Halal Money Matters Podcast

Episode 22 - Your Charitable Dollar with Anwar Khan

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Narrator:
The thoughts and opinions expressed on Halal Money Matters do not necessarily reflect the views of Saturna Capital, Amana Mutual Funds, or their affiliates.

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Scott St. Clair:
Welcome to Halal Money Matters presented by Saturna Capital. I’m Scott St. Clair.

Monem Salam:
I’m Monem Salam. And Scott, we have a really great show today talking about the charitable sector.

Scott St. Clair:
Yeah, I’m really excited to get into sort of where this money goes after we’ve invested it. We’ve gotten the returns. What do we do with it after that?

Monem Salam:
So a lot of people sometimes don’t know exactly where the money is going. And so I’m really excited to speak to Anwar Khan today. He is president of Islamic Relief USA and actually one of the co-founders of Islamic Relief USA back in 1993. So he’s been there a long time, really knows his subject well. And I’m ready to get into and find out where my $100 goes every time I donate.

Scott St. Clair:
I’m excited to learn about it as well. Let’s get into it.

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Monem Salam:
Anwar, thanks for for joining us on the call. I’m really excited about this topic. It’s been on my mind for a long time. Partly it’s because I’ve been in the sector for a while as a volunteer. In fact, you know, pretty much my whole professional career I’ve been doing something along the lines of charitable work and those type of things. So it’s nice to be able to have you on this podcast.

Anwar Khan:
Thank you for having me.

Monem Salam:
Charity is a very big part of Islam and when you look at how we calculate, even when it comes to zakat, for example, you know, there’s specific calculations in how you do it, not only about the calculation part that’s up to the individual, but there’s also there’s particular prescriptions in the Quran about who you actually give it to. Right. So that’s pretty specific. A long time ago, maybe it was something where people gave it on their own. But now there are organizations, charitable organizations, that can deliver aid near and far and arguably maybe much more effective than other places. Maybe we can just start off and just talk a little bit about your history, Anwar, about how you got started, how Islamic Relief came about.

Anwar Khan:
Islamic Relief started by students from the University of Birmingham in 1984 in England and the name of that organization is Islamic Relief Worldwide. It was as a result of the famine in East Africa in 1984. In America, we started in 1993. I’m one of the co-founders of Islamic Relief USA, so I was 13 years old when Islamic Relief started in Birmingham, England, and in 1990 I went to the University of Birmingham and I was a volunteer from the age of 18, from 1989 in high school, and I was excited, Monem and Scott, that I wanted to do something that put something back in the year after I graduated. But there were no proper Islamic internship programs or organizations that I could go to to put something back in in the UK. And I thought that it was important when people were dying. We saw them on TV screaming to death in Bosnia that we needed to respond. So Islamic Relief USA started in 1993 and it’s part of the family of Islamic Relief Worldwide.

So now we have 40 Islamic Reliefs using that name around the world. It started by fundraising for emergencies. It then developed into not just doing fundraising, it developed into actually doing the programs. That was the second stage and the third stage is advocacy. So in Islamic Relief USA, we are involved in fundraising. That’s one bucket. That’s no money, no mission. The second bucket is doing the work and doing it well. Inshallah (If Allah has willed it). No mission, no mission. And the third is advocacy. Being witness to the mission.

Monem Salam:
That’s a good start, because I know, you know, basically after graduating from college in Birmingham, Anwar you basically were given the task of coming as at a young age just to America, and you were kind of flying blind, right?

Anwar Khan:
Oh, not kind of, completely flying blind. Our strategy was Bismillah Hir Rahman Nir Rahim (In the name of Allah, The Most Gracious and The Most Merciful). And I remember when someone asked us our strategy, objectives, we said Surah Al-Ma'un (Small Kindness) and we got told off, don’t be ridiculous. But we came with that sincerity. We didn’t know what KPIs were. We didn’t know what ROIs were. We didn’t know what that was at that stage. Because remember, we were grassroots activists who were involved in youth work in England. All we knew is hungry people, need to raise money to help them. Alhamdulillah (Praise be to God) we’ve become more sophisticated over time. But when people say to me, Monem, well, Islamic Relief should work with young people, I said, what do you think I was 30 years ago? I was 22 years old. And our volunteers, Mashallah (What God has willed), were as young as five, six years old. And I think I met you in ‘94, ‘95, Monem, as a volunteer. You remember, we were about trying to make the world a better place, to summarize it, and we didn’t always know the best way, but I think we had a humility that we didn’t always know and we were eager to learn.

Scott St. Clair:
Anwar, you said something about no mission, no mission. What do you mean by that?

Anwar Khan:
No mission, no mission. There’s no work. No, there’s a reason why I said that because quite a few organizations that we believe are relief organizations in the US are basically raising money and giving it to someone else. And those organizations will have very low overhead. So if I’m not doing much work and I’m just taking money from you and I’m giving that money to Scott to give to somebody else, then I’m not going to have to have really good accountants, lawyers to make sure that that money goes overseas, because I’m not really sending it overseas. I’m keeping it here and someone else is doing it. So what I’m actually doing is, I’m claiming a lower overhead, but I’m giving that overhead to someone else, reducing transparency. So I will tell you, I have a really low overhead. You don’t really know what the overhead is because I gave it to someone else, Scott. Now, Scott’s got his own overhead and it may be double, triple what I’m claiming, but you won’t know that.

Monem Salam:
Okay, this is a really good point for us to get a little bit more deeper into because it ties back to something you said, which is that you have 40 offices worldwide.

Anwar Khan:
40 countries.

Monem Salam:
40 countries worldwide. So what that means is that there are independent organizations in those countries that are using the Islamic Relief name and the right way to understand it?

Anwar Khan:
Well, USA is an independent, quite a few are independent. But Pakistan, South Sudan and others are linked with UK. But I would say that the 40 different organizations that are registered in their respective countries, some of them are completely independent, some of them are dependent on IRW from the UK as an INGO, but all of them are part of a family.

Monem Salam:
So the family is is tied together by name, basically, by mission.

Anwar Khan:
Yeah. Not just mission. There’s actually a license agreement between them. And so, for example, if I want to work in Pakistan, I can’t just help Scott’s uncle in Pakistan. I have to give money to Islamic Relief Pakistan. And Islamic Relief Pakistan will contact me and say, Hey, IRUSA, there’s a need on the ground. This isn’t about me sitting and getting excited by an article on CNN or Al-Jazeera and saying, okay, I need to send money to Pakistan. Pakistan will say, look, we’ve done a needs assessment. We need to have a concept note. This is the money we need. This is where we’re going to work. And our job is to fund projects that we believe align with our mission we believe that we have the funding for. Now, sometime, we’re going to fund projects that we may not have the funding for, but we think are really important. And that’s why the general fund is really important.

Monem Salam:
So now, you know, I want to give money say, like, $1,000 to Islamic Relief. Right? And I specifically say, hey, you know what? I heard that something’s going on in Pakistan. I really want to give it for that. So then I’m going to give you the money, you’re going to receive it. And your responsibility is to be able to what? What happens to the money after it comes in?

Anwar Khan:
So it depends. If it’s general money, it depends. If it’s a zakat money, it’s more specific. If I can, I’ll start with the zakat. According to our zakat policy, we will be spending 10% on admin here in the US. 2% will be support work internationally and 8% in the field.

Monem Salam:
What does that mean?

Anwar Khan:
Here in the US, we will be spending money on raising that money. That’s the general administration that would be 10% we’ll spend over here.

Monem Salam:
So out of the thousand dollars, Right. $100 will go towards more raising more money.

Anwar Khan:
It will go towards raising money in the US, paying for the lawyers to make sure we don’t go to jail. Because 25 Muslim organizations got shut down after 9/11. People are in jail because they fed hungry kids. There’s a law in America that was a part of the Patriot Act. It was the material support law. You can go to jail in America for feeding hungry kids if our US government doesn’t like the relatives of those hungry kids. So this is really serious.

So if we are dealing with large organizations, do you have lawyers? If you don’t have lawyers, how are you making sure that this money is being able to be transferred legally? Do you have CPAs? Do you have accountants that know how to deal with banks? There are many Muslim organizations whose bank accounts have been shut down. You know, this Monem. In America there are many Muslim individuals. This is a civil rights issue. I can discriminate against Muslims and shut down their bank accounts. And if you want us to make sure our bank accounts are open, we need to have quality accountants.

Now, if I’m a little organization and I’m only raising $500,000, nobody’s going to really worry about me. But when I’m raising $130 million like I am in Islamic Relief USA, I’m going to be under more attack. And it is foolish for us to not have enough lawyers, enough accountants, enough professional staff to not only raise the money, Monem, to manage the money and to make sure that the money is spent on the right projects in the right way.

Monem Salam:
The entire operations of the US, whether it be from raising more money to making sure that your dollar gets to the right hands, following up on that dollar to make sure that that it was spent properly, All those things are being done within those 10%.

Anwar Khan:
Yes. That includes our monitoring evaluations, that includes our auditing, that includes our accounts, our work over here, including administration raising money, including even advocacy work.

Monem Salam:
Where specifically you’re talking about Islamic Relief and that 10%, maybe there might be a lot of different other charities. The bucket is overhead costs that we’re talking about. Then then there was another one that you mentioned, something about 2% for Islamic Relief, what was that?

Anwar Khan:
So that would be working through our international partner, IRW. They are providing additional MNE, additional audit to make sure that the money is being spent. That’s not going towards fundraising, that’s programmatic cost. And then there’s an additional 8% in the field. So for example, I’m sending money to Pakistan for zakat. 10% we’ll keep here for our expenses here, 2% from IRW to make sure that the money is being spent from their side, and 8% in Pakistan to help pay for the running cost of the office and the programmatic work that they do.

Monem Salam:
So basically, then I can understand the 8% cost, which is, you know, having an office there, having staff, being able to distribute, you know, the trucks that you need to be able to move the supplies, gasoline, the supply chain, basically that’s there. And I can understand from the perspective of the US, which is the 10% and going into the legal costs and those type of things. Hiring people like you to go out there and spread the word and do those things as well. I’m a little confused about the 2%, however, where does that bridge come in?

Anwar Khan:
Okay. So that is for the lawyers, for the accountants in the international secretariat in Birmingham, England. They’re the ones that manage the general license. They’re the ones that manage the trademark, they’re the ones that speak at international conferences on our behalf, who do the advocacy work. They’re the ones that keep an eye on the 8% from Pakistan.

Monem Salam:
But technically, you could actually send the money directly to Pakistan?

Anwar Khan:
I could send it there, but I would not have the experience, I wouldn’t have the checks and balances. I wouldn’t have the financial and legal rigor. I’d be missing that out from the IRW.

Monem Salam:
Okay. So they’re basically like an extra set of eyes.

Anwar Khan:
And they have programmatic experience that includes all of our best programs people from IRW. They’re the ones that get the request from Pakistan, then they look at it, then they adapt it and they send it to USA. So we’ve got not just an extra pair of eyes to make sure that it’s managed properly, but we’ve got experience of people who have done the programs and who can manage the programs.

Monem Salam:
Right. So programs will be like, for example, running a school or it would be distribution of food.

Anwar Khan:
So we would make sure that we have child protection team in IRW that makes sure that those programs aren’t hurting the children. We have education specialists, we have nutrition specialists, we have the Islamic finance specialists with PhDs who are based out of IRW who make sure that these programs are in alignment with our mission in the best way possible. And then we will work with the local office, let’s say Pakistan, we picked as an example, yeah? To make sure that the schools are in line with our child safety policy, in alignment with our education policy and so on.

Scott St. Clair:
And so 20% of that, it sounds like, is going to, at least in the US here, a lot of like administrative work. The lawyers, like you said, that it’s really important to keep the rest of the money doing the work that it does, right?

Anwar Khan:
Yeah. So 10%, you can say, is on general administration in the US a little bit of programs and 10% on programmatic support offices.

Monem Salam:
This is only for zakat, right?

Anwar Khan:
This is for zakat. Now, if we’re dealing a non-zakat, then it depends what kind of program we’re doing.

Monem Salam:
Do you find there’s a competition amongst different charitable organizations to reduce this number or it’s pretty much all the same. 20% is what it is?

Anwar Khan:
We are one of the few organizations to actually have a written zakat policy. And because of that, it’s easier to attack us because we have more transparency. Many times people say, Oh, this is zakat eligible. Really? What’s the name of the scholars? Where’s your zakat policy? So we have a zakat policy. We’ve named the scholars on the zakat policy. It took us one year to come up with the latest iteration of the zakat policy.

You can disagree with what we’re saying, and that’s allowed in Islam, yeah? But we have the evidence. This is not something that I came up with, with my friends. We have eminent scholars in the US who understand fiqh (jurisprudence), who understand relief, who understand zakat. We explain to them all of the issues we’re facing. So we came up with this zakat policy.

So people will tell you, oh, I have a I have a percentage admin of, let’s say 3% or 4%. How did you calculate that? So our calculation is based on what is on our 990, and it’s what we give to the IRS. So overall, Islamic Relief in the USA overall, we normally go in between 16 to 18%. We’re bouncing around that number. Okay? And this is according to the IRS, the amount of money we keep and then we send the money overseas or we give it to partners, we spend it locally. The zakat number I gave you is going even more deeper. It’s not just saying how much we keep, it’s also saying how much is spent on programmatic work. Now, according to the IRS, programmatic work is work. So it would be included, according to the IRS, on the actual programs work.

So the way we did zakat is much more conservative. According to the IRS, the programmatic work we would be doing, they would regard that overseas as programmatic work. According to our scholars, they said no, call it programmatic support.

Monem Salam:
Okay. I think you lost me on the programmatic work.

Anwar Khan:
The normal way of working, which the IRS would count, it would be 10%, not 20%.

Scott St. Clair:
Okay. So a lot of extra costs are folded there.

Anwar Khan:
So the programmatic support that we’re doing is counted in our industry as programmatic work. It’s not fundraising, it’s not for legal, it’s not for other stuff. Programmatic support would be included not as admin, it would be included as programmatic work.

Scott St. Clair:
It’s different definitions to the IRS and the scholars.

Anwar Khan:
There’s the IRS definition and then there’s the zakat definition. The zakat definition is more conservative.

Monem Salam:
Just to be clear, what you mean by programmatic work? Person who is directly involved with the distribution of the aid, for example?

Anwar Khan:
Yes.

Monem Salam:
And that’s considered programmatic work.

Anwar Khan:
Yes.

Monem Salam:
A person who’s actually raising money, that’s called admin work.

Anwar Khan:
Exactly. Accounting is admin. So it is fundraising and admin would normally be counted as administration expense.

Monem Salam:
And then so the rest of the money, which is the non-programmatic and admin on the zakat side, so let’s say 80% roughly that is actually going towards the people that need it the most that are specifically stated in the Quran to be recipients of zakat.

Anwar Khan:
Yes.

Monem Salam:
So that helps. Now, for every hundred dollars that I give Islamic Relief, I could expect that about $80 is going to go there.

Anwar Khan:
$80 out of $100 go in the hand, ten will go to people to help to administer that, to make sure that it’s given in the proper way. It will go to help to people and 10% will continue our work in the US.

Monem Salam:
And then what about the non-zakat part of it?

Anwar Khan:
So with the non-zakat, when I’m doing long term development work, that’s more expensive than if I’m just giving out food on the back of a truck. If I have to employ engineers to build water wells. That’s going to be a more expensive project than if I’m just handing out water bottles. So the administration isn’t a standard amount.

When people say, but Anwar, if I give $100, it depends which country, it depends what administration is in that country. It depends the difficulty of working there. If I’m having to take it on the back of a donkey up a mountain, which literally we had to do, that’s going to be different than if I’m putting it in a train and the train is speeding along. Overall, as an organization, if you get $1,000,000, how much of that is going to what? So I think the individual thing depends on the kind of project you’re doing.

But overall, as an organization, if you look at our 990 and so on, overall we’re about 16 to 18%. I could make that percentage lower if I was less conservative in the way I do the calculation and this is all legal. I could, for example, add more gift in kind and I could get gifts of medicine and I could use that gift in kind medicine and lower the percentage admin. We used to be lower because we had gift in kind. So I can make the percentage admin lower, but we decided we’re taking a more conservative approach the way that we do the calculation. We could just, for example, get a lot of cheap medicine and we could lower our percentage admin down.

Scott St. Clair:
That makes sense. So what specifically is a gift in kind in terms of like a charitable organization?

Anwar Khan:
So gift in kind, for example, is if somebody gives you blankets, they may be used, they may be brand new, someone gives you medicine because we’re getting really technical now. So I want to be clear. What I’m saying, this is all legal. But within things being legal, there’s questions about whether it’s the right thing to do. If, for example, you give me brand new coats, I value those coats at $100 in America. I can then send those coats overseas. They’ll get to, let’s say, Pakistan. Pakistan will charge tax on them. I can say that I got the coat for free. But you paid $100. Yeah? I then send it over there, but there’s customs and duty, there’s shipping cost. And there’s distribution cost. I can actually buy that coat, let’s say in Pakistan for $30. But I’ve now spent more than $30. But I can say I got a donation of $100 from you. So on my books I can say I got $100. Now, are we going to value what the coat is worth in America or are we going to value what it can cost in the country where we we’re sending it? We’ve decided in the last few years to move away from sending what we call gifts in kind, donated items, and we’d rather buy the items locally to support the local industry.

Monem Salam:
I know sometimes you send over hospital beds, some people do that gifts in kind. And sometimes they’re doing hundreds of hospital beds to I don’t know, let’s pick a country, a war zone country like Yemen. Now let’s be realistic. You can buy hospital beds in Yemen, hundreds of thousands at a time. Sometimes you do have to do the GIK in country, right?

Anwar Khan:
We actually have done that. In that particular case, we’ll take the hospital beds.

Monem Salam:
But it does become to depend on supply of whatever is available in the country.

Anwar Khan:
Exactly. So I was saying that sometimes people are looking at GIK and they’ve got tens of millions of GIK. We’re not looking at the amount of money. We’re looking at the quality of the GIK.

So when the London Olympics happened in 2012, they had a lot of hospital beds just in case they needed them. They never used them. They took them to another organization. We worked with that other organization to send it to a country where they don’t get hospital beds of that quality. So there’s a difference between sending hospital beds and used blankets. I don’t want your dirty used blanket. Please wash it and donate it to your local shelter here in America.

Monem Salam:
It’s also a massive matter of what they call in Arabic, izzah, right, is that people want to accept what’s new, they don’t want don’t want your trash, they want your treasure.

Anwar Khan:
Exactly. So some people say, gifts in kind, it’s just trying to inflate the income that the charities get and they overvalue it. That’s one extreme. There’s another extreme saying, oh, we can’t do work without gifts in kind, it’s the most important thing, it needs to be given. People are giving it to us out of love. We need to take it and send it there. No matter what the costs are, even if it’s costing more to send it there than it’s actually worth. My approach is number one, do they need that item in the country? Two is how much is that item worth in the country? Is it worth financially us getting that item for free in America, cleaning it, putting it on a cargo, sending it overseas, paying customs, delivering it there. And the answer is sometimes, yes, it absolutely is. So if it’s high quality hospital beds, if it’s medical equipment, absolutely. If it’s old socks, if it’s clothes or blankets, no. So we actually have to make a calculation, Monem. Is it worth us sending it there? And, you know, when we send medical equipment before we do anything, Scott, we ask the country, this is a medical equipment we have. Does anybody want it? In certain countries they’re, yeah, we want this.

So we found, for example, that in parts of Africa they want certain kind of medication. In parts of Asia and Africa, they want certain medical equipment. Then we try to connect the medical equipment from the donor here with the people on the ground. So I know many times when it’s been done successfully, we are not driven by what the value of it is and is going to make our books look good. We’re driven by what the need of it is on the ground.

Scott St. Clair:
Could you explain how these gift in kinds could help you reduce your admin expense?

Anwar Khan:
So I’ll give you an example. Let’s say the stuff you’re giving me, you value it as $1 million in the US, but I might value it as $100,000 if I get it from India. Now, legally, I can book it as a million or I can book it as a 100,000. If I book it as a million, my percentage admin goes down. If I book it at 100,000, then it won’t go down as much. This was actually an example. These medications that are worth a million here, they’re were 100,000 in India. If I get that from India for $100,000 and I send it by road, let’s say to Afghanistan or I send it to somewhere in Asia, then my admin of that would be much less. So if someone donates it to me for 100,000 over there compared to if someone donates it for a million in America, because once I get it in America and I say it’s a million, I’m going to have to pay tax on that million when it arrives in the end country. I’m going to have to pay for the shipping of that. I’m going to have to pay for the distribution. And sending it from America is more expensive than sourcing it locally.

Scott St. Clair:
So Islamic Relief USA couldn’t do a gift in kind from India, you’d have to do it from the US, right?

Anwar Khan:
Normally I’m getting the donation in America. That’s correct. Usually I’m getting the donation in America. Then I’m sending it overseas.

Scott St. Clair:
But it sounds like you try to, if you can, locally source it and just send money from America, if possible…

Anwar Khan:
Exactly.

Scott St. Clair:
…because that’s more efficient.

Anwar Khan:
It’s more efficient. You’re helping the local economy, you’re putting money into the local economy. And I’m worried that if you are sending too much supplies from America, then you’re dumping food and dumping medicine and destroying the local market. And we’ve seen this happening in developing countries where a lot of food, a lot of medicine has destroyed the local market. So we always try, if we can, to buy the supplies or source them locally so we can support the local market.

Monem Salam:
On the flip side of that, you have some kind of a relief that you’re doing and you’ve been able to come in and buy $5 million worth of aid. You’re going to be increasing the prices of the local goods for the people who normally could have afforded it, but now can’t because you made the price go up.

Anwar Khan:
So it’s a balance, Monem. But what we found for example, in Pakistan when the floods happened, we learned how to work with different organizations to buy tents locally. So we actually, Monem, we buy the tents in advance. We have them in storage. We have contracts with different providers. And those tents went to Philippines. Those tents went to different countries around the world when they’re needed. So we actually found that it is better to buy some of these supplies in advance and to have contracts in advance because the price goes through the roof at that time. When I was in Pakistan after the earthquake and the price of the cloth that you use to wrap the dead bodies in, the three white pieces of cloth, they said it went up 1,000%. If you want to bring in the supplies from overseas, then yeah, you want to get those. But I don’t want blankets. I want white funeral shrouds. And I don’t want them on a slow ship that takes six months to get there. I need them on a cargo plane. And a cargo plane is very expensive.

When I was talking to one of my colleagues after Hurricane Haiyan, he said, Anwar, we need the tents, we need them. I said, okay, okay, I can get you the tents from Pakistan, but if you can wait six weeks, it will cost a fraction of if I rent a cargo plane, which will cost a lot more money. He said. Anwar, if you’re going to put it on a cargo ship and it’s going to take six weeks to get here, keep it. We are right now dying out here. We’re under the stars. We need the tents right now. I can’t wait six weeks. I need them now. So we actually flew them in from Pakistan. We had staff on the ground in Philippines, from America, waiting. You know what happened once those supplies arrived? Sometimes they get stolen or they get lost. So our guys were waiting on the tarmac when the plane arrived. We made sure that we got those from the plane. We then worked with a local Christian Filipino organization to get their trucks to move it from the airport to near the water. Then we got dingies, I’m not making this stuff up, dingies with little rowboat, and we put one tent on each one and we sent it to the most remote islands. Now I can keep my percentage admin low by not doing any of that. I can send it by ship and I can get it when it’s not needed. I can send it by truck or I can give it to a local army and then just say Bismillah and hopefully it gets there. Or I can trace it all the way with these guys in their dingies going in rowboats to deliver it in the most remote island, and it cost more to deliver it to the people who need it the most than if you just dump it at the airport in Manila or in Cebu. Very technical now.

Monem Salam:
Yeah. Very technical, which is good. I mean, I think people need to understand the intricacies. There’s a reason why you pay the 10%. There’s a lot of intricacies and there’s a lot of understanding that goes into it.

Anwar Khan:
I would rather pay 10% than lose everything for it to be stolen. I can pay 10% or I can pay 100%. Something I really want to tell you guys, this is a book, Islamic Charity by Samantha May. The title is How Charitable Giving Became Seen as a Threat to National Security. This book is talking about how much harassment Muslim charities get and how difficult it is for them to send the money. People have gone to jail because they’ve been accused of not making sure the money was spent properly. We were told very clearly, Scott, our job was not to raise the money at the lowest cost. It was to make sure that the money raised reaches the people who we actually delivered it to. That costs money. And you want to have experts. Volunteers normally don’t know the intricacies of how to do a 990. They don’t know about all the different schedules that we have to do. They don’t normally know as much as a chartered accountant. They don’t know about child safety. We make sure, for example, that when there’s an adult there, a child is not going to the toilet by themselves. We want to make sure that we reduce child abuse, that we reduce corruption in places where we work. You notice I said reduce.

Scott St. Clair:
All this money you’re spending on is completely worth it to make the charities effective as possible.

Anwar Khan:
How much is a child’s safety worth, Scott?

Scott St. Clair:
Exactly.

Anwar Khan:
If I’m telling you my admin is 3% and then I just ask a simple question. Do you have child safety policy? Do you have child safety officers? Do you have MNE? Ideally, Monem, you get what you pay for. That’s not always the case in life. So for example, if I want to buy a car, I can buy really cheap cars, am I right? Or I can buy really expensive cars. Me personally, I like the Toyota Camry because I trust Toyota. The Camry is bigger than a Corolla and it’s more safer for my family. Now there’s cheaper cars than a Camry and there’s much more expensive cars than a Camry. What’s my priority? I want good value for money and I want to protect my family. And I don’t want the miles per gallon to be too high. When we look at a car, it’s not a case of how much bang for my buck am I getting? No, you get what you pay for. At the end of the day, you want to get what you pay for. So if you want to pay for an agency that is not just raising money but is actually spending the money in the right way at the right time, is winning awards for the work that they’re doing, is regarded as very transparent and at the same time is doing advocacy work to help to prevent the problem happening in the first place, then you’re going to pay more for someone who’s just taking the money, giving it to someone else and just forwarding the money onward. So you get what you pay for, the same with a car, the same with any product.

Monem Salam:
That’s a good point. The one thing I want to highlight also, you kind of touched upon it, and that is that you save like the tents and stuff like that, you have warehouses where you keep them so then when the emergency happens, then you’re able to deploy them, right? That kind of begs the question, when I see something on TV where an earthquake in Iran or in Turkey, the recent one that happened and I’m giving $100 to Islamic Relief, you’re not literally going out there and buying the tents right then and there to give them to. You already have those tents. You’re delivering those and you’re replenishing the supply for any other emergency that happens.

Anwar Khan:
Well, in some places, that’s what we do. So in Turkey, we’re basically buying the supplies locally, Monem. In answer to your question, there was plenty of supplies available. We were getting them locally. In other places like Philippines, they were like gold dust. So we were bringing them in from Pakistan.

Monem Salam:
So it’s not only about the local supply, right? It’s all about delivery time delivery as well. If I give you $100 and you have to go out there and buy it, source it, deploy it, it’s different than saying I already have it in my warehouse, all I’m going to do is deploy it. So it’s a it’s a time issue as well.

Anwar Khan:
Yeah. So to be frank with you, that was such a horrific crisis. Over 50,000 people died. Nobody’s ready to respond to that at the level it needed. No government in the world is ready to take care of 50,000 people that died there. Or in the case of Pakistan, 80,000 in the earthquake or the huge number that died in Port-Au-Prince. Look at here in America. We weren’t ready for the 1000 that died in Katrina. Those of you who are old enough to remember there was a mess made of that. At the beginning of the crisis, it’s often chaos, and if it’s at that level, it’s difficult to get the supplies. So we try to mitigate it with sending as much supplies as we can, as quickly as we can, where they’re needed. People shouldn’t imagine that large amounts of supplies are arriving in 24 hours. It’s not the case. The money needs to be raised in the first few days and the first couple of weeks to be spent for the next few years. In Turkey you just don’t need food and clean water and tents. You also need rehabilitation. You need to rebuild people’s homes. There’s so much that needs to be done. So when a crisis like that happens, it takes 2 to 3 years to actually help people to get back on their feet. It’s not done in days, it’s done in years.

Monem Salam:
Relative to all the charitable organizations that are out there. How are Muslim organizations doing when it comes to overhead?

Anwar Khan:
You have to compare apples with apples. So if you’re talking about organizations that don’t have many staff overseas and basically are fundraising organizations, they have very low overhead. If you’re talking about organizations that have professionals over here that know how do the right programs and to have lawyers and to have proper processes and make sure that the money’s spent overseas, I would say that we are lower than our industry standard. So Muslim organizations who are doing work at a higher quality level have slightly lower admin than the average American nonprofit and Muslim organizations that do not have much programmatic capacity, finance, legal capacity, they have very low overhead. They look like they’re doing great.

Monem Salam:
So like for like I guess you’re saying that the Muslim organizations are a little bit cheaper.

Anwar Khan:
Yeah, but I would argue that’s also because we might not be able to offer all the same checks and balances. So if you’d ask me this question 25 years ago, Monem, I would have given you a different answer. With my maturity, with my experience, may Allah forgive me for my arrogance, when I was younger, I was like, so happy. Oh, overhead is so low. That’s great. Now I’m like, yeah, the overhead is low because we don’t have child safety officers, we don’t have the lawyers. I give example, your company Saturna. Why do I need you and Scott? Why can’t I just ask my uncle to invest the money? But when I’m working with the Saturna, I’m going to ask you questions. I want to know how much money I’m making every year. Ask those questions to Islamic Relief. Ask those questions to some other organizations, and you might be surprised with the answers you get. But I would rather that I tell people sometimes, hey, I don’t know the answer to your question. Or, hey, it’s not an easy question for me to answer, rather than just come up with stuff. I remember years ago, nearly 30 years ago, someone asked a question and I just happened to be standing there. How are you getting the supplies into Iraq? Oh, we just fly them in. And the person walked off because, as you know, Monem, there was an embargo at that time, sanctions on Iraq. I had to run in and I said, no, no, please don’t listen to his… (laughs)

Monem Salam:
It’s just a volunteer… (laughs)

Anwar Khan:
You were a volunteer when you went into Bosnia and visited the mass graves with me. You were a volunteer when you and me were trying to avoid the bombs from the bombers in Chechnya. You were a volunteer when you went many times. So there are trained volunteers and there are untrained volunteers. So I want to be clear. By the way, do you think volunteer work is free, Scott? Your volunteer needs to be trained, am I right? And needs to be managed. When we get volunteers to work with children, Scott, we have to pay money to do a criminal background check. When people come to our Islamic Relief childcare services, at any event, people may not realize this Monem, the child care staff are certified with CPR. We used to pay a few hundred dollars for babysitting. It then went to a couple of thousand dollars for child care. But we’re now giving a quality product. I think this is a good example. In the past we were getting aunties from the local masjid (mosque) to put on Disney films and to give out pizza. Our overheads were much lower. Now we have people who are certified in CPR and who are coming like the mad scientist with the kids and doing the volcano eruption and making the kids want to come.

Look, in the eighties, our opinion in the sector, because you asked me about the sector. The sector was, hey, why are you asking so many questions? I’m doing you a favor. Give me food. There’s hungry kids in Africa. We had all these children that were nearly naked, that had big bellies, and we were meant to feel bad. I would argue that that wasn’t done ethically. I don’t like those images of starving children in Africa, but that’s what we did to raise money in the eighties. We want to help. We have money. They should just be thankful for anything we’re giving. That’s a very patriarchal approach. That was in the eighties. Then later on we said, no, we need more of a needs based approach. Can we check with the people if they actually want the food? If they don’t eat rice, why are we sending them rice? I remember, Scott, people were sending pork to Muslims in Sarajevo.

Scott St. Clair:
Not a very effective piece of charity.

Anwar Khan:
And they said this is not charity, this is an insult. I said, no, it’s just stupidity. The needs based is, does the person actually need it? Are we dumping the stuff in America because we have extra crops and we’re just dumping it in Africa? Or do the people in Africa actually need that food at that particular time? Then there’s the next approach that came up later, it’s called rights based approach. Where we ask the people, how do you think you can have a better quality of life? Well, you know what? We don’t want you to send food from America. We want you to help us to grow food locally. And we notice with climate change, the environment is more arid. So we want to rebuild our ancient irrigation systems that we have. As you can tell, this is not a hypothetical. This actually happened. And we want solar power panels. So we want a mixture between our ancient systems of preserving water and cutting edge solar power. So we did that. The rights based approach is based on people’s rights, not just their needs. And the original approach was, hey, just be happy. I’m giving you money, I’m such a nice guy. So my focus to your audience is it’s not about you. It’s not about you having a glow and being happy. Hey, I’m such a nice person. Inshallah you are a nice person. It’s about how does my money help the person in need that no one else is helping?

If you’re going to give money on the top of that mountain, it’s much more expensive than giving money at the airport. When you arrive, it’s much more expensive than dumping it on the side of the street. Do I trust this organization? Do they have a track record of delivering the aid? And this is my question. You know, when people say to me, what’s the percentage admin? You know, one number I think is important? 13. 13 of our staff have died in the last 20 years to deliver aid. 13. I believe, Monem, if my memory serves me right, you were with me when we went to meet Morat, and his mother was crying. So the first time Scott, I went to meet Morat, he picked me up at the airport in Russia. The second time I went to see him, he wasn’t there. We went to his house. He died delivering the aid earlier. Monem was there with his mother, and his mother said, I lost my son, but I have all of you from Islamic Relief as my children. And if you remember, Monem, his widow was there, and his baby was very young. He was a few months when his dad died. When we’re thinking about Halal Money Matters, can we think that people have died to deliver this aid? Can we realize that people are in jail right now trying to deliver aid? Can we realize that this isn’t just a money issue, it’s a civil rights issue. It’s an emotional issue. At the center of the work we do, it’s not about us feeling good and dumping money.

It’s about what Imam Ghazali said in his maqasid (goals of sharia). The center of our work has to be raising human dignity. So we’re about raising human dignity. We are about giving hope. We are about that person crying who’s going to help me, Allah, who’s going to help me? And Inshallah (if God wills it), your supporters, your donors, our donors here in the US will be giving money to different Muslim organizations that will be replying people’s calls. There’s a cycle of love. Scott, you give us a donation, we then do admin, make sure that it goes to the right place. Our staff may risk their life to deliver that aid. Then that goes to the person in need. What does that person do? They raised their two hands and they pray that Allah benefits you. Then the barakat, the blessing, from that person come to you, Allah Subhanaju wa Ta’ala, (May He be praised and exalted) is helping you. Now, the cycle of love begins again. So please don’t think of it as just it’s a transactional thing. This is a transcendental thing that we’re doing.

Monem Salam:
That’s a good wrap up for our discussion. I know we sometimes do focus on the money and the numbers because we’re the Halal Money Matters podcast.

Anwar Khan:
If I have fitna (trial) and I do things in the wrong way, but I’m more efficient, is that more important than I do the right thing in the right way and my admin is a bit higher? Was that useful?

Monem Salam:
Yeah.

Scott St. Clair:
Thanks, Anwar, that was great.

Anwar Khan:
Thank you.

[music outro]

DISCLOSURES (read by Christopher Patton):

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