The Zakat Industrial Complex Strikes Back

The End of Zero-Rules, Zero-Accountability Zakat?

A few people operating in the International Zakat Industrial Complex (henceforth IZIC) did not like my recently published article, “Zakat Report: Hundreds of Millions in Fake, Wasted, and Hoarded Donations.” Their responses, and those of many others, raised points of legitimate discussion and even led me to correct some numbers (see below). However, my central argument stands: donors, scholars, imams, and masjid leaders should no longer tolerate zakat being handled with zero rules or accountability. Further, one is under no obligation to donate internationally at all. Paying zakat locally fulfills your religious obligations just fine.

My report urged prospective donors not to donate zakat to an organization if it 1) lacks zakat accounting across the distribution chain, and 2) has no zakat policy with actual restrictions on how management can use the funds. None of the organizations in my review met both of these two criteria. No one should donate to a black box with no accountability, especially if they want as much of their donated funds as possible to reach people in need.

I read responses from industry consultants Oussama Mezoui and Shaykh Joe Bradford, as well as an oddly personal one from former ICNA president Mohsin Ansari, who is associated with Helping Hand for Relief and Development. All three represent IZIC perspectives. They used many words, demonstrating fluency in development sector-speak, but not one of them disputed the two criteria above. If you cannot demonstrate that you can handle zakat for Muslims with appropriate accountability and restriction, you should not be soliciting it. This is a point upon which we should all agree.

It is this basic fact that is the source of my frustration with the IZIC. IZIC organizations want our money, our loyalty, our deference, and our respect. They want to hire scholars to tell us how wonderful these organizations are and how we must donate to them. What they do not want to do is tell us where the zakat is going. For some in this sector, respect is not a two-way street. They treat Muslim donors like they are rubes who do not care what happens to the money once they donate it. This needs to stop.

Of the organizations I reviewed, Helping Hand for Relief and Development seemed the most bothered by my report. HHRD is a big organization and a real charity with programs overseas. It is not just a marketing shop like most charities I reviewed. I flagged it, however, for being bloated and inefficient, and for appearing to hoard cash. The organization then released a flyer and substack post bemoaning “misinformation” and my lack of IZIC experience. Here, however, they still sidestep the question of developing a more restrictive zakat policy and transparent accounting. If they simply addressed these concerns the conversation could end.

Individuals associated with the IZIC raised concerns about my report’s methodology and fairness. The main purpose of this article is to address those critiques and point to reasons for hope.

Is Burning Cash Bad?

Both Oussama Mezoui and Joe Bradford objected to my method, which assumes the donor’s perspective while ignoring the sector’s binary distinction between “programmatic” and “administrative” costs.

Bradford writes:

Shaikh describes his evaluative framework as “donor-centric,” treating all domestic expenses as “cash burn” regardless of their function. This is not a neutral accounting standard; it is a philosophical position that classifies OFAC compliance (Office of Foreign Assets Control, part of the US Treasury Dept), grant due diligence, monitoring and evaluation, and fiduciary oversight as waste. The framework assumes that value exists only at the point of overseas cash transfer, as though these organizations should function as wire services rather than governed institutions operating in sanctioned and conflict-zone environments.

Bradford, who acknowledges a conflict of interest as a consultant to four of the organizations I reviewed, risks speaking past donors here. His response quickly hits readers with a barrage of development-speak. It also frequently resorts to misdirection and attributes claims to me that I never made. For example, I did not say that funds I classify as “burn” have no value. What I argue is that cash burn is overhead that is ancillary to the actual mission; it may be necessary but charities should have as little of it as possible. Something like OFAC compliance may be necessary, but that is a cost, not a benefit. Further, my use of the term “cash burn” is not a proposed accounting standard (I propose a different one, as is clear from my report), it merely describes what is objectively happening: the money is ‘burned’ on things like rent, advertising, salaries, and zakat consultants before it travels overseas. Then it may be cut further in ways invisible to the donor before ever benefiting the donor-intended beneficiary. Donors understand there are costs to running an international charity, but such costs must be clarified so that donors feel confident that as much of their donation as possible is going to those in need.

Take HHRD, for example. It has 155 employees in offices throughout the United States. The organization labels $7,152,302 spent domestically as program expense even though it is an international relief organization with no domestic charitable programs of its own. This description of “programs” is largely an accounting fiction. However, Bradford and Mezoui appear to say this kind of accounting is legitimate because international NGOs like HHRD are not merely “wire transfer” vehicles. I want you to decide for yourself as we walk through HHRD’s IRS Form 990 using my methodology, which is for 990 review purposes in the absence of a zakat accounting.

Below is an HHRD statement of revenue from 2024:

First, I eliminate non-cash contributions (gifts in kind). Gifts in kind are central to what I have previously called hisab-hacking because they provide an easy way for organizations to inflate their revenue and program spending without actually having real cash flow. This is why my method treats non-cash contributions as phantom revenue. Here, after subtracting non-cash contributions, we are left with $59,098,577. So far, so good.

Then, I check what HHRD distributed in cash overseas. That brings us to Schedule F of Form 990, which reports a nonprofit’s activities outside of the United States.

The cash wires we care about are $8,816,000. Using the method in my report, we simply ignore gifts in kind (e.g., donations of food, clothing, or medical supplies) and file them as domestic burn for two main reasons. First, the associated numbers are manipulated; the goods cost a fraction of what HHRD attributes to them. Second, everyday donors donate in cash or equivalents.

Some “gifts in kind” can actually be harmful to local economies and economic development because they deprive local merchants, tradesmen, and farmers of opportunities to sell things that are given away for free by charities (see the “TOMS Effect” described in the Poverty, Inc. documentary). It is also generally better to give people cash so that they are able to buy their own clothes, food, and furniture. However, it is not for these reasons that my methodology excludes numbers distorted by hisab-hacking. I exclude the numbers because there is no way to trust them.

The domestic grants at HHRD appear to be legitimate charitable work (see Schedule I—I do not reproduce it here). However, I would decide to exclude domestic grants if there appeared to be a substantial marketing angle to the grants, such as scholarly endorsement or fundraising access to a masjid. HHRD did not appear to obviously engage in this, and Hidaya Foundation did not appear to do so either. But another organization Bradford defends and consults for, Human Development Fund, engaged in grantmaking that appeared to be marketing-focused (rather than charitable), based on what I saw in the 990 and the organization’s website. The Zakat Report applies a similar approach with other IZIC organizations as well and explains why I treat them differently. You as a donor can make your own call but remember, none of these organizations have both a restrictive zakat policy and zakat accounting. We would not have to play the “is it marketing or not” game if these systems were in place.

Going back to HHRD, the total for domestic grants is found on part IX, line 1.

When I add $8,816,000 from Schedule F to $1,022,684, we reach $9,838,684. This represents HHRD’s total cash-based charitable work in 2024 (at least what we can see on the 990). Now we get to what I call “burn.” This is part IX, Statement of Functional Expenses.

Ignore lines 1-3 as they have already been dealt with. Now we add up everything except the total (line 25) and reach $14,614,471. This leaves a $33,141,286 gap (we will get to that). Of the purely domestic expenses of $14,614,471, $7,152,301 falls under “programs.” But remember, this organization does not have any domestic charitable programs. Whatever they are attributing to programs, legitimate or not from an accounting perspective, is not what donors donated for. This is what I mean by being donor-centric in analysis.

Bradford and Mezoui justify domestic program expenses for organizations that do not operate programs within the United States using phrases like “complex governance decisions,” “counterparty risks,” and other development-sector jargon. They present this with the same matter-of-factness as a car salesman explaining tacked-on junk fees at a Chevy dealership. Claiming overhead as ‘programs’ can inflate charities’ program expense ratios while contributing nothing to the poor and needy, but this seems beside the point to Bradford and Mezoui. After all, this is the International Zakat Industrial Complex.

As it happens, the Qur’an contains categories of eligible zakat recipients. Any competent zakat accounting would consider this. But I invite you, donor, to sort this out for yourself.

Above are the categories of zakat in the Qur’an, plus the shrug emoji. In a hypothetical zakat policy crafted by scholars, virtually any domestic overhead for an IZIC organization would fall into one of two categories: administrative or impermissible as zakat. For example, the Islamic Council of Europe’s policy prohibits classifying marketing costs as administrative. But in much nonprofit accounting, categories become blurry. Marketing can frequently appear characterized as “programs” on the basis of it providing “donor education.” In contrast, I call domestic overhead “burn” because that is what it is and we have no other common standard to describe what is happening. We know that anything meant for an actual charitable beneficiary is wired overseas or granted out.

My method evaluates administrative costs from a zakat policy perspective and not from a nonprofit accounting perspective, which zakat donors should not care about. For an IZIC charity that values only nonprofit accounting, giving actual cash to an orphan’s family is treated the same way as creating a video to educate donors about giving to orphans. However, only one of these activities provides actual benefit, while the other represents a cost (burn). What Bradford’s spirited defense of accounting orthodoxy does here is ignore zakat categories completely. Zakat accounting standards, such as the Indonesian model for zakat administrators known as PSAK 409, modified for the US context with end-to-end reporting, could transparently incorporate zakat categories without being hostage to nonprofit accounting. That is what I am calling for.

What I do know about HHRD’s domestic office expenses is that none of the associated money goes to the poor, needy, or any other category of zakat-eligibility except administration. Again, some administration is necessary, but too much should be scrutinized by donors. And expenses like fundraising events, for example, cannot legitimately fall under zakat administration (advertising does not actually help administer any zakat). Bradford’s defense of the distinction between programmatic and administrative expenses, divorced from a zakat framework, is unpersuasive. It is relevant here that HHRD does not have a zakat policy and treats zakat as an unrestricted asset according to its audited financial report. Page 20 of the report clarifies:

The zakat categories I listed above do not mean anything to HHRD, per their audited accounting. HHRD has no separate fund or account earmarked for zakat. And of the eight Qur’anic categories of zakat, HHRD’s audited accounting recognizes one—the poor—and then immediately expands beyond it to “the less fortunate” and “the general welfare of society.” These categories are broad enough to encompass almost any expenditure imaginable. We should not care if their fundraisers have hundreds of scholars and that their faces are plastered all over the HHRD website. This description in the audited accounting is the whole ballgame. Just about everyone is “less fortunate” than someone else. Use of the term “general welfare” is also striking as it assumes zakat does not mean anything discrete or specific but is, as the audit report essentially says, for the general benefit of…everyone. These slippery phrases render categories of zakat meaningless.

There are scholars who say that zakat can be used for whatever a person’s heart desires as long as he or she thinks it is virtuous. Thus zakat-eligible causes have come to include things like conferences, a suburban masjid’s phase-seven expansion, and Gavin Newsom’s political campaign. If you follow such opinions, I do not know what to do for you. If you believe zakat is for discrete, specific categories and some sort of accountability is possible, keep reading.

Let us return to the $33,141,286 gap in HHRD’s 990. In my original report I counted this as an amount kept by HHRD because the trail went cold in the tax return, but there is more to the story. I thus corrected it on the Zakat Report and classified the money as “unknown.” That was the most appropriate move, based on additional information that I reviewed outside of the 990, which was left blank in crucial places.

HHRD has offices in various countries, and those offices are fully controlled by the organization. However, the Schedule F grant was to an organization outside of HHRD (we are not told whom). That is a black box. In the methodology I have described, to maintain consistency across the organizations I review, I accept that money granted out is going into some dark hole once it is granted out or distributed. I do this to treat organizations fairly, even though the situation is lousy because there is no accounting or accountability for what happens once the money leaves the United States.

HHRD is fully capable of telling us what happened with the $33,141,286 gap since they were in full control of all funds the whole time. But HHRD elects to not tell us much. They also left important information out of their 990: HHRD has controlled subsidiaries. They are identified in Schedule R, but that is as far as it goes. Because of HHRD’s structure, the 990 instructions require that the organization clarify how money was distributed to its subsidiaries. HHRD, however, did not do that; they left the section completely blank.

A conversation I had with a couple of HHRD employees a few years ago informs my analysis of the organization. They told me a story about someone who showed a photograph of a water well bearing his family’s name to a friend. The friend responded by showing a photograph of what appeared to be the same well, but with his own family’s name listed as the donor. One of the donors then complained to HHRD about the apparent deception, and the employee tried to quell the donor’s frustration. The US-based HHRD employee with whom I spoke thought that the HHRD representative or contractor outside the United States probably did just switch the names on the well instead of building one. This story came from within the organization itself.

I cannot verify this story. But here is the more important point—neither can you, and neither can HHRD’s donors, or even the two stateside employees who told me the story. An organization that controls its entire distribution chain from its US headquarters to nine foreign subsidiaries, leaves Part V of Schedule R blank, and describes millions in activity as ‘programs,’ has structured itself so that this kind of story is permanently unverifiable. The opacity that makes this possible is their system. To be fair, these things can happen in even the best run organizations and are not in and of themselves reasons to dismiss the whole charity. But for an organization where this kind of deception is at least possible, it is vital to make sure people can understand where money is going through an accounting that covers the entire global distribution chain.

While writing the Zakat Report I did not rely on HHRD’s audited financial report. This is because such reports are resistant to an apples to apples comparison since different firms have vastly different ways of presenting information. They are also not federal filings signed under penalty of perjury. I also did not anticipate that an organization like HHRD would leave crucial information on the 990 blank, leaving the impression that they are not doing anything with large amounts of money.

HHRD does provide some additional information on its website that I reviewed after the publication of my report. See the audited financial report below. This report gives country by country breakdowns but contains only general categories like “emergency” or “community development.” What happened to the money? How many beneficiaries were there and what did they receive? Where was the money transferred? Were there contractors or local lawyers? BDO, the auditor, says there were local audits, but we don’t know how many were conducted or the quality of each. BDO did not vouch for the audits (which are not public) and the numbers are not under penalty of perjury like they are in a 990. HHRD is plainly hiding the ball on what happens down the chain. We also know from the audited report that they can do seemingly as they wish with the money, even operating in ways that are divorced from the concept of zakat.

Because this reporting is unnecessarily vague and conclusory, and because HHRD promised to provide a zakat policy four years ago, I recategorized the $33,141,286 gap as “unknown” in the Zakat Report. So now we have $9,838,684, the amount granted out; $14,614,471, our overhead burn; and $33,141,28, an unknown amount that was not included in the 990. This does not mean the unknown amount is less of a black box than the amount granted out. None of the organizations in the Zakat Report have end‑to‑end zakat accounting, but I have done my best to treat them fairly.

Now remember, our number for revenue was $59,098,577. We accounted for $14,614,471 (domestic burn) + $33,141,286 (unknown/unverified) + $9,838,684 (granted out) which equals $57,594,441. Subtract that from $59,098,577 and now we have $1,504,136. That is HHRD’s retained earnings. To make this easier for the casual reader to understand, I designed my report around hypothetical $100 donations and treated the $59,098,577 as a $100 donation. Thus a $100 donation would result in $24.73 in domestic cash burn, $56.08 in unknown/unverified, $16.65 granted out, and $2.54 retained by HHRD. What this mostly means is that we don’t know what is happening to donations that go to HHRD because they won’t tell us anything useful.

Another issue is that HHRD has been engaging in asset accumulation. In its 990 we see that there is money listed under “receivables” from the subsidiaries that we know HHRD controls.

The balance sheet also shows cash:

Just adding “receivables from subsidiaries” to the cash at the end of the year (ignore the “right of use assets” line item), we get $68.7 million not given to charity. From the audited financial report though, the cash on hand situation looks meaningfully worse than the picture I painted in my report. It shows $60,489,975 in cash.

What this means is that of the $60,489,975 on its balance sheet, HHRD can only use $1,517,600 for general purposes, including administration. The rest is donor-restricted and must be used for the charitable purposes donors specified. Just because those funds are not coded as zakat, does not mean they are not intended as zakat. For example, HHRD appears to impose separate restrictions for orphan programs, which from a donor’s perspective are zakat-eligible programs.

But the main problem with HHRD is not hoarding (though retention of substantial assets is happening), it is that the organization has no zakat rules nor zakat accountability. In other words, HHRD is a zakat-collecting organization that deliberately pretends zakat obligations do not exist. It is an excellent example of why charities need restrictive zakat policies and a robust end-to-end zakat accounting. HHRD is more than capable of providing such transparency. In fact, four years ago HHRD’s CEO personally promised me by email that they would have a zakat policy on their website. He stopped responding to my emails after I followed up, once it was clear a zakat policy was not happening. After all this time, HHRD is the prototypical zero rules-zero accountability IZIC shop. There has to be a point when Muslim donors stop tolerating this kind of dereliction. Charities will not change without meaningful donor pressure.

Notably, I made a different call when it came to the charity Mercy Without Limits. They are also a direct-provider charity whose money ends up in a black box. However, this organization is different in that it fills out its 990 instead of leaving critical parts of it blank. Mercy Without Limits, as it happens, has a restrictive zakat policy.

You can decide if this is a fair way to evaluate charities or not. What I can tell you is that I assessed organizations in this way because this is a 990-based analysis. This is why the HHRD $33,141,286 gap is treated as unknown. A different methodology would still need to contend with the fact that HHRD is not competent enough to handle zakat because it has defined zakat as anything under the sun.

Bradford’s Strange Gift-in-Kind Accounting Defense

Bradford and Mezoui differ a bit on gift-in-kind accounting. Bradford seems to believe we should accept whatever an auditor or appraiser thinks. He specifically cites the example of Muslim Aid USA (MAUSA), pointing out that CharityWatch approves of them and that an auditor gave the organization a clean bill of health. Bradford seems to suggest that we all defer to such ‘experts.’ This is pure credentialist gatekeeping and a convenient position for an IZIC consultant to take because it can help festering problems like hisab-hacking remain invisible. Auditors and appraisers are not impartial judicial officers or mediators, they are professionals who like happy clients.

An auditor’s clean opinion means the numbers are internally consistent and follow Generally Accepted Accounting Principles (GAAP). It does not mean that the underlying valuation is honest, that the goods reached beneficiaries, or that donors were not misled. Those are different questions entirely. Bradford seems to conflate “audited” with “true.” Accounting has a persistent “GIGO” problem (garbage in, garbage out), and must rely on information provided by clients themselves. If someone tells an accountant a bottle of pills is worth $1,000, they are usually not going to view the expiration date, check storage conditions, or do much of anything that may challenge the valuation.

Relying on CharityWatch’s endorsement will not work for Bradford either. CharityWatch still uses the programmatic/administrative divide as its foundation, with minor adjustments. While it asks whether expenses are classified as program costs or overhead, it does not ask whether cash ever reached a beneficiary. Bradford’s reliance on CharityWatch is circular. Muslim Aid USA is a marketing-only charity that attributes much of its functional spending to programs in ways that donors likely do not expect.

Gifts in kind, as discussed above, are not the only kind of make-believe number with which we are dealing. Charities often combine unrealistic programmatic expenses with gifts in kind. For example, MAUSA is a marketing organization for Muslim Aid in the UK, and also makes grants to organizations like the UK-based Orphans in Need and US-based ANERA. Former employees of the organization told me that a major purpose behind the gifts-in-kind program is to massage the organization’s accounting. Let me explain.

MAUSA generally purchases items. The purchase may be labeled a “service charge” or “administrative fee” but it is a purchase. The difference between the purchase price and the “value” they get is the amount of the “gift.” This delta is often astronomical and allows IZIC shops to inflate their numbers. The Attorney General of California has taken enforcement actions against this kind of manipulation and has stated that it is deceptive. Yes, these accounting gimmicks happen quite often in nonprofits, but they are not as legal as Bradford seems to think.

If you buy something for $100 in an arm’s length transaction, $100 is the market price. That is consistent with GAAP. It is also common sense. You do not need gift-in-kind accounting magic to turn the $100 into $2,000. More importantly, if you as a donor tried something like this, things would go badly for you. Say Javid is a successful surgeon. He comes upon a shipping container full of shoes with a retail value of $200 a pair, but the shoes have cosmetic defects and cannot be sold and would end up in a landfill. Javid decides to buy the shoes for 20 cents a pair. He gives them to a charity and agrees to pay for them to be shipped across the globe. For this, he values the shoes at $200 a pair and deducts them on his taxes as a $200-per-pair charitable donation instead of 20 cents. He figures this gambit will save him hundreds of thousands of dollars on his Form 1040 as a result. However, Internal Revenue Code Section 170, which regulates donations, has specific rules on deductibility here. Javid would owe back taxes and severe penalties. There is also a non-zero chance that Javid would end up in jail.

Form 990s are not usually audited by the IRS like 1040s, but just because charities’ accounting shenanigans are seldom punished does not make them right. Unlike Javid, charities do not pay taxes and are thus not trying to cheat the government out of money. However, they do cheat donors when they share untrue stories about themselves. Bradford does not seem to agree, as he claims that because hisab-hacking can be GAAP-compliant and accountant approved, charities are in the clear. Actually no, that is not how things work in the real world. It is possible to be completely GAAP-compliant, have extremely reputable and expensive accountants sign off on all documents, and still be guilty of a crime. In other words, it is accounting itself that is often used to tell lies. Reliance on professionals is a potential defense, but not a cure-all. This defense can also fail spectacularly, as it did with the famous example of Enron, but cases of people trying to hide behind accountants and failing happen constantly.

I am not saying crimes have been committed, since I am not a prosecutor or a juror. My goal here is merely donor education, not criminal enforcement. But the notion that cooking books this way is all safe and legal is a fairy tale and egregiously bad advice. I would expect someone like Bradford to know better.

So yes, there are potential crimes involved when someone says in the mail or online that 91% of your donation goes to charitable programs when that percentage relies on GAAP-compliant financial manipulation. In fact there are a variety of potential crimes here that have been prosecuted in related contexts repeatedly. That Bradford would make a stand defending this at all is quite amazing.

This May Not All Be Zakat

Bradford points out that not all donations to the IZIC are intended as zakat. He cites numbers not from clients for whom he does zakat consulting, but from the Lilly Family School of Philanthropy, which emphasizes that a minority of Muslim’s charitable giving is zakat. That tracks; I hope nobody reading this gives most of their charitable giving as zakat. But the IZIC comprises organizations that specifically solicit zakat and are focused on poverty internationally. Many, including Bradford’s own clients, have zakat calculators. Muslims do give to their masjids (which often refuse zakat for their operations), the PTA at their kid’s school, and a variety of other causes that are not usually zakat eligible, but it does not follow that we need to assume most zakat funds within the IZIC are not zakat. We do not know because zakat totals are often not disclosed. As we know from HHRD’s accounting, the organization simply treats zakat as unrestricted funds. I could not find any 990 of theirs that tagged zakat as a restricted fund. So where is Bradford getting the idea that any money is being segregated at all without a segregated accounting? It may be that some organizations have an internal accounting mechanism tracking zakat, but we just do not see it. Unrestricted funds can find themselves anywhere.

A more recent article about zakat hoarding by Bradford styles itself as a rebuttal against my report, even though Bradford spends most of it critiquing strawmen instead of addressing my actual arguments. He seems to lose the plot completely here, even attributing a couple of either made-up or AI-hallucinated quotes to me. For example, I never said that Human Development Fund was “literally burning through money,” nor did I use the phrase “hoarded Zakat.” Bradford claims there is no hoarding because charities he reviewed reached a distribution threshold based on a non-segregated non-zakat accounting system. We have already established that the IZIC’s descriptions of charitable programs are often self-serving and unreliable. Bradford’s argument is conveniently circular: the IZIC is doing great because the IZIC says they are doing great.

The article also has other issues. For example, Bradford stated that he will obtain more information from the Zakat Foundation but reached his conclusion without having this information. He also neglected to disclose he is on the Zakat Foundation’s website as a team member. Finally, Bradford’s silliest attack is that my report leaves Muslims with the impression that the whole Muslim charitable sector is untrustworthy. He knows the report is about specific organizations within the IZIC—17 in all. Not all of them were bad, though all were inadequate when it came to zakat.

On Mezoui’s Development Industry-Based Critique

This is how I would describe typical readers of this newsletter: they are Muslims, they understand they have a religious obligation called zakat, and they wish to handle zakat with iḥsān (excellence) to ensure it goes to the right people. The right people, with all due respect, are not Islamic McKinsey-like consultants who throw out a bunch of jargon about how things like “terror regulations, OFAC compliance, banking security, counterparty risk, [and] fiduciary oversight” can eat up a high percentage of a donation before it goes to a single poor person. If there are organizations that can discharge their zakat obligations without excessive jargon-justified overhead, that is where Muslim donors will donate.

Penny Appeal USA, of which Mezoui is the founder, has a zakat policy that is quite restrictive but duly ignored. It was presumably written with the assumption that administrative costs can be reasonably small and that charitable work is possible without a massive list of boring excuses for why overhead bloat is a necessity.

Another complaint about my report by Mezoui was that instead of using nonprofit accounting standards I made up my own methodology. To this I respond that all methodologies involve choices: the choice my method makes is to follow the cash in the 990, while the choice existing standards make is to trust organizations to classify their own expenses. Those are different choices with different blind spots. But my approach happens to answer the questions donors actually need answered. An accounting standard that allows for a 95% program efficiency ratio when 70% of the cash never leaves the office is broken, and donors would be fools to trust it.

Neither that accounting system or any specific IZIC organization is deserving of your blind deference, loyalty, or respect. Call it cynicism or just call it being honest. The IZIC is not the ṣaḥāba, the khilāfa, or your parent. They are a relatively recent invention to accommodate Muslims who want to donate overseas to impoverished Muslims. Muslims need to pay zakat with as much excellence as they can muster. Simply deferring to their betters in the IZIC is not that.

I do not think my methodology is one that Muslim organizations should use. Focusing on and critiquing it as a proposed solution is a red herring because I never suggested such a thing. I want the Muslim community to adopt zakat accounting standards, specifically PSAK 409 (modified for fuller transparency), unless American Muslims can create a better standard. My methodology provides a writing and educational tool to work with the cards we have been dealt.

One specific line item Mezoui mentions in his article is that Penny Appeal has a domestic violence shelter that I do not properly attribute to “programs.” I looked into this issue and the organization’s 990 does not mention any such shelter. Penny Appeal does, however, solicit funds for a shelter that is owned by a different nonprofit to which they did not give any grants. This is a bit of a rabbit hole I do not need to go down right now. The point is, I do not know why I need to give Penny Appeal credit for something they do not bother to mention in their tax filing.

Mezoui also argues that the American Muslim IZIC is relatively new, so we cannot expect it to perform like organizations that have been around for 100 years or more. But I do not agree with this framing—it does not serve the Muslim community well to infantilize our own institutions. There are many high-performing, transparent, and relatively new nonprofits both inside and outside of the Muslim community. We should expect excellence from our community institutions, and we should not have to wait 50 more years to get it.

Mohsin Ansari’s Critique

Mohsin Ansari also registered his displeasure at my assessment of HHRD. He objects to the asset retention claim, a grievance I addressed above, though in a way that does not help HHRD much. Much of the rest of his critique is a bit credentialist and says nothing about my central argument on restrictive zakat policies and accountability. Ansari seems to be missing the point. I can read a 990 without being an Islamic scholar, having visited a refugee camp, or working within the IZIC. The document is filed under penalty of perjury and made public for all to see because these organizations are public charities. I have no interest in being gatekept.

Ansari makes a few other claims in defense of HHRD, which I should address briefly. His claim that they had $72.4 million in charitable projects in 2024 is misleading. We walked through the 990 to show that. We know “programs” largely means whatever the organization wants it to mean. It is not an especially helpful term. Ansari also asserts that HHRD requires two separate related entities to be OFAC-compliant. The separate entity is not in the 990 but should be.

Finally, Ansari also claims my report “vigorously” promotes UNHCR. This is amusing, given that the report links to an article of mine about UNHCR that includes the word “yuck” in the headline. I think it is vital that there be sovereignty in worship. But you know what UNHCR has that HHRD does not? A zakat policy and process of holding themselves accountable to it. As bad as UNHCR might be, they take zakat more seriously than HHRD, which is an actual Muslim organization run by Muslims. It is a tragedy that giving zakat through our own international charities is not a great option.

Some in the IZIC do not like accountability. The mere thought of it makes some of them upset, defensive, and prone to lash out. I understand that, but people in positions of trust should resist that inclination. Relatedly, I made some mistakes in my nearly forty-page report that I corrected as promptly as I could. While I regret any errors and apologize for them, none change the thesis of my report or modify its overall message regarding the international Muslim charity sector. See below for a clarification of these errors. I have also included an additional note related to a fourth organization that is not tied to an error but worth highlighting.

Corrections and Notes

Penny Appeal

I significantly understated the amount Penny Appeal sent to the “MENA region”. This was an incorrect entry on my spreadsheet and the problem compounded. This was quickly fixed, with my apologies, as soon as I became aware of it. Penny Appeal never did report what went to Gaza specifically, and the MENA region is quite large. This correction does not change my overall conclusions regarding the organization, which has serious structural problems. A comprehensive zakat accounting would come in handy here. Unfortunately one does not exist.

Mercy Without Limits

Mercy Without Limits is a direct provider with some unconventional (but still valid) financial transactions. The $100 donation breakdown for Mercy Without Limits is more favorable than my report initially described. $71.47 goes overseas (where it is subject to more unknown overhead), $28.91 is burned, and $0.62 is retained. I had originally subtracted a figure I should not have and cleared up the misunderstanding with the charity’s CPA. This moves Mercy Without Limits to the top tier of domestically efficient organizations in the IZIC.

Another important clarification is that the organization does have a zakat policy. I previously said it does not. You will not see the policy on their website until you actually click on the donation link (which I did not do). The policy is restrictive when it comes to administrative costs, which is good. They do not, however, have a zakat accounting. My overall view of the organization as not being appropriate for zakat on that basis holds. However, they are a significantly better organization than I had portrayed earlier, largely on the strength of institutional non-zakat grants that went directly to their Turkish office and were not part of the record of money being wired from the US office. If they start providing a detailed accounting for their zakat to show they are keeping true to their policy, this could be a quality organization.

Islamic Relief

I note in my review that Islamic Relief has had significant improvement and is perhaps the second most efficient organization in my report. Its balance sheet was enormous and matched what I stated in my report, but the amount of cash was not out of the norm for an organization of that size (other assets were non-cash items). I have updated the report to reflect this. Additionally, the 990 does not reflect Islamic Relief’s accounting method, which is unusual among IZIC organizations, in which granted funds tend to stay on the books until an overseas project is completed. In short: they were not hoarding cash despite an inordinately large amount of assets.

I also had a conversation with their CEO for the past two years, Ahmed Shehata (after I made the update, which they did not request), and a separate 90-minute meeting with Shehata, Araif Yusuff, and Khaled Albadawi, who is the COO and Board Treasurer. All were gracious, helpful, and not at all defensive. They all addressed their efforts to differentiate zakat and account for it under the various Qur’anic categories of eligibility. We also discussed ways that the zakat policy might change going forward so that there are real restrictions with teeth.

Another issue I brought up with them is their website user interface, where donations that a donor intended as zakat may not be coded as zakat, and thus be spent based on a different set of rules. Because of recent organizational changes I was not previously aware of, Islamic Relief USA will likely better be termed as a direct provider rather than a marketing-first organization in future years.

Islamic Relief has the scale and potentially the leadership to lead the sector and improve it. At least from what little I know, they have a professional team that can make zakat more transparent. I look forward to follow-ups in this regard and will update the newsletter as this happens.

Human Development Fund

I did not make a correction on this charity but do have a few follow-up notes that are pertinent. I had the opportunity to discuss my report with Abdirahman Kariye, CEO of HDF. He was also gracious and non-defensive. He did point out that the organization should be considered a direct provider and not a marketing-only charity. The 990 does not reflect this, but I wanted to make that clarification from their perspective here. He also pointed out that the money to Islamic institutions, what I viewed as donor-acquisition costs, was for scholarships. I do not think that changes my analysis nor did I allege or suggest that scholars were directly benefiting from the grants, but it is worth noting, as it is arguable this hews closer to their mission. Otherwise Kariye did not have any problems with the numbers stated in my report. The organization in my view was poorly served with their recently released zakat policy drafted by Bradford, who was compensated for the service. The policy has no restrictions or meaningful accountability mechanism.

The organization does appear to have a commitment to doing better with both the policy and accountability pieces going forward and I want to acknowledge that and thank them. I do hope HDF will craft a zakat policy that is actually useful to donors in the future. I will also follow up with them and provide any updates in future editions of this newsletter. While HDF’s numbers are not stellar, this is another organization that may have the potential to be a solid performer in the charitable sector once it gets its policy and accountability systems right.

Cut Through the Smokescreen

This newsletter is meant for education, both for me and for anyone else who finds value in reading this. All of us—donors, writers, or actors in the IZIC—will make mistakes and hopefully learn from them, grow, and improve. I know some of us are resistant to education, beneficial changes, and improvement, but inshaAllah it will happen for most of us all the same. I myself aim to improve how I develop this annual report. I have already received immense and beneficial feedback from commenters, people at the masjid, and gatherings throughout Ramadan.

Zakat is vital to who we are as Muslims. It is essential worship, a means of socio-economic unity in the umma, and an institution that has degraded since the emergence of the IZIC. We must be wary of institutions that render zakat meaningless or allow for it to be used to spread wealth among the affluent. We have created an extractive managerial layer that has for too long insisted on being without rules and accountability.

We Muslim donors need to give zakat with excellence (iḥsān). That means scrutiny of those who distribute zakat and a refusal to uncritically defer to them. If they do not like your tone, they just need to learn that part of leadership is accepting legitimate scrutiny from within the community. Anyone who cannot accept scrutiny on matters of public concern should not take on a position of public trust. It is hard to describe a more solemn responsibility than taking zakat.

There is a reported hadith regarding Ubaydah Ibn Samit (RA). When the Prophet Muhammad ﷺ offered him a position to administer zakat, he warned him not to seek help on the Day of Judgment if he were to abuse his authority, describing vivid imagery of him carrying the weight of an animal on his neck on that day. Because of the immense risks and responsibility that come with this trust, Ubaydah ibn Samit (RA) declined the role of zakat administrator, even though it was offered by none other than the Prophet Muhammad ﷺ. Zakat is not a joke. Not for donors, not for organizations, not for their employees, and not for their board members.

Instead of getting distracted and making this conversation about personalities or tone, let us fix the IZIC. My ask is the same, and remains reasonable and without any discernible disagreement that I have seen:

(1) There should be zakat policies with actual restrictions. These should be credible, not products from scholars who have financial relationships (or the expectation of the same) with the organizations.

(2) All charities should adopt a zakat and sadaqa accounting standard, such as PSAK 409 adding end-to-end reporting, or one even more transparent, that allows donors to understand what is happening throughout the entire lifecycle of their donations so that they know they donated with excellence. I am confident these changes are within the capacity Allah has given the umma of Muhammad ﷺ. We owe this to zakat beneficiaries of this and future generations.

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