Islamic Charities

Philanthropic donations by the Muslim community in the USA have acquired a significant threshold of Billions of dollars, mostly distributed amongst local Islamic centers and schools, international humanitarian organizations, US-focused charitable and advocacy organizations, and private donations. 

Local US work is in public view; however, there may be limited formal reporting on it. This makes them relatively transparent to the donors.

International humanitarian organizations are by far the largest amongst all others, some reaching $100M annual thresholds. To their credit, these organizations have developed a sizeable market with elaborate marketing and sophisticated fund mobilization operations. The total outlay of funds generated by all international relief organizations that primarily collect donations from the Muslim community is roughly estimated to be in the order of $1B. This sizeable resource potentially allows for a significant positive impact on the beneficiaries.

There is very limited discussion of the efficiency and effectiveness of such a large resource deployment. International charitable work at far-flung locations lacks meaningful scrutiny. There is negligible donor capability to evaluate the work conducted using their funds. Most organizations report very rudimentary information about their program’s outcomes. They mostly only report the number of beneficiaries. Most reporting aims to raise funds by highlighting a few success stories. 

Such a large resource deployment requires more elaborate reporting. How do these numbers and success stories aggregate compared to their total expenditure? A good metric should include the total value an organization created compared with all donations collected. Such information about ‘value for money’ is key in our decision to purchase, so why not donate?

To be fair, price tags are provided for programs like orphan sponsorship, food packages, Udhiya, and, in some cases, home or school rebuilding, increasing transparency. Therefore, they are relatively popular with donors. However, most donations are not ‘priced,’ allowing organizations to shift non-productive costs to those donations.

The desire for growth drives charities to spend more on marketing and fund mobilization. This distorted focus is diverting valuable resources away from the field programs. This misplaced focus has also deprived the non-profit sector of skilled workforce development that can uplift their programming and operations. 

It is crucial for charities to invest more resources in building capabilities for program development, execution, and monitoring. This will not only ensure the efficient use of funds but also provide the donors and philanthropic organizations with the confidence that their contributions are making a significant impact.

Charity organizations report low fundraising and administrative ratios. There are two basic reasons for such low ratios: 1) Often program promotional expenses (businesses would call them sales expenses) are accounted as indirect program expenses. 2) In-kind donations are added to the cash donations for such calculations. In-kind donations are accounted for at donor-country rates, which inflates their value, even though they usually cost much less in the recipient country. When calculated on a cash basis, such ratios will be much higher.