.