115. Where do American Muslims Donate Their Money?

Transcript

Welcome to Progressive Pockets! Whatever keeps you up at night- climate change, income inequality, oppression, homelessness, you name it- there’s a real chance that we are leaving some of our power on the table. I believe that we can use our dollars, as every day people, to help create the type of world we’d like to live in.

I go by GG, that’s short for Genet Gimja. I’m your host around these parts. And guess what? It’s right around that time of year when Ramadan is kicking off! This is a holiday observed by Muslims globally by taking some time to pray, reflect, fast, and connect with the community. At its best, there can be a lot of introspection. Ask your observing friends what they’re thinking about this Ramadan, you’re likely to get some pretty deep answers about the ways they want to live their lives according to their values.

Not that we ever need a reason, but if you think about it, what could be a better time to talk about lining up our values and our money? So let’s dive in and learn together.

One topic that comes up a lot when I talk to listeners of the show is this soul searching question of how much should I donate? In fact, way back on Episode 2 there’s a whole discussion that you might find helpful to help you make this decision, borrowing from different faiths to kind of get a sense of what other people are doing, or other ways that are not faith-based to help you pick a goal as you think about your own giving. The concept of giving within Islam is briefly discussed in that episode.

Today I’d love to share some interesting research about giving within the Muslim American community. This research comes out of the Indiana University Lilly Family School of Philanthropy, they have all sorts of initiatives and research that they do. I find myself looking at their work quite often when I’m trying to answer your questions. In preparing for this episode, I got elbow deep in the work they’re doing over at their Muslim Philanthropy Initiative.

They have lots of research that they’ve published, but to focus this episode, I curled up with the Muslim American Zakat Report 2023 and here’s what I learned! Let’s talk about what Islam says about giving and how to calculate how much to give. And let’s find out where Muslims in America tend to give. Maybe some of these things can inform our thoughts about our own giving.

So the first thing to know is that Islam is based on 5 pillars. Should I see if I can remember them from memory? There’s prayer, fasting, philanthropy….aaah! I’m blanking on the other two…prayer, fasting, philanthropy…. Ok I need to look at my notes. Ugh! How could I forget pilgrimage. And, yes, well I was never going to remember this one, it is the profession of faith. Literally saying the words that you are a believer of the faith.

So the requirement to give money away generously is the 3rd pillar of Islam, it comes even before the fasting in terms of the priority order. The prioritization is first the profession of faith, then prayer, then philanthropy, then fasting.

This third pillar is called zakat. This philanthropy is sometimes called financial worship. And there is a lot written in the Quran and in the religious interpretive texts about all the rules of zakat. There are a lot of guidelines. For example, there are even guidelines about who is allowed to RECEIVE zakat. There are 8 conditions under which someone is eligible to RECEIVE zakat. Here’s an excerpt from the report:

“Zakāh expenditures are only for the poor [1] and for the needy [2] and for those employed for it [3] and for bringing hearts together [for Islām] [4] and for freeing captives [or slaves] [5] and for those in debt [6] and for the cause of Allāh [7] and for the [stranded] traveler [8] - an obligation [imposed] by Allāh. “

So you can imagine that if there are so many guidelines about who can receive zakat, there are also lots of guidelines on how much zakat should be given away.

I’m nobody’s religious scholar, but I did grow up familiar with the traditional messages in the Christian faith and so the concept of a tithe feels very familiar. But the tithe, usually 10% has always been 10% of income that’s coming in. So if you’re a farmer, 10% of your harvest for the season, that’s the tithe.

But here’s what’s so fascinating to me about the zakat. It’s a percentage of wealth. This distinction is a big one. And the guideline for Islam states that:

“The rate of zakat today is estimated at 2.5 percent of surplus wealth above the necessary minimum threshold.”

So what’s the minimum threshold? The minimum threshold is debated, the traditional way to calculate it is according to gold and silver prices. Traditionally, the way it would be calculated is ok these are the prices of this amount of gold in today’s dollars, the calculation for the threshold is $5,500. Or for the scholars that use the silver prices, the minimum threshold would be about $450. So as long as you hold this amount of wealth, this minimum threshold for a year, then you are obligated to give zakat. You are obligated to give philanthropically.

So you are obligated to give 2.5% of the surplus above the $5,500 if you’re using the gold standard, or $450 if you’re using the silver standard. You have to give 2.5% of the surplus above that amount. You have to add up the value of your wealth and give from the surplus. But what all is included in your wealth?

Here’s what the report says is one modern interpretation,

“Zakat is liable on gold, silver, cash, savings, investments, rent income, business merchandise and profits, shares, securities, and bonds. Zakat is not paid on wealth used for debt repayment of living expenses such as clothing, food, housing, transportation, education, etc.”

So let’s think about that. Let’s say someone has a million dollars between their retirement accounts, their gold silver cash, all their assets, they don’t have debt, let’s say their net worth is 1 million dollars and they use their salary for their job to cover all of their living expenses. According to the guidelines that would mean that the 2.5% zakat would be off the 1 millie actually the amount of surplus over $5,500. So if you subtract $5,500 from $1 million, and then multiply it by the 2.5%, so that comes out to donating just about $25,000 this year. That’s so interesting. It’s a lot, but hmmmm it’s just such a different way of thinking about it, donating based on your wealth rather than based on your salary.

I’m fascinated by this mental shift!

There are even online zakat calculators. What a time to be alive!

All this zakat adds up to a lot of money! The Muslim American Zakat Report 2022 found that Muslims in the United States gave an estimated $1.8 billion in zakat in 2022. Muslims only make up about 1% of the American population so that is a lot of money!

When survey respondents were asked what causes they think are really important for zakat to be used for, there wasn’t a clear preference. Muslim Americans were asked about causes like:

Hunger alleviation Immediate relief Poverty alleviation Health services Education empowerment Long term development Advocacy Humanitarian aid Economic sustainability Economic empowerment and more. There was no preference.

When you look at the report, the largest recipient when you look at where most respondents give their money is informally and directly to people and causes that they think might need the money. I have witnessed that before. Someone needs help, you help them. Or a friend or someone in your community is gathering resources to help a family. Informal, direct giving.

There’s also a sizeable amount of giving to formal nonprofits domestically and some formal nonprofits overseas as well. And some through remittances, this is where people send money back to their countries of origin.

There’s no prescribed time when the giving needs to happen, but many Muslims do tend to give during Ramadan when community and living out the pillars of the faith are in the discourse and on the minds of people perhaps more than the rest of the year. So, whether you’re observing Ramadan this year or not, whether this is your faith or not, I think it can be helpful to spark our thinking. Let’s recap:

The third pillar of Islam is zakat and it requires that Muslims give 2.5% of their wealth above a minimum threshold. Wealth not income. 2.5% of your wealth above a minimum threshold of around $5,500 or $400 depending on how you interpret the religious text.
There are online calculators if you want to see what zakat you would pay. Of course, links in the show notes. As always.
Muslims in America tend to do more of their giving during Ramadan, although they do give throughout the year.
The tend to give directly to informal causes. To a slightly lesser degree, they also give to formal nonprofits. And then to an even lesser degree, they donate to overseas nonprofits, and then to a lesser degree remittances.

So interesting!

Let’s end with a quote from Rumi.

“All religions, all this singing, one song. The differences are just illusion and vanity. The sun’s light looks a little different on this wall than it does on that wall, and a lot different on this other one, but it’s still one light.”

Today’s episode was inspired by a question from a listener a long time ago about trying to decide how much to donate. That’s where the best episode topics come from, your messages. So please, open up your email window and send a quick email to progressive pockets at gmail dot com, what are some questions you’d like to hear explored on this podcast? Or you can go to progressive pockets dot com and click on Contact and send your request that way too.

I hope you enjoyed the discussion today, let’s talk again soon!

Muslim American Zakat Report 2023

https://scholarworks.iupui.edu/server/api/core/bitstreams/720d569d-3cfb-432b-9ec0-f5d7924ccf4c/content

Online Zakat Calculator

https://irusa.org/zakat-calculator/