For a Good Cause

Humayon Dar, CEO of BMB Islamic UK, shares his thoughts with RAHAYU MUSA KAMAL on how parent BMB Group balances faith and finance in its role as the co-manager of the newly announced Global Zakat and Charity Fund.

Self-made American billionaire Warren Buffett, who handed over US$30 billion to the Bill and Melinda Gates Foundation, reportedly said it takes a different skill set to give away money efficiently than it does to accumulate it. It therefore follows that if successful philanthropy requires the correct expertise, then the International Zakat Organization (IZO) was on the right track when it mandated the BMB Group to co-manage the Global Zakat and Charity Fund.

The IZO, a charitable body of the Organization of the Islamic Conference (OIC), will oversee the management of the fund by the BMB Group, a prestigious global asset management and financial services firm. As part of the initiative, the BMB Group will set up an Islamic asset management company in Malaysia, to be launched in August.

Humayon Dar, CEO of BMB Islamic UK, a unit of BMB Group, described the setting up of the Global Zakat and Charity Fund as the beginning of a new Islamic financial trend which favors social responsibility and community development. “Islamic financial institutions need to differentiate themselves from conventional players and one way to do that is by showing their commitment to the community. At BMB Group, we feel that the Global Zakat and Charity Fund is an avenue for us to connect with the global community,” he commented.

Humayon added that the current financial turmoil has highlighted the need for Islamic financial institutions to further differentiate themselves from the rest of the pack in the financial world and show their commitment to the communities they are serving. BMB Group’s participation in the IZO fund is its first association with an international non-profit organization and its new global charitable initiative promises to be the largest in the Islamic world.

On its part, BMB Islamic provides what it describes as “cutting-edge” Shariah advisory services, and together with parent company, BMB Group, is said to be well placed to ensure that the fund is run along professional and spiritual lines. However, there are critics who say that faith and finance do not go together and profit is key. Humayon disagrees with the notion.

“You need to look at the big picture. I believe that customers, if given a choice, would pick an efficient Islamic bank involved in community and charity work over another equally efficient bank which does not have the community’s interests on its agenda,” said Humayon. “By carrying out charitable activities and serving the community, a lender will have the opportunity to increase its market share, over time.”

“At BMB, we believe that if we can demonstrate that we are socially responsible, and are committed to the concept of poverty alleviation through the Global Zakat and Charity Fund, it will definitely have a positive impact on all our related businesses,” he added. Humayon also hopes that other Islamic financial institutions will take its cue from BMB Group and maybe emulate what it is doing by being involved in other socially responsible initiatives. “The fund will invest along an agenda determined by social responsibility that requires every person to help his neighbor. We are also engaging in the highest level of due diligence and governance to ensure that the deployment of our funds do not advance the causes of organizations that do not promote peace and tolerance,” Humayon had said in an earlier interview.

No leakage of funds
According to Humayon, the funds will be collected from Muslim sources in different parts of the world, both on the government and private sector levels. Both the BMB Group and IZO will work jointly to raise the money from the 57 member countries of the OIC. BMB will, in turn, run the fund on a professional asset management basis, while IZO will serve as an advisory role to ensure that the investments remain in line with the objectives and principles of Zakat.

Humayon also believes that with better regulation and professional management, leakage of the Global Zakat and Charity Fund, in terms of collection as well as disbursement, will be minimized. He added that the people he has spoken to about the fund —regardless of whether they are with Islamic banks or conventional banks — have shown a great deal of enthusiasm as the concept is very much in line with the notion of corporate social responsibility (CSR).
The launch date of the Global Zakat and Charity Fund in August, to coincide with Ramadan, will add more meaning to the initiative, said Humayon. This is because Ramadan, which marks the fasting month, is when Muslims are required to pay the Zakat (or obligatory alms) to the state for distribution among the needy. “About 40% of the 957 million people in the OIC countries live in absolute poverty,” said Humayon. The Global Zakat and Charity Fund, which will finance various causes in the world, aims to raise US$750 million within the first year, and increase the figure to over US$3 billion once commitments from the various OIC countries are realized.

The launch of the fund is also significant as it is the first time that the OIC has agreed on a common initiative to uphold and focus on Zakat, the third of the five pillars of Islam. Humayon added that the announcement is timely as the world experiences one of the worst financial crises in memory. He noted that the global Zakat collection, so far, by governments as well as non-governmental organizations has not been efficient or effective. “This was one of the reasons why the Global Zakat and Charity Fund was set up.

It would improve the efficiency of the Zakat collection, its management and disbursement,” he said. So, to critics who say that an organization cannot reconcile faith and finance, the BMB Group is all set to prove them wrong as it embarks on its mission to manage a billion-dollar fund and give away money in a businesslike manner.