Charitable giving thrives despite economic slowdown

Updated May 27, 2019

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The volume of donations in Ramazan this year is projected to be around Rs170bn, same as that of last year. — Dawn/File
The volume of donations in Ramazan this year is projected to be around Rs170bn, same as that of last year. — Dawn/File

Despite her best effort, Mrs Sheikh says she is left with one-third of zakat that she wants to disburse to the last penny in the first half of Ramazan. She likes to dedicate the second half of the holy month exclusively to ibadat.

An ageing widow, Mrs Sheikh says she has already donated Rs1 million to Edhi Foundation, Sindh Institute of Urology and Transplantation, Fatimid Foundation, Layton Rahmatullah Benevolent Trust and the patients’ aid society of a public hospital.

She told Dawn that given her limitations she could not locate the families worthy of zakat and, therefore, donates to organisations serving the needy.

“Yes, I do try, but it is very hard to find people who are deserving of zakat. So I divert it to credible institutions offering services free of cost to the poor,” she said.

Like Mrs Sheikh, a notable percentage of upper- and middle-class households in Pakistan donate to help the needy, mostly for religious considerations.

The volume of donations in Ramazan this year is projected to be around Rs170bn, same as that of last year

On the other end of the economic spectrum, the poor are working their networks to make the most of this period. Online networks may still be inaccessible to the poor, but they have learned to use cell phones that ensure timely delivery of donation-related messages in Ramazan.

Shehnaz, a 45-year-old housemaid, works on Eid but takes two weeks off during Ramazan. She utilises her work break to collect donations from certain institutions, her past employers and other sources.

“Besides clothes and food for the family, I collect more money in these two weeks of Ramazan than what my husband and I earn in a month after backbreaking labour. As long as it meets our needs, I am indifferent if it is zakat or khairat. We cover Eid with this money and use the residue to pay for some longstanding heads, such as fixing the roof or a cot,” she explains.

Independent observers and people associated with charities did not notice any change in the scale of giving during this Ramazan. They do not expect higher funds mobilisation for charitable causes this year and hope it will be similar to that of last year. An informal survey that assumes the value of assets to be static in the wake of an economic slowdown projects the volume of charitable giving this year is going to be the same as the last year’s level of around Rs170 billion.

According to a study titled “The state of individual philanthropy in Pakistan,” the estimated magnitude of annual household giving was Rs240bn in 2014.

The practice of giving hits its peak in the holy month every year. There is no formal data available as giving is mostly cash based. But most analysts believe that the trend of giving has not shown a significant sign of weakening despite the economic slowdown in 2019.

“The zakat calculation is not based on running income. It is calculated on the basis of the value of assets that tends not to vacillate in a short span,” an analyst explained.

Pakistan is currently in the midst of serious economic challenges. The growth is expected to slow down sharply from 5.22pc in 2017-18 to around 3pc this year. Wages have slumped, inflation is high and the currency has lost one-third of its value against the dollar. More worrisome is the fact that prospects are gloomier in the immediate future as the country returns to the IMF within three years of the completion of a $6.5bn Extended Fund Facility in 2016. Economists predict a loss of jobs and wage cuts besides an increase in taxes, further devaluation and a hike in utility rates.

Consumer spending has taken a hit as reflected by the latest consumer confidence index released by the State Bank of Pakistan last week.

A young economist, barred by her company to speak publicly, believes that the self-indulgent elite donates not necessarily for altruistic or religious reasons, but to experience warm glow.

Published in Dawn, The Business and Finance Weekly, May 27th, 2019