PWF Zakah Policy

Progressive Welfare Foundation

Riba Policy

Charity Name:             Progressive Welfare Foundation

Charity Number:         1190076

Version Number:         1

Last updated:              April 2023 

Objective

The objective of this Riba Policy document is to outline how PWF views and deploys Riba donations received. We hope that in future no riba is generated which would negate to need for such a policy, but in the meantime whilst there is riba we want to facilitate a charitable means of cleansing it for donors.

Riba-donations

Riba (usury/interest) is a major sin in Islam and is haram (forbidden). 

"O those who believe; fear Allah and give up what still remains of the Riba if you are believers. But if you do not do so, then be warned of war from Allah and His Messenger. If you repent even now, you have the right of the return of your principal; neither will you do wrong nor will you be wronged."

Surah Al Baqarah 2:278-9

Any haram income (including Riba) must be given to charity as a means of purifying the rest of one’s wealth. Our charity will accept Riba donations as a means of cleansing the wealth of the donor. It will only be used for specific purposes as outlined in this policy.

Our view - Overheads and Beneficiaries

As riba is a social harm the most appropriate use is to combat social harams or to benefit society at large.

Riba donations will be used by our charity for the following purposes only.

Organisation Admin costs

• Payroll & general taxes

• Business rates

• Utilities & rent

Beneficiaries in the following situations

• Emergency situations (e.g. earthquakes, floods, refugees etc.)

• Infrastructure (e.g. roads, sewage, water plants, electricity, gas, broadband, development of communal spaces etc.)

• Combating social harms (e.g. domestic/drugs/alcohol/sexual abuse, modern day slavery, indebtedness/bankruptcy etc.)

Riba will NOT be used for any ibadah purposes (e.g. masjids or Islamic education) nor for the net wages received by any Muslim employee.

Riba Officer

PWF will designate a specific person as the Riba Officer. The scope and responsibilities of the Riba Officer is outlined in a separate Riba Officer Role Description document.

Shariah Advisor

PWF will appoint annually, and normally for a minimum of three years, a shariah advisor to review and audit it’s Riba policy, procedures and practices. Details of the scope of such engagement will be outlined in a separate Shariah Advice engagement letter. The role of the Shariah Advisor is outlined in a separate Shariah Advisor Role Description document.

Board of Trustees

The Board of Trustees will be responsible for approving this Riba policy on an annual basis. PWF is committed to educating and upskilling current and prospective trustees on all matters of Riba policy and procedure to provide confidence to donors around competent governance and oversight processes.

Transparency

PWF is committed to transparency by making its Riba policy available online on its website. Consumer friendly FAQs will also be on the website to communicate how the policy is translated into practice.

Education

PWF is committed to increasing Riba education amongst its personnel, key management, volunteers, trustees and donors by generating and/or linking to Islamic teachings on its website and/or holding webinars/seminars/training sessions.

Charity Name:             Progressive Welfare Foundation

Charity Number:         1190076

Version Number:         1

Last updated:              April 2023 

Objective

The objective of this Riba-free Policy document is to outline how PWF manages its bank accounts and transactions to avoid generating riba and, if it is generated, how to minimise its effect.

Riba-free banking

Riba (usury/interest) is a major sin in Islam and is haram (forbidden). 

"O those who believe; fear Allah and give up what still remains of the Riba if you are believers. But if you do not do so, then be warned of war from Allah and His Messenger. If you repent even now, you have the right of the return of your principal; neither will you do wrong nor will you be wronged."

Surah Al Baqarah 2:278-9

The charity supports the development of riba-free financial services by adopting riba-free Islamic bank accounts (where possible) and communicating to conventional bank account providers our aspiration for a riba-free banking solution (so they can direct us to any Islamic banking windows they may have within their organisation). 

Our view

We will aim to operate a riba-free Islamic bank account but unfortunately there is not currently an Islamic bank that is accepting charities & masjids (as of 3-March-2022). We will continue to pressurise Islamic banks to provide riba-free banking services for masjids & charities.

Where we use conventional bank accounts preference will be given to the banking needs of our charity and the ethical positioning of the bank in question.

Conventional banks will be communicated our preference for a riba-free banking option. We will move to that Islamic window if one is established/exists at the bank.

Conventional banks will NOT be asked to “not pay interest on our bank accounts” because in reality interest is generated from all deposits whether we accept it or not, and by not accepting the interest more interest is left to increase in the system. Instead, the charity will request the conventional bank to keep any interest due separate so it can be conveniently ‘cleansed’ from the charity's bank accounts and allocated (alongside Riba-donations received) to a Riba fund account.

Riba Officer

PWF will designate a specific person as the Riba Officer. The scope and responsibilities of the Riba Officer is outlined in a separate Riba Officer Role Description document.

Shariah Advisor

PWF will appoint annually, and normally for a minimum of three years, a shariah advisor to review and audit it’s Riba policy, procedures and practices. Details of the scope of such engagement will be outlined in a separate Shariah Advice engagement letter. The role of the Shariah Advisor is outlined in a separate Shariah Advisor Role Description document.

Board of Trustees

The Board of Trustees will be responsible for approving this Riba-free banking policy on an annual basis. PWF is committed to educating and upskilling current and prospective trustees on all matters of Riba policy and procedure to provide confidence to donors around competent governance and oversight processes.

Transparency

PWF is committed to transparency by making its Riba-free banking policy available online on its website. Consumer friendly FAQs will also be on the website to communicate how the policy is translated into practice.

Education

PWF is committed to increasing Riba education amongst its personnel, key management, volunteers, trustees and donors by generating and/or linking to Islamic teachings on its website and/or holding webinars/seminars/training sessions.

Bankers

This policy, and any updated policy, is to be sent to the relationship managers of all banks (Islamic or conventional) the charity uses so that the banks understand to keep riba income separate (if conventional) and easily identifiable and so that they may be able to advise of more suitable banking arrangements in future that meet the letter and spirit of this policy.

Financial Reporting

This policy, and any updated policy, is to be forwarded to the charity’s auditors (or independent examiner or book-keeper as appropriate) so Riba-free financial income and expenditure can be properly and separately reported in annual financial statements from interest transactions. The riba-free policy should also be explained under the ‘Accounting policies’ section. The terms ‘riba-free income’ or ‘riba-free expenditure’ shall be used under the Financial Income & Expenditure line before tax on the P&L. Similar wording shall be used on the Balance Sheet, Cash Flow Statement and notes to the accounts. 

Owner

Awal Fuseini/ Zakah Officer

Date Created:

April 2023

Last Updated:

April 2023

Date of next review:

+ 12 months

1. Summary

Progressive Welfare Foundation (the “Organisation”) is a UK registered charity dedicated to advancing education, healthcare, animal welfare and other social interventions.

As well as crowdfunding as the Organisation’s main source of income, both restricted and unrestricted, donations of zakah funds is also a source of income.

This policy document summarises the Organisation’s approach to receipt, management and deployment of zakah funds based on the advice of Shariah advisors. This policy shall be reviewed by the trustees and updated as required at least annually. 

2. Definitions

• Organisation – Progressive Welfare Foundation

• Zakah policy – outlines approach to collecting, managing and deploying of Zakah funds. 

• Financial controller – individuals assigned the responsibility of overseeing and implementing the measures outlined in this policy document.

• Shariah advisor – Islamic scholar(s) qualified to provide advise on Islamic finance matters such as zakah and riba  

3. Zakat Policy – Policy Statements

The Organisation will:

• Overall: Be committed to collecting, managing and deploying zakah funds with the utmost care and due diligence and in-line with expert advice received from professional, experienced and credible Islamic Shariah Advisors.

• Collecting: Clearly label zakah-related donation options as zakah in all fundraising communications and assets to ensure clarity and respond to any clarification queries received promptly to avoid ambiguity 

• Managing: Ensure financial accounts explicitly track zakah-related funds raised as a separate line item(s) to avoid ambiguity with other income sources

• Managing: Ensure zakah donations collected are spent within 12 months of its receipt, and to explicitly communicate to the donor if this is not possible.

• Deploying: Only use zakah-related funds for the expenditure of the following projects which qualify as zakah-eligible as advised by Islamic Shariah Advisors: 1) [Name of Project 1] and 2) [Name of Project 2]. General overhead costs of the Organisation shall not be considered zakah-eligible, however the proportion of overhead costs associated with the expenditure of above-named projects shall be considered zakah-eligible as this represents an essential component of project delivery.

4. Accountable and Responsible Person(s)

The owner and person accountable for this policy shall be the Awal Fuseini, who is also the Chair of the trustees

• Chair of trustees:  Awal Fuseini– charity.pwf@outlook.com

The employee / person responsible for the implementation of this policy on a day-to-day basis shall be:

• Mohammed Awal Abubakari

5. Shariah Advisors

In the formulation of this policy and matters relating to its implementation, the Organisation shall seek guidance and advice from professional, experienced and credible Islamic scholars who are knowledgeable in the fields of shariah and Islamic finance.

The Organisation currently consults the following Shariah Advisors, and their biographies and contact details are provided below. The range and type of Shariah Advisors shall be continuously reviewed as the needs of the Organisation changes.

Mohammed Tajudeen

Mohammed Awal Abubakari