- by Erly Witoyo
- June 20, 2021
LONDON: Taxation is coercive while charitable giving is voluntary. Taxes are used by governments as fiscal tools to make economic corrections by way of re-distributive policies and programmes. Charitable giving, on the other hand side, largely remains a private phenomenon whereby individuals and corporates contribute to charitable causes organised and run by not-for-profit organisations (NGOs) and trusts and Awqaf.
Ramadan is fun time for those involved in raising charity from Muslims, especially in the countries in the Western hemisphere. For example, all faith-based Muslim television channels in the UK run almost nothing but charity appeals. It is an art to push people into giving.
“I can tell you many stories where a man came to our charity dinner with £1,000 signed cheque in his pocket but ended up contributing £100,000 instead,” said a fund raiser who has helped many charities in the UK to raise funds.
An Islamic school in the East London needed £4.4 million to buy a property for expansion. It started a campaign just before Ramadan and raised the required amount within the first week of Ramadan. Albeit not all the money was raised through donations, as a major chunk of the money was contributed in the form of flexible interest-free loans.
UK is a paradise for fund raisers for Islamic charities. The Islamic Relief Worldwide, the largest charity in the Muslim world, funded by retail donations, is based in Birmingham, and indeed benefits significantly from the charitable giving of the Pakistani diaspora population spread all over the country.
It is not only the hard core Muslim charities that have benefited from the generosity of the British Muslims but also less Islamic charities (in terms of their emphasis on faith as a symbol of identity) continue to receive huge support from this segment of the society. Edhi Foundation and Shaukta Khanam Cancer Hospital are two important beneficiaries in this respect. There are others that have decided to have permanent presence in the UK to raise funds for many of its projects like Shahid Afridi Foundation.
According to Edbiz Consulting, British Muslims contribute an estimated £950 million annually to charitable causes and help to the less privileged and families and friends in their countries of origin.
Over the last week of Ramadan, British Muslims gave £15 million (about Rs260 million) as Zakatul Fitr (also known as Fitrana in Pakistan). An estimated Rs10 billion was paid as Fitrana by 100 million Muslims who live above the poverty threshold. This amounts to about Rs1,315 per poor household, estimated to be 7.6 million by Ministry of Finance.
The real charitable contribution in Pakistan and elsewhere amongst Muslim communities comes in the form of Zakat paid in the month of Ramadan. Now that the government of Sindh has decided to collect Zakat on a provincial basis, it opens a window of opportunity for other provinces in Pakistan to collect and distribute Zakat locally.
Given the growing importance of charity and social giving, it is imperative that Pakistan government devise a comprehensive framework for the development and operations of social enterprises in the country. There are three important areas in which social enterprises can play a developmental role, namely, education, health and housing. These sectors should provide tax-based incentives for investors to develop social enterprises. There is also a need to develop regeneration projects around Waqf properties that lie under-developed – in many cases – in prime urban locations.
Under performance of the public sector health care system and unaffordability of private health services in Pakistan have created room for social sector to grow and become popular in health service delivery. Social sector is no doubt a reality with the likes of the much-talked about Aga Khan Hospital and Shaukat Khanum Memorial Hospital and lesser-known hundreds of charity-run hospitals and clinics. Yet, it is largely unregulated.
Despite this, the social sector has played a significant and innovative role, both in preventive and curative service provision.
The sector has demonstrated great deal of responsiveness, hence creating a relation of trust with the consumers of health in Pakistan, majority of whom otherwise would not have access to health services. There is definitely a potential to engage and involve social and non-state entities in the health care system – building their capacities and instituting regulatory frameworks.
Charitable giving can play a significant role in its further development if the government takes it seriously to develop a comprehensive framework for collection and distribution of charitable giving.