Muslims Investing in Goodness

It’s a brave new world for Islamic charity. The World Zakat Fund, the world’s first fund dedicated to investing Islamic charitable donations, will be launching in the first quarter of 2010, according to Reuters. With $50 million promised so far, a goal of raising $750 million in the first year and a possibility of accruing $10 billion over 10 years, the fund will put Islamic charity on the map in a new — and big — way.

Zakat, the obligatory charitable donation that serves as one of Islam’s five pillars, usually accounts for 2.5 percent of one’s yearly savings. Reuters reports that Humayon Dar, chief executive of Malaysia’s BMB Islamic, the fund's sharia adviser, estimates that zakat amounts to between $20 and 30 billion worldwide every year.

The fund will invest 65 percent of its money, hoping for an annual return 10 to 15 percent, in business and liquid investments compliant with sharia law, was well as in microloans to small businesses in rural areas. The rest of the funds will support charitable causes in health, sanitation, education and housing.

The project is controversial, as some Islamic scholars insist that zakat should be used immediately to help those in need, instead of being invested in other things. This argument will likely keep conservative Muslims away, but with 40,000 high-net-worth Middle Easterners and around 400 billionaires in the Middle East and North Africa, the idea might still find enough takers to make a go of it.

Photo courtesy of Hamed Saber, via Flickr