Islamic investment principles do not typically come to mind for a donor advised fund (DAF), the special purpose US charitable entity that takes full ownership of and manages donated assets while the contributor gets tax benefits plus more.
“Many donors, especially Muslims, worry about the lack of control over charitable distributions once their assets are handed over to the DAF,” said Muhi Khwaja, the co-founder and chief development officer at the American Muslim Community Foundation (AMCF).
“Because legal title has passed, the DAF can channel funds to causes that donors don’t or won’t support and there have been instances of such abuse. That’s why we set up AMCF, for Muslim donors to be assured their assets will be both managed and distributed in a Halal manner.”
Keeping to its community focus, the Shariah compliant asset management at AMCF involves only six volunteers — inclusive of Muhi. The others are Operations Director Shatila Sago-Hart, Nonprofits Director Ola Mohamed, Giving Circle Fellow Shazeen Mufti, Marketing Fellow Crystal Habib and Accountant Akshaya Nair.
These volunteers each put in about 20 hours weekly to AMCF and Muhi says fees charged for asset management, capped at US$125 annually, barely cover staffing costs. He said fundraising activities and other donations make up the difference.
“We are lucky that much of assets donated is cash, with some cryptocurrency. All of this is invested in various Shariah compliant Amana mutual funds handled by Saturna Capital, depending on the risk preference of donors,” Muhi told IFN Investor.
“We give the donors regular investment performance reports plus how proceeds are being distributed to the charities they have designated. These charities also get details of the donations, unless there are specific requests for anonymity.”
Having worked in nonprofits since 2009, and also at other Muslim-led institutions, Muhi used his experience to set up AMCF as the first Muslim DAF in 2017. AMCF started with just four donors in the first year, but its assets under management (AuM) had grown to over US$9 million this year.
The growth was largely fueled by word-of-mouth recommendations and talks conducted at mosques all over the US. “We have since been trusted with mosque endowments and assets from giving circles (pooled funds) to manage.”
Muhi explained AMCF’s DAF services helped donors beyond tax benefits by focusing on growing the assets while giving flexibility to distribute funds to charities chosen by donors on preferred schedules. “Contrary to what some may assume, AMCF distributions mainly go to nonprofits operating to help needy Americans here in the US. This is a very Muslim outreach for the benefit of Americans of all faiths.”
