UN & ISDB Global Zakat Fund

Abstract

This roadmap report is prepared for the Office of the Special Adviser to the United Nations Secretary-General for Public Private Partnerships and Islamic Social Financing. The primary purpose of this report is to establish a UN ISF mechanism framework based on Islamic social financing (ISF) potentials in order to achieve the sustainable development goals (SDGs). The concept of ISF is widely used in Muslim communities and societies. It is a crucial alternative source of funding that can be better utilized to lessen vulnerability. Muslims from across the world willingly contribute to the ISF mechanisms to ameliorate human suffering. These mechanisms include zakat, sadaqah, waqf, qard hasan, Islamic microfinancing and others. Global zakat funds have been estimated at $550 billion to $600 billion per year by the World Bank and the Islamic Development Bank Institute (IsDBI)1. On the other hand, worldwide approximately $700 billion to $1 trillion are estimated to be the value of waqf assets, mostly real estate. This enormous untapped ISF resource has a tremendous potential to achieve the SDGs. This roadmap report aims to assist the UN in systematically releasing the ISF potential to ensure transparent and efficient accumulation, management, and distribution of zakat, sadaqah, and waqf funds. Two models were developed through dedicated workshops and discussions with key stakeholders including UN, IsDB and Islamic scholar representatives, namely: i) Global Zakat Fund and ii) Decentralized UN-ISF Mechanism Framework. In the first model, the funds accumulation is centralized along with the decentralization option for the agencies, whereas the distribution is entirely decentralized. On the other hand, the second model offers fully decentralized accumulation and distribution options for Islamic Social Financing funds. This report proposes two models that support the United Nations (UN) to systematically accumulate, manage, and distribute the substantial untapped ISF potential to achieve the SDGs. The adoption of a formalized mechanism to leverage ISF funds for the SDGs is necessary given the immense documented potential but low engagement of Muslim donors and the UN system.