Charities were originally formed to provide aid to those less fortunate than ourselves; most are indeed legitimate channels to help people in need. However, some charities are fraudulent, created to take advantage of the needy and the generous.
Some charities have been used as a cover for money laundering or financing terrorists. It is estimated that 5% of terrorist organisations’ revenue comes from charities or philanthropic donations.
According to Brotherhood Sheikh Yusuf Qaradawi in his book, “Fiqh of Jihad”, zakat (alms-giving and religious tax in Islam) may be used to finance the liberation of Muslim land from the domination of the unbelievers, particularly Israel and Kashmir in India. This is why donors believe that their money has a sacred role in supporting the message of Islam.
After the attacks on 11 September 2001, charities came under global scrutiny. In 2008, the US Treasury Department imposed a sanction on Union of Good, a network of charities headed by Qaradawi, for Hamas fundraising.
Traditional sources of funding for Al-Qaeda, such as donors and charities in Saudi Arabia and other Gulf countries, have been increasingly hindered. Businesses and individuals can avoid problems by being knowledgeable of charities and their operations. The Saudi government has proven triumphant over this corrupt connection, and the US has a supportive partnership with the UAE on the issue.
Charities rely on several methods to collect funds for philanthropic or humanitarian purposes, usually a variety of income sources including public support, government funding, private foundations, grants, or fees collected for services provided as part of charitable programmes.
There are several solicitation methods, which include mandatory religious donations. Some examples of how charities raise funds by using solicitation techniques are:
- Fundraising events, ie raffles, and marathons/races
- Direct in-person requests
- Direct mail or telephone solicitation requests
- Newspaper and magazine advertisements
- Ticket sales for special events
- Selling products
A portion of these funds continue to be at risk of being diverted to terrorist networks, often without the donor’s knowledge.
Zakat is one of the pillars of Islam: giving 2.5% of one’s possessions (surplus wealth) annually to charity or to the poor and needy. Often compared to the system of tithing (giving 10% of one’s income to religious organizations or as governmental tax), zakat primarily serves as a welfare contribution to poor and deprived Muslims, although others may have a rightful share. It is the duty of an Islamic community to collect zakat and also to distribute it fairly.
While most of these charities exist to help the poor and spread the message of Islam, some of them have been misused to finance terrorism.
Weeding out fraudulent charities from the good is a hard task. Governments and individuals must join together to stamp down on terrorist financing; care must be taken to authenticate charitable organizations before donating.
It is crucial that financial institutions subject charitable organisation’s accounts to close monitoring so as to recognise any “indicators” or “red flags” that call for further scrutiny.
Donors should be careful too, as charitable contributions were once the largest source of terrorist funding, coming mostly charities and individuals. As a donor, questions such as “How do I know that this charity is legitimate?” and “Where does this money go once I make a donation?” could set your mind at ease.
Donating to a charity is a way to support the needy during these troubled times. Sadly, there are many who will take advantage of this kindness. Therefore, you should do your research and take all reasonable measures to ensure that your hard-earned money does not fall in the wrong hands.
Hany Aboul Fotouh is a banking expert and the Chairman of Alraya Consulting Company.