UNHCR Refugee Zakat Fund is the best international zakat program I have seen. Also, yuck.

I am not happy about this either.

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It was narrated by Ibn Abbas that the Prophet (peace be upon him) sent Mu'adh to Yemen and said:

"Invite the people to testify that none has the right to be worshipped but Allah and I am Allah's Messenger (ﷺ), and if they obey you in that, tell them that Allah has enjoined on them five prayers in every day and night (in twenty-four hours), and if they obey you in that, tell them that Allah has made it obligatory for them to pay the Zakat from their property, and it is to be taken from the wealthy among them and given to the poor."

Sahih al-Bukhari, Book 93, Hadith 19

Earlier in Ramadan, I wrote a survey article that mentioned the domestic overhead for a US organization called "USA for UNHCR,” (that is the United Nation’s High Commission for Refugees) as well as UNHCR’s 100% Zakat distribution policy. It also noted that they had received a fatwa from Ali Gomaa, the former Mufti of Egypt, who is a documented supporter of human rights abuses, particularly the mass murder of peaceful protesters. Why would a humanitarian organization care what he thinks? This question made it difficult for me to evaluate the program's merits beyond the endorsement of one individual, and I lost interest.

Mohammed Abu Asaker from UNHCR requested to meet with me and discuss the program. After initially declining, I agreed to meet with him and Jill Clark, the Chief Development Officer of USA for UNHCR, an auxiliary fundraising organization (the one whose 990 I examined). I also reviewed the extensive documentation they provided, much of which was available on the program's website (though some was emailed to me).

UNHCR has the best-documented Zakat program available to Muslims that I have seen.  While there are domestic Zakat programs that measure up, the UNHCR Zakat Fund is unparalleled among international Zakat distribution options available in the United States.  This is more a commentary on the state of Muslim nonprofits than on UNHCR’s Zakat Fund. 

Zakat is NOT Charitable Giving

Several articles in this newsletter discuss overhead for organizations' operations. This is intuitively incorrect when discussing Zakat since it is meant to be special. However, it's all we have, as Muslim nonprofits generally do not account for Zakat separately.

American Muslims are being trained to think of Zakat as charity. This is flat-out wrong. It is a tax. It is calculated like a tax, and it is given not because you are willing to part with your money for some social benefit; you are parting with that money because it is not yours and you have no moral right to it. Keeping it is theft. It is the right of those people who are entitled to Zakat. If you lived in a Khilafa, a government agent could come to your farm, count your livestock, and tell you what you owe. Abu Bakr (RA) actually went to war against tribes in part because they did not pay Zakat. It is not that dissimilar to the system we have for taxes. If you don't pay your taxes in the United States, you are basically Al Capone.

However, we don't live in an Islamic system, so we are being trained by nonprofits, imams, and scholars (often paid by the nonprofits) to think of it as indistinguishable from charitable giving. Why does this matter? Because often, the nonprofit organization's mission is not exactly the same as Zakat.  

Administrators of Zakat Get a Piece of the Pie 

One major area where this issue is apparent is in the category of "administrators of Zakat" (in Surah Tawbah, one of the allowable categories of Zakat). Historically, scholars have stated that this category is only for governments. A government has the authority to collect Zakat and even audit tax cheats. It is not for random people who collect Zakat and then decide the Quran allows for a profit or that it is acceptable to have a bunch of "Zakat-Madoffs" roaming around the community looking for their piece of the pie. This is an inherently chaotic system that can be ruled by greed and cynicism.

When we transfer this system to the so-called "nonprofit" world, that piece of the "administrators of Zakat" pie can be quite large and may not be that different from random profiteers collecting Zakat for commission.  

For example, Islamic Relief Worldwide's Zakat policy allows for 12.5% as an administrative cost. Scholars came up with this number because administrators of Zakat are one of the eight categories of eligible Zakat recipients. 12.5% administrative cost, however, is actually low for nonprofits. Islamic Relief USA (an independent but related affiliate) decided to ignore this limit for years, then raised it to 20%. However, it allowed itself significantly more than that in its Zakat policy by including overhead in its programs. Their overhead before anything leaves the United States is now over 38%.  Other nonprofits do not have limits on how much they can collect in administration costs. As I noted with Islamic Relief USA's example, administrative costs are not the only way nonprofits and people associated with them can profit from Zakat. With the rise of for-profit charitable solicitors, technology companies, and marketers, plenty don't even pretend to be charitable (like Launchgood) now profiting from Zakat.

This system our society has built is also terribly inefficient. Remember, you need to think of Zakat as a tax. If you were to hold Zakat administrators to the standard of a tax collector, the Internal Revenue Service (IRS) in the United States, for example, has a budget of roughly 0.25-0.3% of what it collects. The percentage for government-associated Zakat administrators would have varied. The IRS won’t ever invite you to a banquet with Pakistani cricket players to try to convince you to pay your taxes; they won’t produce videos of food-related stunts on instagram or sponsor doctor conferences. You pay what you owe.

Hand-to-hand Zakat vs. programmatic Zakat

Leave aside “expanded Fisabilillah Zakat” for a moment where Zakat can be used for anything someone subjectively thinks is good but results in a transfer of wealth from the affluent to the affluent, or you can count your property taxes as zakat. Let’s assume you donate your Zakat because of your obligation to those in need. You have local options for hand-to-hand Zakat, which (at least in my local area, Southern California) are quite good. Such options typically involve volunteers, are often but not always run through a Masjid, and provide those in need with cash or cash equivalents, like paying for things like rent directly at the request of the Zakat recipient.

Hand-to-hand Zakat is the best and most traditional way to give Zakat and is in no way controversial. As best as I am aware, no Muslim international nonprofit does anything like hand-to-hand Zakat. These international organizations (think Islamic Relief, Penny Appeal, and just about everyone else) practice something I would call “programmatic Zakat”- sometimes known as “Z4D” or “Zakat for development.” In programmatic Zakat, a Zakat recipient typically, though with some exceptions (not necessarily great), won’t receive a nickel. What they may get instead is services.

Programmatic Zakat is not necessarily illegitimate; indeed, it may sometimes be the only way to make a distribution. For example, a donor in the Indian subcontinent may give Zakat to a Madrissa to care for impoverished orphans who are minors. The madrassa uses the Zakat to provide a place to sleep, three square meals daily, and an Islamic education. That’s probably a fair deal. You normally won’t give a poor child cash anyway. The madrassa administrator is known as a “wakeel” or an agent for the Zakat recipient. The one problem unaddressed here is that there is a conflict of interest. The madrassa administrator usually has only one solution for the child: attending the madrassa. In any event, scholars have said this is fine.

There are, however, many obvious problems with programmatic Zakat, and they become far worse once you expand the scope to make it the norm. The effect is to infantilize those in need and make value judgments for them about what is the most important thing for them to be spending their money on. Instead of giving a family cash, which can be associated with dignity and the ability to make choices, like starting a business, or the breadwinner earning a trade of his or her choosing or going to a local grocery store to get ingredients to cook a meal for their family, a Zakat distributor assumes all agency. Instead of giving money to the poor, you are giving a job training program, a mass feeding event (with photos for the brochures), deciding what groceries they should have, or maybe building a masjid. Of course, these are all great things for charity. Zakat is not charity, though, is it? 

With programmatic Zakat, there tends to be very little and often no accountability. We typically don’t know what happens to the money after it leaves the United States in meaningful detail. For example, in a feeding program, we usually don’t know how much each meal costs, where the ingredients came from, who cooked it, or other factors that can either raise questions about corruption, nepotism, cronyism, sustainability, adherence to local laws, or any of the other kinds of problems that can come from having the power to make spending decisions for others. If you are a Zakat donor, it likely makes more sense to give a poor person money so he or she can buy and prepare their own food.

Development professionals typically want to take away a poor person’s agency and make all these decisions themselves. The current system is intolerably expensive, inefficient, unnecessary, and depressing. I wish there were a solid Muslim international Zakat choice overseas that provided hand-to-hand cash Zakat, but none exists. That does not mean you don’t have options; that’s where the very imperfect UNHCR Zakat fund comes in.

UNHCR Zakat Fund has 100% Hand-to-Hand Cash Zakat

Here is the compelling case for the United Nations High Commissioner for Refugees (UNHCR) Zakat fund: in most of the countries it serves, it's a 100% cash distribution Zakat program, in various countries (Rohingya refugees do not currently receive cash distributions according to the program's FAQ and there are other details below). If you give $5,000 in Zakat to the UNHCR Zakat Fund for specified countries, $5,000 will go to Muslim refugees in cash. Not in job training, infrastructure building, or a plate of rice and lentils: just cash to help them get on their feet and achieve dignity.  UNHCR provides other things as well to refugees, but usually not with Zakat (there are times when they do that I will get to).  They take no overhead. You donate the Zakat funds, and they go to a dedicated interest-free bank account in Geneva, which is distributed to registered refugees in various ways, including an iris scan plus an ATM in Jordan, ATMs with PINs in Lebanon, and literal cash in hand in Mauritania and Yemen.

From the UNHCR 2021 Islamic Philanthropy Report

100% cash distribution with no overhead makes you suspicious?  That’s a fair point.

UNHCR is not your run-of-the-mill NGO. This office resulted from an international agreement, the 1951 Refugee Convention, and a 1967 Protocol. They have a mandate enshrined in international law and authority and status in places where refugees exist that nonprofit organizations cannot match. They are also funded by governments. The organization has to be where refugees are and must help them.

UNHCR, and its United States auxiliary charity USA for UNHCR, have a budget that can go towards marketing the Zakat fund, including advertising on Google, as well as all overhead associated with administering the program itself. One question about the program is that if Muslims did not contribute to their Zakat fund, wouldn't cash go to refugees anyway? Well, maybe some of it, but UNHCR gets a bigger budget to fulfill its mission if it can convince Muslims to give them some or all of their Zakat. It's not 100% distribution if you think of all the money in UNHCR's control as being one pot. UNHCR tells us they have segregated Zakat funds, 100% of which goes to the intended purpose. As I note below, though, UNHCR has some history of messing up on funds going where they should go. There is no evidence this has happened with the zakat fund, however.

The Sovereignty Question

In some of my discussions on the UNHCR Zakat fund, an important concern arose. This does not have to do with the permissibility of giving Zakat to the UNHCR Zakat Fund but the notion that the Muslim community is outsourcing our essential worship and the third pillar of Islam to a secular non-Muslim operation. Are we so bad at it that it has come to this? Most refugees are Muslim. For American Muslims, when it comes to international Zakat, we are pretty bad at it.

One example from a Sheikh I spoke with was Hajj. It may well be that the Walt Disney Company would likely do a better job administering Hajj than the Saudis. That still does not mean handing Hajj to Disney is a good idea.

This is a real concern. However, there are two responses to it. First, this is not necessarily a takeover of Zakat since you can still donate to local hand-to-hand Zakat administrators and consider the UNHCR Zakat fund as a place to give to refugees. Given how the world is currently organized and the state of Muslim institutions in the United States regarding Zakat, you may feel this is the best option. If you are at an airport on a connecting flight and want to pray jummah, you can go to the prayer area operated by a secular airport authority with an organized jummah or leave the airport and pray at a Muslim-run Masjid a mile away. You praying at the airport does not mean prayer was taken over by a secular institution; it just so happened that they offered you a better option for that particular prayer.  Of course, nobody is taking your money in this airport prayer example.  Both the prayer and Hajj analogies are imperfect.    

The other response is that Muslims looking to UNHCR and the superior local hand-to-hand zakat as an option can catalyze reform among Muslim non-profits that do international Zakat distribution so poorly. If Muslim donors started to demand that we, as an ummah, return to hand-to-hand Zakat distribution and eliminate most programmatic Zakat, Muslim nonprofit organizations would be forced to adapt.

Muslim international Zakat distributors will compete for goodness and improve the administration and distribution of Zakat and transparency to donors. At the very least, we can open up some hand-to-hand Zakat distribution options internationally to ensure Muslim sovereignty in quality Zakat.

Opinions of Scholars, gross or otherwise 

I mentioned above that I tuned out initially when I found out UNHCR was advertising a fatwa from scholars that are cartoon villains of the Ulema, like someone who wanted unarmed protesters against a military coup shot. That is a credibility-sapping move from an organization with a humanitarian mission. There is no way to mitigate this fact other than looking at the program itself as documented.

Other than the identity of those with the fiqh opinions, there is no question that scholars and UNHCR’s staff put in some work and thought things through. They put in more work than any international Zakat distributor in the United States. UNHCR obtained an independent report from the Tabah Foundation that was able to critically review the Zakat fund’s operations in three different countries. While they endorsed the program, they offered suggestions for improvement. I have not seen American Muslim organizations do that.

An important reason for this program is that it's vital for refugees, at the most difficult point in their lives, to understand that the Muslim Ummah has not abandoned them. Refugees need to know the funds are coming from the Muslim community and not some random government fulfilling an international agreement. The Tabah Foundation found this was not happening, as they were told there was no logistical way to do that.  It’s worth pointing out that the Tabah Foundation itself appears to be an agent of the UAE, and its scholars' council is made up of people who follow the anti-human rights ideology of the UAE and the military dictatorship of Egypt. So it is really hard reading what they have to say and conclude that they have a point about something.  

A UNHCR representative told me they notify beneficiaries now in Jordan (mostly Syrian refugees) through SMS, telling the donor that the funds came through the Refugee Zakat fund and even naming the donor. I am told UNHCR will notify beneficiaries whenever feasible going forward.

What to consider when donating to UNHCR’s Zakat Fund

You should review the 2023 Islamic Philanthropy report from UNHCR. Their representative told me that by default, every Zakat distribution is cash; however, from the report, there are countries where Zakat is not necessarily distributed in cash. When you donate to their program, you must decide which country’s program you want to donate to.  The report tells us the following about 2022: 

Also, if you are vaguely familiar with the history of the United Nations and even the United Nations High Commissioner for Refugees, you know the organization has a sizable record of scandal.  UNHCR was implicated in a 2018 scandal involving about 300,000 fake refugees and mismanaging $214 million.  Of course, your Zakat may be caught up in grift, and you may find out years later after an audit, or you may never know.  This is always a risk, and this exists with any Zakat distributor.

UNHCR is aware of its sullied reputation, and they attempt to bolster it with reprehensible government-connected shuyukh, who are best known for carrying water for their governments.  Anyway, I don’t get that.  Yet, somehow this seems to be the best international Zakat we have (on paper, at least) by a huge margin.   The connection to abusive governments and their Islamic Scholar agents makes this enterprise gross and will probably make some people (likely including myself) unwilling to donate to this fund. It’s still worth a look if you are also considering international zakat.  I am not happy that this is the best international zakat program I have reviewed.  I wish it were an American Muslim organization that did not seek the approval of people who should be on trial for crimes against humanity or have a record of corruption and mismanagement.  It’s not, though.  That is a sad fact.    

Let's make Zakat better

Donors need to wrest control of Zakat from international nonprofits that have been botching Zakat for far too long. Sovereignty is important. But we should not associate sovereignty with donating to a nonprofit that wastes your donation on overhead on top of overhead that takes agency away from the people who are entitled to the funds. No matter what you were told, NGOs are not beneficiaries of Zakat. Google is not a beneficiary of Zakat. Your favorite nasheed artist is not a beneficiary of Zakat. Zakat beneficiaries are usually perfectly capable of buying their own groceries if they have the money to do so.

If you are going to be giving Zakat, do it with excellence. There are wonderful local hand-to-hand Zakat distribution volunteers in the United States, often associated with Masajid.  If you don’t know who is doing that work, find out. If you want to give internationally and don’t have a needy close friend or relative you can send your money to, you have an option that will likely give those in need the cash they need, and you may well move the needle and encourage Muslim organizations to move to hand-to-hand cash distribution as well.  

We need a  reimagining of Zakat internationally among Muslim organizations.  The UNHCR Zakat fund is not a solution for your Zakat over the long term (and does not need to be a solution at all). Muslims in the  United States should help Muslims overseas, the poor, the needy, and the refugees with Zakat, sadaqa, or both.  We need to do it with excellence.  With international zakat, I do not believe this truly exists anywhere for American Muslims yet.