Guide for Islamic scholars endorsing "charities," and "Islamic" investments.

The Muslim ummah desperately needs to fix this.

Abu Darda reported: The Messenger of Allah, peace and blessings be upon him, said, “The scholars are the successors of the prophets. Verily, the prophets do not pass on gold and silver coins, but rather they only impart knowledge.” (Source) 

READ in the Name of Thy Lord! 

In 2015 some Muslim leaders were tempted with corruption by a government program called “countering violent extremism” (CVE), which I had written about extensively. During that era, I saw a video of a popular sheikh endorsing a CVE program. This was a sheikh who enjoyed quoting Ibn Taymiyyah all the time. The CVE program he publicly endorsed included, among other charming ideas generated from experts in the American and Israeli national security establishments that made up the contents of the program, that people who read Ibn Taymiyyah are more likely to become terrorists. 

I spoke to this sheikh on the phone at the time. He confessed he had not read the manual for the program he had endorsed and had no idea it implicated him as a kind of pre-terrorist because of things he did read.  He was alarmed and became sincerely concerned about the issue when brought to his attention, but he had not read a thing he endorsed.

This is a problem I have observed several times in the American Muslim community in the years since. Muslim leaders, especially people popularly called “Islamic Scholars,” often ignorantly endorse all sorts of things.  

Sh. Yasir Qadhi gets mixed up with “fraud or deceit” 

Wahed is a “Shari’ah-compliant robo-adviser” that claims to have a process to ensure your investments complied with Islamic rules and marketed a “purification process for your wealth.” In 2017, Sh. Yasir Qadhi joined Wahed as an “ethical advisor” and stayed on at least until 2019. Many Muslims would have been led to believe in the legitimacy of these processes and the company itself, given a person of Sh. Yaser Qadhi’s stature and international fame. They should have also assumed, based on the “ethics advisor” title, that " ethics " were involved in this enterprise. 

Here is the problem, though: Sh. Yasir Qadhi had not read any “written policies and procedures reasonably designed to address its Shari’ah advisory decision-making processes and compliance reviews and oversight.” That is because no such documents existed when he endorsed the organization. That quote comes from the United States Securities and Exchange Commission (SEC), which took action against Wahed for essentially faking both the “Shari’ah” and “advisory” parts of its “Shari’ah advisory” business and also lied and misled Muslim investors about a range of things you can read about here:

Wahed Invest willfully violated Section 206(2) of the Advisers Act, which makes it unlawful for any investment adviser, directly or indirectly, to “engage in any transaction, practice or course of business which operates as a fraud or deceit upon any client or prospective client.”

The time period of the SEC action last year overlaps with Sh. Yaser Qadhi’s involvement with the company. 

Sh. Yaser Qadhi was not merely a celebrity endorser like Kim Kardashian hustling crypto; he was a trusted expert in the Muslim community who sold investments from Wahed as an authority on Islam ordinary Muslims should trust. 

Wahed was censured and fined a penalty of $300,000 plus interest by the SEC for its fraud and deceit. The SEC did not personally implicate Sh. Yaser Qadhi in this fraud like it has been doing recently for other celebrity endorsers. 

Sh. Yaser Qadhi’s marketing claims were bald appeals to authority with no useful education, including claiming a Shari’ah Board  “is looking into each and every business transaction, looking into each and every company and assessing whether these companies fit the criteria for halal investing.” Another one advised that if you trust the people on the Shari’ah Board and the Ethics Board, you should trust the company. 

At best, Sh.Yaser Qadhi served as a pitchman for a company and process he knew less about than what he was saying. Wahed has since moved on from using shuyukh as pitchmen to now using international Muslim athletes to serve as “brand ambassadors.” 

It is likely Wahed is not now and never has been “Shari’ah compliant” (e.g., halal). To see why you should see a review from practical Islamic finance (which does not cover the SEC issues). In addition, the company appears to still be deceptive with customers. At present, it claims to have a “Shari’ah Review Board.” Here is a screenshot with the claim:

As best as I can tell, no such “Review Board” exists, at least not in the way we were led to believe. Wahed claims this group was assigned by the “Shariyah Review Bureau” (SRB)-an organization based in the Persian Gulf. If you go to SRB’s website, you will be greeted with a splash page:

I did see a certificate from SRB from 2022. However, SRB does not approve investment decisions or question them. It looks at documents like various policies, forms, and privacy agreements. It seems more like a pledge than a process. This certainly does not look like the kind of process Qadhi claimed the organization had. A customer of Wahed should have no reason to believe Islamic scholars approved their investments. Wahed investors had charged a substantial premium over other investment options because of a process that did not exist. 

Wahed created a website for its Shari’ah review process that was up after the SEC action, evidently to give people confidence, but that website appears to have been removed (as have others), but you can see an archived version here.  

Scholars almost blindly endorsing Launchgood is part of a normal pattern

It was notable for some that prominent Islamic Scholars like Yasir Birjas and Joe Bradford would record videos with a full-throated endorsement of Launchgood’s zakat program when they likely had no idea how the company made money from zakat marketing or if their policy was being followed and did not appear to be interested in asking or verifying if their own claims are true. After my article on Launchgood [see “How Launchgood takes up to half of your charity without telling you” and “Launchgood “Zakat verified” is worthless”], I asked both Sh. Yasir Birjas and Sh. Joe Bradford if they continue to endorse Launchgood, and they did not reply. As of this writing, endorsements by these individuals are still up. They do not appear to disclose any financial or business arraignment behind the endorsement. 

It happened with the same scholar before

This issue has come up with Sh. Joe Bradford before in this newsletter. A nonprofit called “ American Muslim Community Foundation” was accepting zakat for themselves because they were “administrators of zakat” - and did nothing else zakat eligible. They were also accepting zakat for other organizations through their donor-advised fund (DAF) based on any zakat-eligibility claims made by organizations, never mind how absurd. Joe Bradford had unwittingly endorsed this zakat policy without knowing what it was, and he did not agree with it when I explained it to him. As of this writing, the American Muslim Community Foundation no longer accepts zakat until they rework their zakat policy, and naturally, Sh. Joe Bradford’s endorsement is no longer present for that organization. 

Sheikh endorsements are special

Donors will assume that the endorsement of a sheikh means that he will bring his expertise in Islamic worship and the rules surrounding zakat, finance, marriage, and other things. His status as a “scholar” means that he has read relevant documents, can vouch for its leaders, and fully understands what the organization is about. 

A sheikh’s influence and endorsement may be the only factor many Muslims have in donating to an organization. Remember, these people are supposed to be experts on worship, and zakat and sadaqah are that, but so is striving to organize your finances in a halal way. In many ways, ignorant endorsement is the principal way shuyukh are often complicit in zakat abuse by Muslim organizations. Many Muslims will also use an app, invest in securities or use a matrimonial service after being influenced by a sheikh’s endorsement. 

Anyone endorsing an organization or a service should be more discerning. 

Giving false testimony is a major sin in Islam

As a general matter (without making judgments about any individual person), giving false testimony is a major sin in Islam. 

Allah's Messenger (ﷺ) said thrice, "Shall I not inform you of the biggest of the great sins?" We said, "Yes, O Allah's Messenger (ﷺ)" He said, "To join partners in worship with Allah: to be undutiful to one's parents." The Prophet (ﷺ) sat up after he had been reclining and added, "And I warn you against giving forged statement and a false witness; I warn you against giving a forged statement and a false witness." The Prophet kept on saying that warning till we thought that he would not stop. ( Hadith reported in Bukhari) 

        In this article, we are not talking about testimony about witnessing a murder that never happened. We are talking about false testimony about a product, service, investment opportunity, or organization. Not all endorsements are paid. Endorsements given away for free may not implicate any law or regulation. However, if the claim made in the endorsement is not true, it’s testimony that should not have been given. 

I don’t know what will happen in the hereafter. However, I know the law can sometimes catch up to people in this world. 

Influencer Marketing is more regulated

Readers may well be familiar with various celebrities in the news who have had to settle with the Securities and Exchange Commission for promoting investment opportunities. A separate set of rules exists for “influencers” promulgated under the Federal Trade Commission Act. Several state Attorney Generals have been interested in going after influencers who are paid to say things that are not true. For example, claiming to use a product they never use. 

The FTC regulations on social media influencers are a helpful guide (and hopefully at least an ethical minimum) for Islamic scholar-influencers and imams, even if it is unlikely that a government agency will come after them for hyping a fraudulent zakat program or even selling a fake Shariah-compliant investment. By one estimate, 93% of the top influencers on the internet violate the law (the Federal Trade Commission Act) on disclosures. 

The Federal Trade Commission has a guide on social media influencing (Disclosures 101), and any Islamic scholar getting into this business should be familiar with it. The Library of Congress has a research guide on social media regulations in the United States, and even the United Kingdom sheikh influencers may want to check out. Rules relating to endorsements should be similar online as offline, like at public gatherings.  

Disclosure rules are just to be honest about the relationships with the brand or product being endorsed. Lying when making those representations about a product or service (fraud) or not caring if what you are saying is a lie is completely different. Those are often crimes that could involve prison time or torts that can result in civil damages. 

Disclosure is simple

If you are engaged in influencer marketing, you need to disclose your relationship with the organization or brand, personal, family, financial, or employment. You need to disclose even if there is no financial payment, but if you get a discount or free stuff. If an organization paid for your trip to a refugee camp in Turkey (and a side trip to Istanbul, naturally), you must disclose this if you are endorsing the organization, even if you were not paid. 

You should never assume people already know you have a business or other relationship, even if you announced it elsewhere. You need to display it prominently with the endorsement. 

An Islamic scholar will likely believe his opinion is unbiased and his recommendation can never be bought. They still need to disclose everything as if it can be. 

These disclosure rules also apply to all other influencers (male or female). The Muslim social media ecosystem has many influencers (“brand ambassadors”) who often have the same ethical lapses as everyone else; however, shuyukh, as inheritors of the Prophets, should have higher standards than that. 

When do Islamic Scholars endorse? 

A request for Islamic Scholars comes up in two major places I will address in this article. The first is with so-called “nonprofits,” especially those that accept zakat. The second and likely more lucrative place is in financial services. In these areas, something like “regulatory capture,” let’s call it “fiqh capture” where people who are paid to develop and articulate rules that are best suited to the interests of those paying the bills, may be going on. Are the top Islamic finance experts disinterested, or are they servants of potentially unethical corporations?  

Shuyukh can often endorse other businesses, like apps, matrimonial services, tours, and travel, or their own entrepreneurial ventures. I won’t discuss these in this article, but if you have any comments on them, please share. 

A fourth area of endorsement is fundraising for masjid building and maintenance. I don’t see any problems with that except to say it’s vital to follow state law on disclosures of fundraising activity, including rules for professional solicitors and fundraising counsel, when applicable. 

The last area of endorsement is when Islamic scholars and other American Muslim leaders are foreign agents who should register under the Foreign Agents Registration Act. I have written about that here. 

Determining if a Zakat-collecting nonprofit is worth endorsing

Many Muslim nonprofits have a culture of abuse when it comes to zakat; you can read about this here and here and various other articles in this newsletter. These organizations usually don’t have written zakat policies and when they do, it’s kind of a joke- like everything is fisabilillah or something like it. They also won’t account for how zakat is spent. If you come across such an organization, don’t endorse it (unless you believe zakat is a joke, then I guess it does not matter). This is true even if you are not being asked to endorse the organization’s zakat program, just the organization itself.

If the organization abuses zakat, that could easily be a sign of more systemic organizational rot. You don’t know to what extent the organization’s leaders are helping those in need versus themselves if they don’t know how to deal with zakat. 

Note that speaking at the organization’s event or, according to the FTC, using a hashtag online could be considered an endorsement of the organization. You don’t have to use the word “endorsement” or even fundraise for the organization. 

Don’t rush to endorse something just because your friend works there or because a sheikh you respect spoke at their event and endorsed it. Organizations often rely on the herding of endorsements as a substitute for scholars reading things and doing their own critical assessment. 

When in doubt, turn them down. 

Herding Endorsements

Zakat, through large international nonprofits in the American Muslim community, has fallen victim to a variation of a “herd scam” or “mass scam” where social proof builds on top of itself to make large numbers of otherwise discerning people start to assume everything is okay. It’s not. 

There is something seriously wrong when millions of dollars in zakat is going to marketing companies, multi-national publicly traded companies, and professional fundraisers. You don’t need to be a sheikh to figure out something is amiss when people who collect zakat have no accounting of any kind as to how zakat is spent. Yet, year after year, dozens and perhaps hundreds of imams, shuyukh, and masjid communities endorse organizations they don’t know much about. There is mass complicity in a broken system. 

To everyone who endorses a zakat-eligible organization: you should understand where the money goes not merely from the pretty pictures or graphics provided, but from independently audited data for that organization’s zakat. If you make any verification of the policy or the numbers someone else’s responsibility, you should be aware that the person likely does not exist. This could be just another hustle, and you are probably being used and may be made complicit. You should do this even if you don’t plan to mention zakat as part of your pitch or if you are being hired to do “education.” 

Remember, Abu Ubaydah ibn Al-Harrah (RA) turned down the opportunity to collect zakat when Muhammad (sws) offered him the opportunity to do so. The gravity of this responsibility is great, yet American Muslims, including (and especially) shuyukh and imams often treat this pillar of Islam with a depressing level of frivolity. Let’s denormalize this. 

Financial Services Endorsements

Wahed’s censure is not unusual in the financial services sector. The SEC is constantly fining companies for things like fraud and deceit, and the consequences to the companies are usually minimal. The financial services industry is known for many things (“greed is good”), but one thing it is not known for is high ethical standards. Other than the SEC enforcement action against Wahed last year, there was “Halal Capital”- an old-fashioned Ponzi scheme with Islamic finance jargon. A Muslim Instagram influencer bilked the Muslim community out of about eight million dollars. Outside the Muslim community, enforcement actions for fraud and deceit are common.  

Well-known people asked to endorse things, including Islamic scholars, shouldn’t be victims of unconscious ignorance- they shouldn’t endorse what they don’t know.

When approached by a financial services company for a scholarly endorsement, the best action is to ask the company to pay for an independent securities lawyer or any other support staff or professionals that may be needed, like secretarial support or a CPA. The scholar should also have independence- a long-term (at least five years) fully-funded contract with no chance of renewal, and have the full ability to say what they want in public and private.  There should be no non-disclosure agreements or non-disparagement clauses.  The scholar should be able to critique the company, its policies, and its track record in public if circumstances warrant doing so.  The scholar can then ask the right questions and check to see what documents should be reviewed and audited before lending their name to something. Islamic scholars involved with this business should not just be pitchmen; they should do the work of Islamic scholarship, enjoining good and keeping us from evil.

If an Islamic scholar lacks independence, it’s hard to say they are anything more than a cog in a machine that may have little interest in Islam beyond using it for marketing. 

Islamic scholars should ask for help not just in the securities space but also in lending and real estate investing. Get the right people for the right job. If imams and Islamic scholars make these demands, the companies may move on to someone less demanding. That’s fine. No amount of money is worth false testimony, especially that of scholars tasked with preserving sacred knowledge. 

Is this breakdown in ethics our fault?

Respect for Islamic scholars is important for Muslims, but what does that mean? That should not mean blind deference or irrational rock-star groupie-like fandom. It’s because of this “respect” that we need to evaluate how we got to this point. 

The economics around Islamic knowledge is more like entertainment and sports; some people are economically exploited, and some achieve fortune and fame.

People who study Islam can go on to careers and be paid like social media influencers, finance bros, or Islamic school teachers. 

The American Muslim community has done much to build buildings but not careers for students of knowledge. We don’t have awqaf supporting imams. Our masjid may offer imam and teaching jobs, but they often have bad pay, in unstable organizations, or have bad internal politics. We greatly value some “scholars” for their celebrity, pitching iPhone and Android apps, “sacred tours,” and investment opportunities- and these are the highest performers in the field. I wonder to what extent we have gone astray. I don’t only mean Islamic scholars. I mean all of us.