Islamic Finance

Islamic social finance crowdfunder Global Sadaqah aims to double funds raised this year from $250,000 in 2018

Photo: Umar Munshi (centre), founder of Ethis Group, with some of the beneficiaries of one of Global Sadaqah's charity projects in Chad, run in partnership with the Islamic Development Bank. Photo supplied by Ethis Group

Charity crowdfunding platform Global Sadaqah raised around $250,000 in its first year last year from zakat, sadaqah and waqf, to benefit campaigns such as for emergency relief, refugee aid and building new mosques. 

The largest single amount Global Sadaqah raised for a campaign last year was $26,000 for the Alliance to Fight Avoidable Blindness, in partnership with the Islamic Development Bank and the Islamic Solidarity Fund for Development. The funds will go to material costs for more than 1,000 cataract operations in member countries of the IDB. 

For this year, Malaysia-based Global Sadaqah aims to double funds raised. How will it do that? We speak to Umar Munshi, the founder of Ethis Group, the Islamic fintech company behind the platform. Listen to the interview, or read the full transcript of it below. 

Salaam Gateway: Umar, when we last talked about Global Sadaqah, this was in May 2018, this was when Global Sadaqah was first launched, we talked about it as a concept and how you put it in place and implemented it. Now, it's been a bit more than a year, I think, since it's been around. Can you tell us what the progress has been for Global Sadaqah?

Umar Munshi: Yes, alhamdulillah, progress has been good overall, I would say. We continue to push for growth and for further expansion for this year. Maybe I can highlight that there have been three maybe I can break it down into three different parts in terms of our progress.

In general in terms of awareness, alhamdulillah it’s moving, we have more and more donors, more and more traffic, more partnerships.

Also, alhamdulillah we got an award for Islamic fintech towards as the best social impact Islamic fintech. That was a great recognition.

In terms of the business itself or the platform itself, the first thing I can share is that one point, or one behavior that we have detected that's very clear and we're very excited about is that for the normal crowd, for the general public that donate, they donate many times and that has been very exciting for us because our hypothesis is that once somebody starts giving sadaqah online you will want to do it more and more because you see what you're doing and you get updates and it's very easy also, you don't have to go to a physical location to give the donation. So alhamdulillah we have, even, a number of donors that donate weekly, some would donate a few times a week.

That’s something that's very exciting and I think this validates our hypothesis that this is great value add for the normal ordinary Muslim or donor. That’s the first point I wanted to highlight or share with you repeat donors is very high, on average it’s 3 times but because you have a lot of people who just come in once, and then only come in when we push marketing to them again. But in general the more people use it, it snowballs they start using it more and more. That’s the first thing I wanted to share.

The second thing is, I believe last year we highlighted in our first article with you that our specific area of focus is to work with and also to help organize donations from corporates, and our starting point, our focus for the whole year was actually on incumbent Islamic Ffnance institutions.

We had big multilateral banks, I mean, one of them, we have the IDB, the Islamic Development Bank, and in Malaysia we had a few banks initially the first one was Bank Islam, followed by a number of others.

So what I can say is that we ran, for a few of them, we ran pilots. This is the first time that they're working with a fintech in this way or a third party platform in this way. Alhamdulillah, all the pilots have done well.

Overall the pilots are leading to the next step, I mean, all the pilots are leading to the next phase or the next step where we hope to deepen our engagement, relationship and value add to these institutions.

This year, we have quite a number of banks Islamic banks and Islamic banking windows working with us and we will be making some announcements later in the year. Right now, everything’s gearing up for Ramadan, and there will some partnerships inshallah.

So that’s great and what we are also doing this year, for this kind of corporate partnership, we are expanding to also invite and discuss with non-bank corporates who have shown a keen willingness to also come on board. So we're very excited about these two aspects of things, the retail side as well as the corporate side.

Salaam Gateway: Before you go on to more about what’s happening this year, can we look back at last year because you put up the highlights on your website. Tell us again, when did you officially launch Global Sadaqah?

Umar Munshi: Global Sadaqah, we had a soft launch, Beta launch, I mean our platform we still consider it a Beta platform because we have the full version that we are still building. So this is more to go to market and to get traffic and to get users and to build the ecosystem before we launch the final product.

In the past one year the movement and the take-up has been quite similar to what we expected and that was in March, the launch. We about a year old.

Salaam Gateway: So your numbers on the website for 2018 are from March to December.

Umar Munshi: Correct, yes.

Salaam Gateway: So I'm going to read this off to you and then you can confirm these numbers $65,220 raised online in 2018, $185,000 corporate sponsorships in 2018, $1.5 million supported programmes in 2018, and these came from 1,204 unique donors, 2,525 donations received. Is that right?

Umar Munshi: Yes, correct.

Salaam Gateway: What do you mean by this $1.5 million in supported programmes? How is it different from the $65,000 and $185,000?

Umar Munshi: So let's say for example, the project is to build a mosque, a waqf in Nigeria, which is one of our more popular campaigns. So the whole mosque requires $50,000, for example, and from our campaign, let’s say our target is to raise $5,000 or even $1,000, we contribute to a portion of the whole project. Sometimes we also have corporate donors to chipping in, typically large amounts, let's say $20,000. So in that case the project size or supported projects or programmes is $50k, the corporate donor, for example, is $20k and our online crowd is $5k. The remainder comes from the project owner of from other sources, not from our effort.

Salaam Gateway: And all of this from 2,525 donations from 1,204 donors, so that's where the repeat donations come in, it's like times two.

Umar Munshi: Last year was times two now it’s gone up to times three.

Salaam Gateway: I wanted to ask if you keep numbers like how many people you've impacted with all of these donations.

Umar Munshi: This is a very important part of our pilot and it will take some time for us to go into it and be able to give data because there's such a wide variety of projects and different types of impact and you know, impact measurement is something that's very fluid, it’s not an exact science.

We have been looking at that and what we're trying to do is not reinvent the wheel but to pull in different standards and different measures of impact and then present in that way with you know, a few different measures or a few different scores. This is something that we're still working on and we foresee that it will take some time before we are able to have this feature.

Salaam Gateway: Impact was one of the big things we talked about last year in May because your concern and you know, rightly so in terms of Islamic social finance, a lot of people are concerned that we give a lot of money in zakat, you know, you gave the number of $500 billion citing IDB, and then there's sadaqah and then there’s waqf and cash waqf but because of inefficiencies and leakages, a lot of that money isn’t channelled properly to the people who really need it. So I know that you're still compiling all of that data to measure impact, but can you give us an indication of whether or not you're happy with the way that the last year has performed for Global Sadaqah in terms of improving on impact.

Umar: Yes. I understand. Maybe you can divide into two aspects: The first aspect is the onboarding of the campaign and then the distribution of funds to the campaign, that’s the first part, fundraising and distribution. The second part is the follow-on, follow-up, and from there the measurement of the impact, reporting an impact.

So for the first part, in principle, everything is quite good, is going well. Quite a few charities had difficulty, or challenges, in providing all the data that we wanted. So some of them took some time to provide us the data that we need so that we can be more transparent and more comprehensive in the campaigns.

So that was a little bit of learning curve for some of the charities that we work with, who are not used to giving so much data or so much explanation and justification on the use of funds. That is ok, I think it's a normal process where people get used to a new standard of providing information and verification of information.

The second part, it's a mixed story, to be very frank. There are some project owners, campaign owners, charity partners that have been very forthcoming and timely in providing reports and updates, sometimes even without us having to chase them they’re giving us those updates. Whereas for others although they commit in our agreement and our standards to provide updates they take longer than they’re supposed to provide those updates.

So right now we what we’re doing is we are trying to see how to help them streamline the process, through technology. So we’ve been building a tool for our charity partners to make it easier for them to have direct reporting using our tool so we’ll receive the data when they are on the ground getting the raw information and pictures and so on.

Salaam Gateway: Are they concerned about security and are there guidelines that you give them for how you use that data?

Umar Munshi: The data is reporting data, not any personal or private data, it’s reporting data in terms of the impact of what they do. I think it becomes to be more sensitive when we talk about individual beneficiaries. In that case, clearly, they need to get permission from the beneficiaries that are being served to speak about individual cases.

Salaam Gateway: I know that a lot of this is new, like you say, to a lot of the organizations even, and especially to the charities that are involved but it sounds as if it's a move in the right direction for them and that they're keen to do this. But has there been any resistance?

Umar Munshi:  Yeah, because, I mean, especially when you meet and speak and network with bigger charities, they’re used to getting large amounts, in a sense, without having to provide so much information. So for us, given our current stage we raise a few thousand dollars typically or, at most tens of thousands of dollars, not in the hundreds of millions of dollars, but our requirements are so much more.

So a few of them said, okay, when we have the resources to provide you what you need, then we’ll come back to you. So for those guys we tell them, ok no problem, when the time comes we’ll explore working together again. So we do lose some clients in that way. But for those who come on board and those who are willing to provide the information they understand it’s a process of building up and it’s a process also of getting repeat donations and building relationships with the donors. That is where the value is in the long run, not immediately getting a lot of donations.

Salaam Gateway: Before we go on to what you're going to do this year in terms of expansion and achieving a lot more scale, I remember last year you telling us that you charge five percent plus two and a half percent. Is this still applicable or have new charges been added?

Umar Munshi: It’s still applicable and it’s still the same.

Salaam Gateway: So tell us again what the 5 percent is and what the 2.5 percent is.

Umar Munshi: In total it's 7.5% that we charge to the project owner or the charity partner. There's two aspects to it in terms of the breakdown of the 7.5%.

The first portion, 5% is for usage of the platform, which is more of the technology, their microsite or their profile site, getting their data, curating data, creating media for them and then putting the campaign out there as well as marketing the campaign, to some extent, organically on our side. That’s for the 5 percent basically crowdfunding to raise funds.

And the 2.5% is for ongoing commitment or ongoing efforts, which is mainly working with them to get reports and from there, trying to measure the impact, although right now, we're not reporting on the impact in a structured way. We work closely with them, we also go on site visits where suitable or where possible, if it's in Malaysia or in Southeast Asia. We even went to a site visit to Africa last year. So all of that is not at the beneficiaries’ cost and is part of the ongoing expansion or development of our relationship with them and the donors supporting them.

So those are the two aspects why we have this two fees and so far the feedback has been positive, the charity partners are happy and willing to have fees given to us, although of course the lower the better and we also want to reduce it over time. But at this stage, to be very candid, platforms like us need a few years before we can breakeven so right now we still have to spend and subsidise the business operations and growth but eventually we need to be sustainable. So at this point having the 7.5% works for both sides.

Salaam Gateway: So on to the point of what's happening this year and what you just said that platforms like yours, and I think you mean by that Ethis, you're still subsidising Global Sadaqah. How has the team worked and how will it expand to push more work for this year to be able to onboard more companies and more beneficiaries?

Umar Munshi: Last year, our growth was good overall, not incredibly fast or not booming in that sense, but that’s because, also, we are learning as we go and we are adjusting as we go especially in our relationships with the different Islamic economy stakeholders, and the charity ecosystem. So that is still ongoing. Everything is not set in place in an ideal manner yet, it’s still a work in progress and it will take many years to reach the ideal situation. So the focus has been on building up our infrastructure last year while also achieving some growth.

This year, we're going to push on both sides, which is infrastructure continuing on infrastructure, as well as definitely pushing on growth.

For growth, maybe I can put it this way - last year, we limited the scope of, especially, the number of corporate donors that we want to work with because we need to learn from the first time. This year, we want to have, and we already have access to quite a number of other corporates. So that is the driver of our growth this year, having more corporates, because that automatically brings more funds through our ecosystem and that also will then result in more of the public being engaged because there's more marketing and there's more exposure.

So that’s one aspect of it and the other part, which is, I think, very interesting and a huge opportunity for us as well as for our partners, what I mean is to have collaborative partnerships with other tech companies or even traditional brick and mortar businesses.

For example, our main running partnership is with Salam Web which you’ve probably heard of. They have a simple widget with some form of gamification feature, that the more you use Salam Web the more donations will be given by Salam Web to a campaign and that campaign currently is hosted on or is with Global Sadaqah.

What we're looking at is to work with other apps, work with other technology companies so that we can also partner with them where we can have a feature for their users to also give donations or for this kind of arrangement like with Salam Web.

Salaam Gateway: Before we let you go, Ramadan is coming up really soon. What's in store on Global Sadaqah for Ramadan? Is there going to be a lot more campaigns or are you going to push more marketing to get more people involved in giving zakat and sadaqah?

Umar Munshi: For this Ramadan, we have three areas of focus. One area is, this is very high demand every year, Muslims want to give to mosques during Ramadan especially development of new mosques, especially if it's a waqf. So we have a few waqf … for mosques that are being developed in various countries from Nigeria to Indonesia to Singapore that we plan to feature and list on our platform so that Muslims can donate and give waqf during Ramadan. That’s the first one.

Second one is another favorite donation type in Ramadan, which is to donate for iftar for the break fast. We believe that if you were to help, give someone food for iftar, then whatever hasanah or whatever reward that person got for his fast will also be clocked in on our side, right? So that’s something that we’re working on also, to give iftar to different communities whether it's low-income people or even refugees, we will have these kinds of campaigns in sha Allah.

The third focus, actually, this is in line with our corporate, one of our corporate partners, which is Alliance Islamic Bank, they have a very good programme with one of the main national foundations here in Malaysia, to support single moms who are in a difficult position because of bad past, bad marriage that did not work out or other family conditions or situation, sickness, illness and so on, that put them in a difficult position. So this is something that is, developing people who are at risk, who are facing challenges because most of the campaigns involve empowering them by helping them set up small businesses or providing, for example, inventory for an existing small business.

Salaam Gateway: So we'll keep our eyes and ears open and looking forward to Ramadan on Global Sadaqah. Thank you, Umar.

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