Islam, charity and business

ISLAM encourages the act of charity to help others, regardless of whether the recipients are good or bad, Muslims or non-Muslims.

While solah or obligatory prayers indicate Muslim spirituality in building a direct relationship with God, charity reflects Muslim religiosity in the context of building a relationship with God’s creations.

Its importance is mentioned in the Quran: “Be steadfast in prayer and practise regular charity.” (Quran 2:43). Charity is so important in the eyes of God that “by no means shall you attain righteousness, unless you give of that which you love” (Quran 3:92).

Ideally, the act of giving in Islam should not be considered merely a moral obligation to society, but it is actually a sincere endeavour to seek God’s mercy.

Islam warns Muslims against false charity (Quran 2:264), which refers to the deceitful act of giving so as to be seen by others. Besides, charity will have value only if something valuable is given, and what is given should be lawfully earned or acquired by the donor.

The Prophet has been described as a role model for alms-giving, bequeathing most of his estate to charitable causes. Thus, it became customary for wealthy Muslims in the early years of Islam to bequeath one-third of their estate to a waqf, an Islamic endowment.

Through charity, Muslims strengthened their social ties and empowered their economic well-being. In describing the market of the Prophet, Meir J. Kister (1914-2010), who made a major scholarly contribution through his meticulous study of spiritual, religious, economic and social aspects of the pre- and early Islamic periods, illustrated that the early establishment of the Muslim market in Medina was without taxes.

That implies that the Prophet intended to adopt the practice of Ukaz market, where taxes were not levied. However, later interpretation of the Muslim market in Medina revealed the idea of the al-suq sadaqa (market of charity) concept.

The historical description of the economy and social state during the Caliphate rule of Umar ibn al-Khattab, one of the Prophet’s successors, is perhaps beyond the imagination of many of us. It was portrayed that the abundance of Bayt al-mal’s funds (house of wealth) during the time reached a point where one could no longer find a person entitled to receive zakat (charity) or state compensation and the funds had to be brought back to Bayt al-mal.

Indeed, history has proven that the Islamic charitable model and instruments, if properly implemented, have the power to create wealth and well-being for societies. The initiative of early Muslims in setting up legal charitable institutions has been recognised as a unique venture and complementary in nature.

In the Middle Ages, Islamic charities thrived as sources of decentralised and self-governing civic institutions, leaving behind a rich legacy of legal precedents for the rights and duties of benefactors and claimants.

Scholars argue that no equivalent institution existed in Europe at that time and the introduction of trusts in Common Law may be considered an application of the Islamic waqf. In fact, the foundation of Oxford University’s oldest college in the 13th century may owe its intellectual capital to the institutional heritage originating in the Jewish and Muslim communities of 7th-century Medina.

To revive the spirit of charity in commerce, a framework of Islamic gift economy (IGE) was recently introduced. IGE is basically defined as “the sharing, by mutual giving and receiving, of natural and cultural abundance to promote material and spiritual well-being”.

The gift or charity as an economic foundation is considered significant in the religious, social and commercial exchange as it emphasises giving more than taking, and is more about serving communal or public (maslaha) interests rather than individual interests.

The IGE framework is conceptually operationalised by a systematic and integrative mechanism embodied in Islamic law. Some of the instruments within the IGE framework include obligatory charity (zakat), voluntary charity (sadaqah), endowment (waqf), gift giving (hibah) and estate division (faraid).

Present scholars, policy-makers and business leaders may continue formulating the best solution for charity or endowment success through product innovation, code of governance or fintech. But by tracing history, it is worth mentioning that the success of charity should fundamentally reflect the Muslims’ spirituality to begin with.

Bringing to mind the experiences of the Caliph Umar, for instance, is like moving into a utopia of social and economic strength. Its glory is well attributed to the spiritual leadership of the Caliph himself.

Hence, innovation is the key. But what is more important is to revive the business charity by channelling back spiritual energy into the flow of the Islamic gift economic system.

Suzana Md Samsudi is a Fellow with Ikim’s Centre for Economics and Social Studies. The views expressed here are entirely the writer’s own.

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