Religious investing

Often SRI chosen according to stated religious beliefs, for example Judaism, Christianity, or followers of Islam. In fact, the history of SRI goes back to the ethical precepts embodied in Jewish law. Quakers and other religious orders starting in the 18th century refused to invest in “sinful” industries such as distilleries and weaponry. The first SRI mutual fund was Pax World Funds, a $1 billion fund created in 1971 by Luther Tyson and Jack Corbett both of whom worked for the United Methodist Church. In 2004, faith-based organizations filed 129 resolutions, while socially responsible funds filed 56 resolutions. Islamic social scientists believe that the Zakat is compatible with principles of economic and social equity. Muslim socialists found their roots in anti imperialism. Muslim socialist leaders believe in the derivation of legitimacy from the public. The Zakat promotes a more equitable redistribution of wealth and fosters a sense of solidarity amongst members of the community. Zakat is meant to discourage the hoarding of capital and stimulate investment. Because the individual must pay Zakat on the net wealth, wealthy Muslims are compelled to invest in profitable ventures, or otherwise see their wealth slowly erode. Furthermore, means of production such as equipment, factories and tools are exempt from Zakat, which further provides the incentive to invest wealth in productive businesses. Jeebika, a Livelihood & Human Development Program was developed by the Center for Zakat Management (CZM) in Bangladesh to ensure sustainable socio-economic development of the hardcore poor. Through conducting a baseline survey the Zakat-deserving households are identified and grouped in grass-root organization comprising 25-30 families. They open a joint bank account and a certain amount of Zakat money for each family is deposited to their account. Besides, they are advised to form a savings fund. The group members, with a view to do business can take interest free investment from their joint account. After engaging in business as per shariah rule, the members can carry lion share of their profit to family and equally shares a portion with other members of the group. The project also provides other services like healthcare, safe water & sanitation facilities, child & adult education, skill development training, awareness building etc. Thus, all the members are engaged in establishing a friendly society. The Jeebika Karnaphuli project was a small-scale experimental livelihood project focused on the sustainable graduation of 450 impoverished families comprising two communities on the bank of river Karnaphuli in the Mohra area of Kalurghat in the eastern outskirt of Chittagong city in Bangladesh. The project was launched in February, 2011 by CZM with the financial support of leading local corporate group A.K. Khan who deployed their Zakat and CSR funds for the purpose. Though relatively small-scale, the Jeebika Karnaphuli Mohora project has a number of features that marks it out as different from the generally-known micro-finance model. It may perhaps be more accurately characterized as a micro-finance+ model with an explicit and far greater emphasis on the issue of sustainability. Beneficiaries are provided with a five-fold stake in the project: (a) Equity capital in the form of the Zakat and CSR allocation for each beneficiary that forms part of a group equity held in a bank account (b) Access to a revolving fund for micro-loans. The beneficiary group’s pooled equity capital constitutes the revolving fund. Each member of the group has the option of applying for a micro-loan as per the family’s need with the provision for paying a service charge/interest as in the regular micro-finance model (c) Group profit accruing from the interest charged for the micro-loans which accumulate in the group bank account. This secondary income stream is earmarked for equal distribution to each member of the group. (d) Social sector support covering education, health, water, sanitation and home gardening. (e) Capacity building on management, leadership and enterprise skills with the eventual goal of graduation.