The important role of charitable organizations
It is often mistakenly believed that charitable organizations and their volunteer activities are unimportant and of little consequence to a country’s economic system, but nothing could be further from the truth.
In reality, charitable activities make a vital contribution to the economic, social and political sectors of a nation.
In fact, the role of charitable organizations and volunteer work is no less important than the roles of the public and private sectors.
Charities provide essential services that positively impact the lives of citizens, such as building hospitals, schools, orphanages and religious centers.
Secondly, charitable organizations are a vital partner to the government in many aspects, including personal empowerment and training, fighting poverty, combating social diseases such as drug abuse, and attempting to narrow the deep divide between the rich and poor.
Charitable and volunteer work is also the safety valve and supporting pillar for a country’s security due to the preventive roles it plays, especially in fighting extremism, radicalism and criminal acts against humanity.
Such work is especially targeted at those who are particularly vulnerable to crime owing to their poverty and harsh conditions.
In addition to their social role, charities are also an investment. As such they require professional management and administrative organization that are governed by corporate governance.
There are three main obligations — economic, political, and social responsibility. Thus, charities — like private companies — must comply with corporate governance in terms of professionalism, good management, performance and management evaluation, accountability and transparency in all activities.
Many developed countries such as the United Kingdom have begun to promote charities to relieve the government of some of its heavy financial obligations. Thus, the British government has sought to partner with charities to meet common economic and social goals in terms of unemployment, security, poverty, drugs, and other important issues.
British Prime Minister David Cameron’s speech, on July 19, 2010, two months after his election, was reflective of how fully he had embraced this approach pointing out the huge financial responsibility on the government, he feared that it was in danger of failing to fulfill its obligation to provide important social services.
He, therefore, called on British citizens to support charities and get involved in volunteer work to address these social obligations.
Prime Minister Cameron called his speech “Big Society and Volunteer Work,” which discussed issues such as unemployment, security, fighting poverty, social equality, and other economic and social issues.
He even stated that the role of the government should facilitate charity organizations and volunteer work and do everything possible to free them from bureaucracy and centralized decisions.
However, it is an uphill task and the struggle of charities to partner globally with governments is well documented.
One of the worst was after Sept. 11, 2001 when the US government adopted the Patriot Act.
The law was initially designed to fight terrorism and money laundering by imposing many financial restrictions on banking.
But it has taken the unpleasant form of “Know your Client” to list those suspected of financing terrorism (OFAC list).
Although some charities may not adhere to the goals of promoting political, social and economic benefits and may engage in wrongful activities, the vast majority of charitable organizations operate in good faith and within the law.
A few bad elements have sullied the reputation of many extremely worthwhile charities and created an environment of apprehension, suspicion, illegitimacy, causing a lack of public confidence.
Sometimes, it has gone so far as to allege treason and expose banking institutions and prominent individuals to lawsuits or for being on the OFAC list.
Some people working for international charities have been accused of aiding terrorist activities.
Sometimes, countries and dictators use what is called “government terrorism against the volunteers who work in charity organizations” as an excuse to isolate, intimidate, terrorize, frighten, and attack their opponents. Is it any wonder then that those who work for charitable organizations feel persecuted under terrorist laws like the Patriot Act? Unfortunately, the international media further contributes to this by confusing well-meaning individuals who then become reluctant to financially support dubious charities.
Another problem is the incidence of bad management and financial and administrative corruption in some charities. This has caused many to question the credibility of charitable work and its management.
The western media have exposed this corruption where leaders of certain charities siphon off 80 percent of the contributions received from donors when overheads should be more in the range of 12 percent of the gross income.
Favoritism and other aspects of administrative corruption lead to suspicion among potential contributors and volunteers, ensuing in a complete loss of faith in some charities.
To avoid this, charities must view their donors and volunteers as a company views its stockholders. Ethical codes, professionalism, and corporate governance should govern charitable activities.
Charitable work should fulfill its obligation within the framework of transparency, compliance with society, the economy, and government.
What’s more, charities should be able to work autonomously without direct governmental involvement.
The role of the government should be to simply support those persons who are involved in charitable work and defend them internationally.
The government should also develop the sector as a vital and international sector and as a partner in sustainable domestic development.
In some countries, charities have lobbying functions and considerable international influence, such as the Bill and Melinda Gates Foundation and the Clinton Global Initiative.
Charitable and volunteer work is particularly relevant to this part of the world as charity lies at the heart of Islam. As Muslims, we believe that charitable works are just like exchanging trade with Almighty Allah. The Holy Qur’an says, “Who is he that will lend to Allah a goodly loan so that He may multiply it to him many times? And it is Allah that decreases or increases (your provisions), and unto Him you shall return.” Al-Bakara: 245. The human soul is very precious, and the Qur’an states, “Who saves the life of one, it shall be as if he had saved the life of all mankind.” Therefore, we should encourage charitable work among our family and friends. This encompasses many activities, both big and small, including smiles, social services, caring for the elderly, the environment, animals and endowments for the sake of Allah. These activities must be an important part of our culture and included in the educational curriculums at all grade levels.
Further, it should be mandatory for our male and female students to complete a certain number of hours in community service in order to graduate from high school or university.
We can be proud that Saudi Arabia already spends 5 percent of its GDP on charitable works, higher than many developed countries like the US, which spend only 2 percent of its GDP on charitable activities.
We must build on this progress by encouraging complete transparency and greater accountability regarding the revenue received and spent by charities, removing bureaucracy, which governs the licensing of charitable activities, and providing legal protection for volunteers.
All charitable work should be governed by local corporate governance and within the framework of religious rulings with the additional onus of individual responsibility for developing, improving, and enhancing the work of charities.
— Sami Al-Nwaisir is a financial economics expert and chairman of Al-Sami Holding Group. Sami@alsamigroup.com
Sami Al-Nwaisir
Published — Thursday 3 May 2012
Thu, 2012-05-03 00:08
In reality, charitable activities make a vital contribution to the economic, social and political sectors of a nation.
In fact, the role of charitable organizations and volunteer work is no less important than the roles of the public and private sectors.
Charities provide essential services that positively impact the lives of citizens, such as building hospitals, schools, orphanages and religious centers.
Secondly, charitable organizations are a vital partner to the government in many aspects, including personal empowerment and training, fighting poverty, combating social diseases such as drug abuse, and attempting to narrow the deep divide between the rich and poor.
Charitable and volunteer work is also the safety valve and supporting pillar for a country’s security due to the preventive roles it plays, especially in fighting extremism, radicalism and criminal acts against humanity.
Such work is especially targeted at those who are particularly vulnerable to crime owing to their poverty and harsh conditions.
In addition to their social role, charities are also an investment. As such they require professional management and administrative organization that are governed by corporate governance.
There are three main obligations — economic, political, and social responsibility. Thus, charities — like private companies — must comply with corporate governance in terms of professionalism, good management, performance and management evaluation, accountability and transparency in all activities.
Many developed countries such as the United Kingdom have begun to promote charities to relieve the government of some of its heavy financial obligations. Thus, the British government has sought to partner with charities to meet common economic and social goals in terms of unemployment, security, poverty, drugs, and other important issues.
British Prime Minister David Cameron’s speech, on July 19, 2010, two months after his election, was reflective of how fully he had embraced this approach pointing out the huge financial responsibility on the government, he feared that it was in danger of failing to fulfill its obligation to provide important social services.
He, therefore, called on British citizens to support charities and get involved in volunteer work to address these social obligations.
Prime Minister Cameron called his speech “Big Society and Volunteer Work,” which discussed issues such as unemployment, security, fighting poverty, social equality, and other economic and social issues.
He even stated that the role of the government should facilitate charity organizations and volunteer work and do everything possible to free them from bureaucracy and centralized decisions.
However, it is an uphill task and the struggle of charities to partner globally with governments is well documented.
One of the worst was after Sept. 11, 2001 when the US government adopted the Patriot Act.
The law was initially designed to fight terrorism and money laundering by imposing many financial restrictions on banking.
But it has taken the unpleasant form of “Know your Client” to list those suspected of financing terrorism (OFAC list).
Although some charities may not adhere to the goals of promoting political, social and economic benefits and may engage in wrongful activities, the vast majority of charitable organizations operate in good faith and within the law.
A few bad elements have sullied the reputation of many extremely worthwhile charities and created an environment of apprehension, suspicion, illegitimacy, causing a lack of public confidence.
Sometimes, it has gone so far as to allege treason and expose banking institutions and prominent individuals to lawsuits or for being on the OFAC list.
Some people working for international charities have been accused of aiding terrorist activities.
Sometimes, countries and dictators use what is called “government terrorism against the volunteers who work in charity organizations” as an excuse to isolate, intimidate, terrorize, frighten, and attack their opponents. Is it any wonder then that those who work for charitable organizations feel persecuted under terrorist laws like the Patriot Act? Unfortunately, the international media further contributes to this by confusing well-meaning individuals who then become reluctant to financially support dubious charities.
Another problem is the incidence of bad management and financial and administrative corruption in some charities. This has caused many to question the credibility of charitable work and its management.
The western media have exposed this corruption where leaders of certain charities siphon off 80 percent of the contributions received from donors when overheads should be more in the range of 12 percent of the gross income.
Favoritism and other aspects of administrative corruption lead to suspicion among potential contributors and volunteers, ensuing in a complete loss of faith in some charities.
To avoid this, charities must view their donors and volunteers as a company views its stockholders. Ethical codes, professionalism, and corporate governance should govern charitable activities.
Charitable work should fulfill its obligation within the framework of transparency, compliance with society, the economy, and government.
What’s more, charities should be able to work autonomously without direct governmental involvement.
The role of the government should be to simply support those persons who are involved in charitable work and defend them internationally.
The government should also develop the sector as a vital and international sector and as a partner in sustainable domestic development.
In some countries, charities have lobbying functions and considerable international influence, such as the Bill and Melinda Gates Foundation and the Clinton Global Initiative.
Charitable and volunteer work is particularly relevant to this part of the world as charity lies at the heart of Islam. As Muslims, we believe that charitable works are just like exchanging trade with Almighty Allah. The Holy Qur’an says, “Who is he that will lend to Allah a goodly loan so that He may multiply it to him many times? And it is Allah that decreases or increases (your provisions), and unto Him you shall return.” Al-Bakara: 245. The human soul is very precious, and the Qur’an states, “Who saves the life of one, it shall be as if he had saved the life of all mankind.” Therefore, we should encourage charitable work among our family and friends. This encompasses many activities, both big and small, including smiles, social services, caring for the elderly, the environment, animals and endowments for the sake of Allah. These activities must be an important part of our culture and included in the educational curriculums at all grade levels.
Further, it should be mandatory for our male and female students to complete a certain number of hours in community service in order to graduate from high school or university.
We can be proud that Saudi Arabia already spends 5 percent of its GDP on charitable works, higher than many developed countries like the US, which spend only 2 percent of its GDP on charitable activities.
We must build on this progress by encouraging complete transparency and greater accountability regarding the revenue received and spent by charities, removing bureaucracy, which governs the licensing of charitable activities, and providing legal protection for volunteers.
All charitable work should be governed by local corporate governance and within the framework of religious rulings with the additional onus of individual responsibility for developing, improving, and enhancing the work of charities.
— Sami Al-Nwaisir is a financial economics expert and chairman of Al-Sami Holding Group. Sami@alsamigroup.com
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