Charity in Reducing Poverty and Income Gap | 2018-01-18 |

Charity in Reducing Poverty and Income Gap

Noore Alam Siddiqui     18th January, 2018 09:57:51 printer

Charity in Reducing Poverty and Income Gap

As a rational being, a human being always comes forward to help their relatives, friends, neighbours or even strangers who are comparatively unfortunate, in a trouble or in a state of helplessness. This is one of the basic human instincts.

This is also universal that charity begins at home. But how much that charity is being done in this 21st century? Today’s world is very much fast, self-centred, individualistic and materialistic. Combined family is being fully replaced by nucleus family. In many cases the rich members of a family are doing nothing or very little to reduce the hardships or poverty of their isolated family members and even they keep their parents in the old home. At the same time social unity, justice and values have also become very much vulnerable. The idea of leadership has been changed and loyalty to the leaders is not being well-practised. Obedience, love, compassion are shown due to personal interest and fear but not simply from the core of mind or free from any personal interest, fear or state of being biased.


Despite alarming decadence in this phenomenon of charity there have been still huge charities that are being conducted all over the world. There are some big philanthropists, like Bill Gates, Mark Zukerberg who have established charity foundations and declared to spend a significant portion of their wealth for the humanity. But there have been many others charities which are unorganised and limited within personal level. In today’s world there are also a big number of charity foundations where billions of dollars are being injected all over the third world for eradicating poverty, providing basic education, preventing infectious diseases, removing illiteracy, providing primary healthcare and many more.

According to a recent survey in the USA, the largest source of charity fund of the world, charitable giving continued its upward trend in 2016, as an estimated $390 billion (2.1% of GDP) was given to charitable causes. For the third year in a row, total giving reached record levels. As in previous years, over two-thirds of donation came from individuals. Specifically, individuals gave $281.86 billion, accounting for 72% of all giving and representing a 3.9% increase over 2015. Historically, religious groups have received the largest share of charitable donations.

Though, according to the command of Islam, Zakat – one of the basic pillars of Islam – is the right of the poor, many people consider it as charity or donation. Whatever it may be, it would play a leading role in removing hunger, poverty and illiteracy from the world. Estimation shows that if all the people eligible for Zakat in Bangladesh give it properly, there might be a fund of more than 30% to 50% the income tax being realised from income tax payers. However, the fund so far being collected might play a significant role to alleviate poverty, if it is utilised properly.

Islamic alms-giving (Zakat) and endowments (waqf) have been in existence and maintained strictly from the revelation of Islam in the 7th century. But during the last two centuries lack of efficient use of the assets held by the charitable organisations and people’s reluctance in giving Zakat and Waqf its role in poverty alleviation has become very much insignificant. A recent study jointly conducted by the Islamic Research and Training Institute (IRTI) and Thomson Reuters estimates that Zakat donations could contribute significantly to poverty alleviation in countries such as Indonesia, India, Pakistan, Bangladesh, Malaysia, Singapore and Brunei, which together account for 45 per cent of the world’s population.

The study also shows that growth of Zakat contributions in some countries has often been in the double digits: Indonesia collected $269.09 million in 2015, up 21.21 percent from a year earlier; Pakistan collected $212.50million in last three years and Malaysia collected $994 million in 2016, a 20.3 per cent increase from a year earlier. While there is no official data for India, the report estimated total annual Zakat collections stood at a whopping $2.5 billion.

But we are witnessing still there have been starvation, illiteracy, insufficient healthcare, big death toll from infectious diseases in many Sub-Saharan African and Asian countries. They are still being deprived of basic human deeds and rights. Are those funding not being utilised properly or not being reached to the poor? Or is substantial portion of it being spent in management cost or being diverted by some NGOs in the name of social business?

If we go through a comparative study, we would find a huge gap between the value of unnecessary spending and the volume of charity fund. More than $3.5tn is spent as a whole annually on the world’s military and on subsidising fossil fuels. On the other hand, so many right things remain neglected. According to a recent survey, every day 19,000 children under the age of five die around the world, mainly from preventable causes. The costs of reducing mortality rates by two-thirds, improving maternal health as well as combating Aids, malaria and other major diseases, are estimated to be $60bn (£39bn) a year. Meanwhile, $60bn is approximately the cost of buying and operating two nuclear ballistic missile submarines. The estimated total cost of achieving the six of the UN’s Millennium Development Goals related to poverty, education and health – eradicating hunger, universal primary education, child mortality reduction, disease prevention– is $120bn annually and this is very tiny fraction of total spending on militaries.

We know that most of the donations and charitable funds are being distributed or utilised by some NGOs that spend most of those fund in their management, salary, infrastructure etc. Therefore, a tiny portion of those funds reach to the hand of the poor and cannot bring any substantial or sustainable change in the fate of the poor.

Even in a capitalist economy or highly developed consumerist society, poverty or illiteracy has not been eradicated fully. Because, the idea or mechanism of equitable distribution of wealth is not found in that economy as they are highly materialistic and mechanical. According to a recent survey there are many people in the USA who are still homeless and almost 2 million adults are illiterate. This scenario is very much common in most of the developed countries.

Another increasing global problem is the expansion of income gap. In our country a recent study, conducted by the Centre for Policy Dialogue has shown that in 2016, the top five per cent of Bangladesh’s income-earners earned 121 times more than the bottom five per cent, in a jump from 31.5 times in 2010 which means, during the interim period, they have almost quadrupled their share of the total national income. The findings are a clear indication that while the country may be performing better in certain development indicators, income and asset inequalities continue to grow and may emerge as a big threat to the overall economy if adequate policy attention is not given to the poor, vulnerable groups and the conditions that perpetuate inequalities and marginalisation.

In the capitalist society the rich are becoming richer and the big middle class remaining in the same status as they are the consumers of the capitalist products and services. The capitalist philosophy is that if the river overflows then irrigation is possible in the paddy field. But from the welfare economic point of view, we can cultivate the land through pumping water from the river even in the dry season and this is called the equitable distribution of wealth. In a welfare economy poverty and income gap might be reduced significantly even in a lower middle income country. The corporate houses create job, reduce poverty, but cannot reduce income gap. Because the rich are overflowing with wealth like a flooded river and the poor are becoming poorer day by day.

So charity and its proper and effective utilisation could reduce poverty and income gap significantly. Moreover charity is not a pity on the poor. As a human being they have the right to get all sorts of help from their neighbours and relatives. So the fund of donation and charitable foundations must be utilised properly and should be focused and target oriented. It should not be given substantially to the greedy NGOs or so called social businessmen. Sometimes they are acting as Shylock and oppressing the poor by giving loan with high interest rates, utilising the funds of various foundations.

That fund must be utilised through government or UN organisations where there is a little chance to be misused. It must be utilised in education, healthcare and employment generation. The donors must also be very much vigilant about whether their fund is being utilised properly or not? They should be committed to sustainable change in the life of the poor. Only then we could find a positive development in creating a society free from hunger, poverty and illiteracy.


The writer is a banker & column writer. Email: