American Muslim Community Foundation (AMCF)
Its a useful charitable concept, but the organization has some work ahead of it.
Part 1: Mission
The American Muslim Community Foundation (AMCF), formerly the American Muslim Fund, is a 501(c)(3) nonprofit corporation in California. Its mission includes “leading sacred, sustainable and strategic Muslim philanthropy for today and future generations.” The organization is relatively new and small, so this mission is mostly aspirational.
AMCF operates Donor-Advised Funds and has “giving circles”—Donor-Advised Funds for groups. Think of it as a charitable bank account meant for the American taxpayer who wants to designate funds for charity, but does not know where to donate just yet. The taxpayer will pay either a flat fee or a small percentage of the account annually and then decide where to donate at his or her leisure. Over at my Islamic Estate Planning website, I explain what Donor-Advised Funds are, and why you may or may not want to use them. For the most part, it is a creature of US tax law, and allows for people to donate without immediately giving the money away to a charity.
A Community Foundation can do far more than Donor-Advised Funds. However, American Muslim Community Foundation has one full-time staff member and a volunteer board and so there is only so much of the community foundation model it can take on at this time. Among the things community foundations do:
Achieve immense economies of scale when it comes to investments and giving.
Hide the identity of donors when gift giving is controversial, or the donor does not want to be known (dark money in politics for example).
Administer a wide range of charitable gifts and contracts such as gift annuities, i.e. things small charities do not have the resources to administer on their own, or for which they will not want to accept liability.
Provide a well of expertise on helping philanthropists make their gifts work in the most effective way.
AMCF does not do many of the things here. They are too small. The organization’s founders created the organization out of a desire to change how charity works in the Muslim community. What they presently provide however, is a Donor-Advised Fund attempting to distinguish itself from a sea of such funds already in existence.
The largest DAFs are run by brokerage firms. Not surprisingly, the biggest one is from Fidelity, which acts as an extension of its online brokerage. AMCF is competitive in how it charges donors for its services (though its revenues are augmented with donations from Muslims, including zakat, which I will get into). They will, like any other DAF, provide you with a consolidated statement of your charitable giving. Another benefit is that your giving will show as coming from the “American Muslim Community Foundation”—a mark of Muslim philanthropy. In a DAF, your donation is to the fund as far as the IRS is concerned; they provide you with the records you use on your tax forms. The charity that is the ultimate beneficiary of your largess may not know you are a donor to their cause unless you tell them.
The cost of this service starts at $125 a year, or depending on the size of your DAF account, a portion of your account.
While the mission of this organization is on point, I am removing a couple of stars because of how this mission has been implemented thus far, as I will discuss below.
Part 2: Transparency
This is an area where AMCF and the board members to whom I spoke excelled. I was able to review the full 990 before it was public, bylaws and strategic planning documents. I never got the impression the organization was hiding anything at all. The team was also able to answer my questions in such a manner that I believe I fully understand what AMCF is about.
The organization also makes significant information public, including a range of YouTube videos.
I delayed this review by several weeks because of possible documents or e-mails relating to the zakat issue I will be discussing, and to allow the organization ample opportunity to respond to the problems I have identified. If you want to work with their team, whatever my concerns, I can reasonably expect they will play it straight with you.
Part 3: Social Benefit
In general, Community Foundations are usually not especially mission-oriented (though their advertising and some discretionary grant-making often makes it seem this way). Rather, they are a tool that donors can use regardless of their politics and what those donors may think of as being “charitable.” This is the same way deposits in the bank can be used to feed the hungry or buy weapons of war. Anti-Muslim groups have routinely been funded by the same community foundations that also fund Muslim Groups. So long as a charity meets minimal requirements, the community foundation usually does not care who or what the money is used for. They are fundamentally amoral as institutions, like banks, arms dealers or internet service providers. Community foundations are frequently the vehicle of choice to funnel money to Israeli settlements that violate international law, for example.
This built-in moral flexibility of community foundations is AMCF’s biggest opportunity to distinguish itself. This moral flexibility is also among its weaknesses. When it comes to “philanthropy,” there is work that is a social credit, and work that is a social debit. If you can’t or don’t want to tell the difference between the two, it may well be a sign you don’t care if you are making a net positive or net negative impact.
AMCF tells Muslim donors it vets Muslim charities. The “Vetting” of a charity at AMCF currently involves reviewing the organization’s filings. There are no value judgements here, but given the organization’s stated mission, there should be.
For AMCF, real “sacred” and “strategic” (terms from the organization’s mission statement) vetting of charities would be a great added value for Muslim donors and the community. In general, a strategy is a plan or a policy designed to get you from one place to another. But what is that one place, and where are we going with this? With AMCF, “sacred” and “strategic” are both a work in progress. AMCF has a strategic plan presently in progress and I do hope they are able to expound on this further.
What kind of impact should Muslim philanthropy make, in broad, general strokes, in say 10 years? This would mean making uncomfortable value judgements. The concept of “charity” as a matter of tax law and “charity” as a matter of social benefit or worship are not the same things. If you have a Zionist Muslim charity on your approved list, just like you do an organization meant to work against Zionism, it becomes hard to distinguish between a mission that is charitable, and one that is mercenary. I don’t know that anyone at AMCF intends for such a result, but they need to beef up their policies and start to become more selective on who gets their stamp of approval and why.
Another problem with DAFs (not just an AMCF issue) is that they encourage the hoarding of charitable resources while ostensibly giving these resources to charity. As I have written previously, under US tax law, there is no requirement that funds in DAFs be distributed to charities doing charitable work.. The business model of the organizations is based on maintaining “assets under management,” which seems like a built-in conflict. AMCF is aware of this problem and endeavors to resolve it by encouraging that funds be distributed within a couple of years, but not requiring this.
There is some great potential here to help Muslims give better. So far AMCF has not focused on this.
It is laudable to want to lead the Muslim community in being “sacred” and “strategic in philanthropy. A whole lot of philanthropy is relationship-based and tied to social circles. However, this often results in “philanthropy” that merely recirculates dollars among people of similar socio-economic backgrounds. Given this, it may be worth stepping back and evaluating the impact of the funds we give in charity.
AMCF is well-positioned for the role of “philanthropic advisor”, as other charities do actual charitable work of their own and cannot work with donors in a way that is unburdened by that mission. Unfortunately, AMCF is not there yet.
Part 4: Zakat
AMCF has two major zakat policies that it needs to reform. The first is that they accept zakat for their own operations. If you pay your zakat to AMCF, it will be used for the organization’s own overhead. As it was explained to me, this is based on the Quran, as AMCF falls under the third category of zakat-eligible: those who collect or administer zakat.
The second questionable policy AMCF has adopted on zakat is accepting zakat-eligible claims of nonprofits without subjecting such claims to scrutiny.
My goal in writing about zakat as a review category is not to pass judgement on the correct fiqhi interpretation of zakat. Rather, it is to determine if there are standards that have been vetted and reasonable. My own disagreement with the “zakat-eligible” claim will not necessarily result in a poor zakat score.
AMCF made the claim that they arrived at their zakat policies upon consultation with Joe Bradford and another well-known Imam in the San Francisco Bay Area whom I will not name. When I checked with Joe Bradford, who is on the organization’s advisory committee, he was concerned about AMCF’s zakat policies. However, before the time I communicated with him, he was unaware of these policies and claimed no role in creating them.
The Imam in the San Francisco Bay Area was not on AMCF’s advisory committee. However, AMCF had explicitly stated that he was involved in creating its zakat policies. This Imam was not involved in the formulation of these policies and disagreed with them. He also immediately contacted AMCF and asked that his name be removed. AMCF complied with this request.
Why the Zakat Policies are Wrong
We already know that AMCF’s zakat policies were not vetted by Islamic scholars, despite clear prior claims to the contrary by the organization. Beyond this, AMCF’s zakat policies are quite harmful and completely indefensible.
Accepting the Nonprofit’s Claims
It should be self-evident why no self-respecting scholar would accept an “anything goes” attitude about zakat. As I have written previously:
The privileging of Zakat funds for expenditures on ornate buildings in wealthy neighborhoods, expensive hotel conference spaces, panel discussions on politics, airline tickets, press releases of dubious value, interfaith networking, awards and honorariums for the already-affluent over the rights of those families and individuals in genuine need is a racket Muslim donors have been either tolerating or enabling for too long.
Zakat is a racket for far too many Muslim nonprofits and a way to spread wealth among the affluent.
It is vital AMCF adopt standards for zakat eligibility. AMCF claims to donors that they vet nonprofits; indeed they charge donors for doing this. As zakat is so vital in Islam, taking nonprofits’ words at face value regarding their own eligibility is a disservice to the Muslim community.
AMCF’s own Zakat Eligible Claim
AMCF has been taking zakat for its own operations, meaning its salaries, marketing expenses and other overhead. However, I have not seen any scholars claim AMCF is zakat eligible for such operations, and neither has AMCF. While the claim of AMCF’s eligibility for zakat is perhaps one of interpretation, to make such a claim credible, AMCF has a steep hill to climb.
People give AMCF money which AMCF then, at the specific request of the donor, transfers to another charity, which then may or may not engage in zakat-eligible activity. It is hard then to understand how AMCF would be zakat eligible while say, Citibank is not.
There are eight categories of Zakat in the Quran, the third is for collecting Zakat. is traditionally interpreted as applying only to governmental entities. This makes sense; AMCF has no authority to collect Zakat, as it cannot go to farms and count livestock or arrest anyone for not paying. It is common practice though for practical reasons for charities to accept a portion of their donations for overhead, since this has to be paid somehow. In this newsletter, I won’t hold such a practice against a charity so long as overhead is not excessive.
AMCF keeps Zakat designated for itself for its own operations. All of it. None of it would go to a single person who is eligible for zakat based on any other criteria. This last fact distinguishes AMCF from other nonprofits that accept the notion that their overhead is zakat-eligible.
I am eager to see what changes AMCF plans to make when it comes to Zakat. I understand the board is looking to revise this. At present, it gets the lowest possible score.
Part 5: Financials
While AMCF is small, it has been growing and increasing the number of Donor-Advised Funds it has been serving. They have not met their targets for everything, but for donors, I don’t see significant concerns when it comes to their DAF operations. If you donate to the Donor-Advised Fund, AMCF will charge you a fee for administration and when you are ready to designate a charity to which to donate, they will direct the funds to where you want them directed. An AMCF board member explained to me that the service fee from the DAF covers outside costs and not the costs of keeping the organization running. However, if you donate to AMCF directly, your donation will cover the organization’s overhead.
I am, however, taking away stars from this section because of my concerns over zakat, discussed above. The various categories here are interconnected and unfortunately a bad zakat score will cascade into several other areas.
Part 6: Governance
I have had the opportunity to speak to various AMCF board members. The organization has done a reasonably good job in recruiting board members who appear to be sincere and want to benefit philanthropic giving within the United States.
They have, however, some clear failings. Not all board members were aware of the zakat problems at the organization. One board member with whom I spoke told me she did not engage with the issue at all because she was told it was handled by two well-known Imams (which was not true). I got the distinct impression that some board members were in the dark about how the organization works, and this may not have been their fault.
The board’s oversight of the organization is clearly hampered by a structural weakness: a volunteer board president serving as the CEO of the organization. AMCF’s bylaws are flawed and inconsistent when it comes to good oversight and accountability. There is a separation of roles and meaningful accountability when a “staff-level” CEO has been hired (which has not happened), but no such accountability exists when the CEO also leads the board ostensibly overseeing her.
The AMCF’s board is going to be vital to the organization’s future performance and will need to work hard to fix its various deficiencies. My recommendation is that they separate the role of CEO from that of President of the Board, and preferably separate the board and executive leadership roles completely (which is already the case if the CEO is on the payroll). For AMCF to be a leader in philanthropy, they should model best practices in how nonprofit organizations should be run.
It is true that small nonprofits are often run with few volunteers and combine the roles of Chair of the Board and CEO out of necessity, but AMCF should move beyond this.
I do have confidence that the Board of Directors will help the organization thrive once it has freed itself from a deficient structure. They have much work to do though.
Part 7: Executive Team
The corporate bylaws of AMCF provide that if the organization has no paid CEO, then this role will fall to the President of the Board, in this case co-founder Safaa Ibrahim. I have addressed my concerns about this structure above and will not repeat them.
The biggest problem with the organization I identified—a poor zakat policy—appears to stem from Ibrahim’s leadership, combined with lax oversight surrounding the subject. In my own engagement with AMCF on the subject, the organization’s explanations were unclear and contradictory. When I asked about the subject of CEO, AMCF wrote back to me stating they do not have a CEO at all. When I responded that the bylaws are clear that Ibrahim is the CEO, I was informed that she is indeed the CEO, and that this is in keeping with California law and a common practice for newer, smaller nonprofits. This is true enough, but not without problems, as AMCF’s own zakat process has shown.
AMCF explained to me that while they could have handled the zakat issue better, the CEO does not make these decisions on her own. However, the Board of Directors did not make the zakat decision either, at least none has been documented. Indeed, board members I spoke to seemed unaware of it, and AMCF had no record or documentation of any of this. The as I pointed out previously Imams cited by AMCF were also unaware of the zakat policies and were against them. Unfortunately, this was a significant failure in leadership.
Some readers familiar with AMCF will immediately associate the organization with Muhi Khwaja. Khwaja is a co-founder and the “Director of Development and Philanthropy” at AMCF. He is also the organization’s only full time employee and has clearly worked hard to raise AMCF’s profile with centers of influence within the Muslim community. While he is widely known and liked, he has no executive role at AMCF, nor is he a member of the board. For this reason, my review does not take his leadership into account.
Part 8: Ethics
There appear to be no major conflicts of interest, other than my concern with the Board CEO also acting as President of the Board. This is not illegal or unethical; indeed for small nonprofits, it is normal. However, it is not a great practice and should be avoided.
There are, however, major ethical concerns surrounding how AMCF handled the zakat issue. To summarize what happened:
AMCF instituted a set of indefensible zakat policies that rendered a vital act of worship meaningless.
AMCF unjustly used the names of well-known Imams in the Muslim community to trade on these individuals’ authority while maintaining policies those individuals did not approve of or even know about.
I have addressed the leadership concerns relating to the decision-making process above. It appears that for most of the leadership, this was a process failure. There are no real ethical lines in the Muslim community on the use of zakat, which has long become a sad joke among Muslim nonprofits.
Having said that, it appears AMCF is now consulting with scholars on revamping their zakat policies. I am eager to see what they may institute and will update readers when this happens.
Use of Public Figures, Shuyukh and Imams
AMCF has been endorsed by a range of Islamic scholars and public figures. Such endorsements generally result from personal relationships, or are sometimes a mere courtesy given for the asking. The person doing the endorsing does not always know much about the value or the quality of the thing he or she is endorsing. In this sense, the blind trust many Muslim donors have in public figures can lead to misguidance. I would hope in the future such individuals exercise discretion lest they accidentally endorse abusive zakat practices. This itself is an ethical concern in the Muslim community, apart from AMCF’s policies.
Unfortunately, AMCF is neither the first Muslim organization to have bad zakat policies nor the first to falsely use social proof from imams, scholars or other public figures to their advantage in ways that misguided people. I am confident that despite what has happened, AMCF’s leadership can grow to become a model of exemplary ethics. I am eager to see this saga behind us so that the Muslim community can have a vibrant and successful DAF.
This review was difficult to write because AMCF is an organization I would personally and professionally like to see be successful. As an Estate Planning Attorney who does a fair amount of Charitable Planning, I can perhaps see and understand the promise of an ethical community foundation better than most. I hope to stay in touch with the organization as they address challenges in living up to their “sacred, sustainable and strategic” mission.
I am hopeful I can change my opinions here as AMCF has much upside potential for the community. It will take some work though.