While much attention has been focused on ultra-high net-worth philanthropists, it is religious giving which accounts for the vast majority of giving across Asia. In Malaysia and Indonesia, religious tithing fills the coffers of the Islamic foundations set up across the two countries. Zakat embodies a central tenet of Islam–the practice of providing 2.5% of one’s income to charity. In Malaysia, the largest of these yayasans, or foundations, are quasi-government and under the auspices of the Sultan of each state.
Zakat Selangor is the wealthiest of the state-based foundations and provides numerous goods and services to the poor and needy in Selangor, which despite its economic vitality still counts about 50,000 of its families as poor. In Selangor, Sultan Sharafuddin Idris Shah appointed his brother-in-law Tan Sri Dato’ Seri Syed Anwar Syed Putra Jamalullail to run the foundation. He recognized that Tan Sri Syed was a gifted accountant and manager and could use these skills to oversee the running of a foundation which gives out more than RM800 million (approximately US$185 million) a year.
CAPS’ Chief Executive Ruth Shapiro sat down with Tan Sri Syed to better understand the important role of Zakat Selangor and his responsibilities in running it.
Shapiro: Tan Sri, thank you for taking the time to talk with me. Zakat is prescribed by the Quran and thus has been around for more than fourteen centuries; but at the same time, you must oversee this massive fund utilizing modern tools and oversight techniques. Can you explain what this balance means to you?
Syed: Of course, you know that Zakat is something that all Muslim have to pay and there are seven categories which are to receive the funds. We have a degree of leeway in designing our programs, but we focus primarily on the poor and needy who live in Selangor.
Shapiro: Your background is in finance and you are a Chartered Accountant. How has this skill set helped you to meet the challenge and responsibility of running Zakat Selangor?
Syed: For me, undertaking this role has been a very honorable task to accept. When I accepted it, I asked for and received permission from High Highness (Sultan Sharafuddin Idris Shah) to change the governance of the organization. I felt that the responsibility of dispensing such a large and important amount of money necessitates high accountability and oversight. You see, RM800 million (approximately US$185 million) coming in and RM800 million going out within one year means we are dealing with RM1.6 billion (approximately US$370 million). I tried to formalize and organize it better. I reviewed the skillsets of the trustees and of the leadership team. I convinced his Highness that we’re like a bank, so we need people with professionalism, who have knowledge about finance, Islamic finance and so on. One of the first changes I made was to bring in a majority of independent trustees, so now we have six independent and four appointed by the religious authority of Selangor. I also changed the auditors when I came in—I wanted a brand name, so now our audits are done by one of the top four.
The other important change was with the leadership team, especially the selection of our CEO. Of course, we cannot pay like a publicly listed company because this is money that is to help the poor, but we should be able to attract somebody who understands what governance is all about, what finance is all about. I am proud of the team we have put in place, a highly professional team with a great deal of integrity.
Shapiro: Are there rules about how the foundation apportions administrative costs?
Syed: Yes, we take what is known as the amil portion, which is 1/8, so that is for administrative costs and salaries, and so on, but the trustees do not receive salaries.
Shapiro: When I prepared for this conversation and read about you and Zakat Selangor, I was struck that information on management and governance received the most attention, and in effect, came first before the vision of how this money can be used to help the people of Selangor. Is that intentional?
Syed: The vision is critically important. The vision is to help the poor and destitute within the Islamic community in Selangor. Now about 50,000 families, multiplied by an average of four children, so let’s say 200,000 are classified as destitute in Selangor. We have to help them until the day they are able to get a job and they are able to pay zakat.
Shapiro: Muslims who pay zakat can choose which charity to give it to. So why do the people give to Zakat Selangor?
Syed: That is a very good question and one we have been focused on. To me the main thing is trust in Zakat Selangor. The reason we need good governance is so that people trust that the funds they send us are spent well and in accordance with our mandate of helping the most needy. I think when people entrust you with their money, you must really look after every single cent of it and use that money properly. Of course some people might not agree but, to me this is fundamental. And it has worked. Over the last nine years, donations to Zakat Selangor have increased from RM300 to 800 million (from approximately US$70 million to 185 million), and we hope to reach 1 billion (approximately US$230 million) in three, four years’ time.
Shapiro: Although there are parameters for the type of programs you support, you do focus on education. Why?
Syed: As we said, Zakat should be helping the poor and the destitute, but how do we do this in a sustainable way? How do we do this in ways which decrease the need over time. So, we target the children. We built a hostel for the kids to live, they go to school, we provide buses, we provide everything. We probably have about 115 boys and girls. And while we do much in the field of education, we also have a number of health and medical programs. Unfortunately, health issues are becoming more problematic in Malaysia. It is sad, but Malaysia has the highest incidence of diabetes in Asia and one of the highest in the world. Zakat Selangor spends close to RM30 million (approximately US$7 million) a year on dialyses. In fact, we have our own dialysis center, which is probably one of the better run in the country. It runs three shifts a day, every day.
It gets back to trust. People trust us, so we give them the best help we can. When they need food, we provide five basic food products. When they need an operation, we take them to the hospital. When they need cash, we provide it, into their account, every month.
Shapiro: You give cash?
Syed: Yes, we give to those who cannot work.
Shapiro: Do you have success stories?
Syed: Yes, of course. We have many examples of children who have succeeded because of the help we have provided them. Many of our graduates come back very often to talk about their success stories, and it motivates the new generations.
Shapiro: So, in your nine years, sounds like one of the things you’re proudest of is the re-organization or the management of the organization.
Syed: It’s very satisfying…I believe when you join an organization, you should leave it in better shape. For me, building trust and showing leadership is by example. You do the right thing and provide the example. When I was asked to lead Zakat Selangor, I had no choice really, it’s my duty. But I had some reservations initially because I did not know much about religious organizations, but then if you really think about it, running any organization is the same fundamentally. It’s governance, trust and leading by example.
Of course you make mistakes along the way, but that’s part and parcel of becoming a better person.