A California-based Islamic estate planning attorney who scrutinizes the operations of Muslim nonprofits in the United States has challenged the administrative practices of a prominent Muslim charity in America. The charity itself has posted responses to the allegations on its website without citing the attorney by name.
Ahmed Shaikh recently raised concerns about Islamic Relief USA’s zakat practices. Linked to the Muslim Brotherhood, the Virginia-based IRUSA is one of the most influential Islamic charities in the U.S.
IRUSA tax documents report the organization generated $110 million in revenue for 2020. The organization is an affiliate of Islamic Relief Worldwide (IRW), a charity headquartered in Birmingham, England with a troubling history.
In 2014, the Israeli government banned IRW from operating in the West Bank, declaring it provided support to Hamas, a terrorist organization. In 2015, HSBC stopped doing business with IRW over fears of its funds being diverted to support terrorism. IRW stated that HSBC’s decision was the result of “generic risk-averse behavior rather than something specific to Islamic Relief.”
In 2020, five years after HSBC severed ties with IRW, the organization’s entire board resigned after a researcher discovered antisemitic statements posted online by one of its members. That same year, the Office of the Special Envoy to Monitor and Combat Anti-Semitism condemned the organization. The special envoy stated its “record of anti-Semitism presents a significant issue for all donors and donor countries to IRW. The consistent pattern of spreading the most vile anti-Semitic vitriol by IRW’s leadership causes us to question the core values of the organization.”
Shaikh, who has written numerous articles for Muslim Matters, a prominent publication catering to Muslims in the U.S., did not address IRW’s alleged ties to extremism, but wrote instead about how IRUSA communicates with its donors about its administrative and fundraising expenses.
He reported that IRUSA claims that no more than 12.5% of every zakat donation goes to administrative and operational functions. But according to a former IRUSA employee who spoke with Shaikh, the charity spends more than twice as much on these functions.
Zakat is the third pillar of Islam and an essential obligation. Zakat donations, which typically amount to 2.5 percent of a donor’s wealth, are usually distributed to the poor and needy although there are additional categories of eligible recipients. Recent disputes over zakat have often focused on donations used “in the path of God” [fi sabilillah]. In 2019, Shaikh warned about “the self-serving desire by corporations” to turn fi sabilillah “into a wastebasket Zakat category.”
The thrust of Shaikh’s latest piece is that IRUSA needs to do a better job of telling its supporters exactly how much of their zakat donations are used to cover the organization’s administrative and fundraising expenses.
“Muslims have a choice where to donate zakat,” Shaikh wrote. “If their dollars don’t go especially far with one organization, they may choose to donate to an organization where their charitable dollar goes further.”
The former IRUSA employee allegedly told Shaikh that while he was instructed to tell donors that the administrative cost was 14 percent of their zakat donations, “he was horrified to learn that a $65 monthly donation he solicited from donors (which was earmarked as zakat) resulted only in $30 for the orphan [in refugee camps] (effectively 54 percent in administrative and marketing costs).” Shaikh writes that “this was conscience-shocking to the former employee because he felt he was misleading donors and shorting actual orphans in poverty-stricken places.”
And as Shaikh explains, “IRUSA’s expenses claim of 12.5 percent does not add up based on figures they have provided themselves” in tax documents.
Shaikh reports that IRUSA “considers fundraising expenses [including salaries and advertising] as collection of zakat” but does not provide information about these expenses to its donors.
“I would like to see a written detailed zakat policy from the organization on what line items are appropriate for zakat and what is inappropriate,” he wrote. “Unfortunately, the organization was unable to provide this, if any such document exists. Unfortunately, this is common. Organizations collect millions of dollars in Zakat from the community but don’t have any written policies on how the funds are handled, at least none they can share. In my view, this is inexcusable and an indicator of unseriousness.”
Shaikh also said that the value of zakat donations sent to IRUSA could be further reduced when these funds are sent to IRW in England. IRUSA, Shaikh wrote, engages in poetic license when it “refers to what it describes as ‘its offices and programs overseas.’”
IRUSA has no offices or programs outside the United States,” Shaikh writes. “Islamic Relief Worldwide (IRW), the UK based organization, does. This would not make too much of a difference if the organizations operated in a unified way and administrative costs for IRUSA and IRW were tallied together, but that is simply not the case. IRUSA gives IRW grants, indeed it was IRW’s largest contributor.”
The result, Shaikh reports, is that not only are IRUSA’s administrative expenses deducted from zakat donations from its American donors, but so are IRW’s expenses.
“But just adding the costs together gets us from 44 to 53 cents on the dollar going to administration, “Shaikh wrote. “While that is enormous, it is more than likely the overall costs are higher, since IRW does use partner organizations to distribute aid, and they will tack on overhead undisclosed to the donor.”
IRUSA has received positive ratings from Charity Navigator, but another nonprofit watchdog, CharityWatch, has stated it cannot determine how much of the money it collects is actually spent on programs in the field because much of the money it gathers is sent to IRW in England and that CharityWatch’s work is limited to assessing how much it costs for IRUSA to raise funds in the U.S., not assessing how efficiently the money is used overseas.
CharityWatch’s website states it “has contacted Islamic Relief more than ten times since 2006 via phone, U.S. mail, certified letter, and e-mail with our questions about its financial reporting. The charity has rarely responded, and when it has, its responses did not include answers to our questions.”
IRUSA’s Responds on Website
IRUSA did not respond to FWI inquiries about Shaikh’s article which was posted on April 4, 2022, on the third day of Ramadan. But an undated FAQ page on the organization’s website seems to address Shaikh’s concerns about IRW expenses covered by zakat donations to IRUSA. The page asks, “Is it true that IRUSA’s and IRW’s administrative fees together amount to 44 to 53 cents per dollar?”
The response states that “The majority of our international projects are implemented through Islamic Relief Worldwide” and that “additional fees” may be applied by IRW and other IRUSA partners to cover administrative costs but that these costs “do not exceed 7% of the project’s total expenditure.”
Former employees of the organization apparently came to the organization’s defense in the comment section under Shaikh’s article.
“Omar,” who presented himself as a former employee of IRUSA, argued that it would be “better” for IRUSA to spend zakat donations “on a lunch [to convince] a member of congress to give an extra $100k to Syrian relief efforts” rather than spend the money directly on feeding families. Shaikh replied that “If IRUSA is using Zakat to dine politicians, that would be a scandal unto itself.”
Last year, Islamist cleric Abu Eesa warned that many charities were adopting an overly flexible view of zakat as this allows them to “cover all projects without the headache of the restrictions of Zakat” and “win PR points with governments and society in general for their charity as now they can use Zakat funds locally for all kinds of random things.”
Eesa declared that if Islamic charities were more transparent, they would be amazed at how much support they would garner “even if they [had] high running costs.”
In a recent video, IRUSA stated that its zakat program “complies with strict sharia guidelines, [is] endorsed by qualified scholars, and it only goes to eligible rights holders.”
Neither IRW nor IRUSA responded to queries from FWI.