| March 25
March 25 Lack of professional management and
poor book-keeping are keeping idle billions of dollars worth of
assets held by Muslim charitable organisations which could
support efforts to reduce poverty, a study released on Tuesday
Islamic alms-giving (zakat) and endowments (awqaf) have been
in existence for centuries, but have yet to develop efficient
use of their assets, a report by the Islamic Research and
Training Institute (IRTI) and Thomson Reuters said.
These asset pools include vast real estate portfolios that
are often poorly managed, which could otherwise help reduce
poverty across Muslim communities, the study said.
"At a micro level, institutions in this sector need to
address the issue of sustainability in the supply of funds,"
said Azmi Omar, director general of the IRTI, a unit of the
Jeddah-based Islamic Development Bank.
This would involve professionals who are adequately trained
not just in sharia-compliance but also in modern financial
management techniques for charity-based and not-for-profit
institutions, he added.
The study estimates that zakat donations could contribute
significantly to poverty alleviation in countries with sizeable
Muslim populations such as Indonesia, India, Pakistan,
Bangladesh, Malaysia, Singapore and Brunei.
Muslim minorities in India and Singapore, for instance,
could collect zakat in the range of about 0.26 percent to 0.65
percent of their gross domestic product.
Growth of zakat contributions in these countries has often
been in the double digits: Indonesia collected $231.6 million in
2012, up 27.3 percent from a year earlier; Pakistan collected
$105 million in 2011, up 34.5 percent from a year earlier.
Malaysia had one of the largest donation pools with 1.6
billion ringgit ($497 million) collected in 2011, a 20.3 percent
increase from a year earlier.
While there is no official data for India, the report
estimated total annual zakat collections stood at a whopping
But it is hard to mobilise these resources because of a lack
of standard and globally accepted definitions of what assets are
eligible for zakat and how to estimate zakat donations, the
The study also shed light on assets held by Islamic
endowments, where India again holds the most untapped potential.
There are about 490,000 registered awqaf in India with a
total area of about 600,000 acres and a book value of about 60
billion rupees ($987 million).
Most of these properties are located in city centres and
their current market value is many times more than their book
value, the study said.
The current annual income from these properties is about
1.63 billion rupees, equivalent to a 2.7 percent return on their
book value. Properly managed, the properties could generate
returns many times bigger, the study said.
In Bangladesh, a government survey identified 150,593 awqaf
properties in the country, although only 15,300 were registered
with the government awqaf administrator.
In Indonesia, registered land from awqaf reached 1,400
square kilometres but most of them were idle, while the market
value was estimated at 590 trillion rupiah ($52 billion).
(Editing by Andrew Torchia)