ACCORDING to research by the Pakistan Centre of Philanthropy in the year 2000, philanthropists gave 65pc to individuals and 35pc to organisations, mostly religious entities.
This 35pc also includes deductions of Zakat by the state from the savings accounts of the Sahib-e-Nisab, as per the Zakat and Ushr Ordinance of 1980. The latest comprehensive data available is for the year 2000.
Of the total philanthropy, Rs40bn (43pc) constituted religious giving — Zakat (20pc) and non-Zakat/khairat (23pc). Zakat deduction by banks alone in 2013 amounted to Rs1.38bn. However, there has been a declining trend, as collections decreased 45pc in 2013 over 2012.
In recent years, a debate has risen in the Muslim world over how to manage religious giving, particularly Zakat money. Muslim scholars have differences of opinion as to whether Zakat must be used for direct donation to individuals, or if it can be used to support institutions that use the money for various development projects, such as for small loans and micro-financing.
Though Zakat deduction by banks is legal practice in Pakistan, scholars argue that only Islamic governments can collect Zakat. Meanwhile, reformists here find development-focused NGOs equally good for receiving Zakat. Even more complex is the issue of distribution and disbursement of the collected money under the head of religious giving.
Though no big irregularity has been recorded in the handling of finances by the Bait-ul-Maal so far, serious questions are being raised on the performance of state institutions for welfare and development of deserving people. The declining trend in Zakat collection by state institutions reflects the lack of trust of the people in the respective government departments over the usage of their contributions.
In this reference, the government needs to think about developing a more effective mechanism not only for collection and disbursement of Zakat, but also for gathering and utilisation of other indigenous religious giving.
At the macro level, one option is that the government may assume a role of a watchdog, instead of being directly involved, in collection and disbursement of Zakat and other religious giving. Another option is that the government may develop collaborative systems with private non-profit institutions for optimum collection of religious giving and reaching out to the people in need with the collected money by offering sustainable development projects of income generation, health facilities, education promotion and socio-political awareness etc.
Since giving in Islam is one of the means for promoting social justice in the society, religious-giving should be more directed to institutions for the sake of collective development, against the prevailing trend of individual charity for daily consumption, as referred to above in the PCP research which found that 65pc of the religious giving went to individuals.
At the micro level, there is a need to promote a more effective mechanism to manage the religious-giving behaviour of the people and the usage of the money collected by institutions — public or private. In this regard, if needed, legislation can be done to encourage religious giving to institutions for the collective good of the target group.
Since our indigenous philanthropy is largely dominated by religious giving, an indigenous philanthropy board may be established at the federal level, with regional offices in all administrative units of the country. To prioritise the areas of development, a separate body may be constituted that would set the priority areas of community development. The disbursement of funds to identified projects can be managed through a separate body of notables from religious and professionals groups.
In resource-constrained countries like Pakistan, resource mobilisation and its management and proper utilisation is imperative for the collective good. Religious giving, including Zakat, cannot be ignored as an important resource for poverty alleviation.
The writer is a Professor and Dean of the Faculty of Business Administration and Commerce at Indus University, Karachi.
