State of individual philanthropy in Pakistan

Muhammad Zohaib Faizi

In recent decades, Philanthropy has emerged as an important component of United Nation’s sustainable development goals agenda that requires nurturing and enhancing of social institutions. In Pakistan, giving charity is a common practice for many households not only for social welfare but also because of religious affiliations. Since Pakistan has a complex social system where government is not taking care of fundamental issues like health, education and housing, the private sector to some extent exploits this gap through private and commercial institutions which do not provide the value for money they charge for their services.
In such circumstances, there is still a ray of hope due to huge philanthropy in Pakistan. To some extent, a large population still depends on philanthropic activities in the country. Individual recipients receive the major share of charity as compared to Non for Profit organizations (NPO). Households tend to give directly to needy and deserving individuals. Mistrust on NPOs is the major reason why people are giving directly to individuals and this makes a lot of charity unstructured and unregistered. Zakat funds is another major challenge when it comes to giving out to NPOs as many households are not sure which NPOs are eligible to receive Zakat funds and use it as per Shariah laws. Lack of knowledge also exists regarding tax incentives due to which there is a major chunk of population not tilted towards giving charity to NPOs.
A recent study from Pakistan Center for Philanthropy (PCP) shows surprising numbers and insights about the pattern of charity giving in the country. Individual giving in Pakistan is huge and estimated to be PKR 240 Billion in 2014. The research was conducted with a sample size of 10,000 households all over Pakistan in addition to many focus groups. In 2015 alone, corporate philanthropy was estimated to be PKR 9 billion.
However, if these figures are compared with the previous research conducted in 1998 the comparison is an eye opener about the economic trends in the country. In 1998 although the total charity given out was estimated to be around PKR 78 billion but it was 2.6% of total GDP of Pakistan. Whereas the total charity amount of PKR 240 Billion in 2014 is just 0.9% of the total GDP of the country. Close analysis shows that amount of charity has increased over the years but total charity to GDP ratio has decreased significantly. This is a clear indication of how inflation has taken up country’s economy over the years. However, the philanthropic mind set exists consistently among Pakistanis.
A further break down will give a clearer picture of the total amount donated in 2014. The total non Zakat funds donated were PKR 70.8 Billion; Zakat funds were PKR 25.4 Billion and the other charity which included in kind, volunteer time, Hides and amount donated to religious institutions were estimated to be around PKR 144 Billion making up a total of PKR 240 Billion.
Province wise, Punjab takes the lead in charity with PKR 112.6 billion in total followed by Sind with the total amount of PKR 78.4 Billion, KPK covered PKR 38.4 Billion and Balochistan had PKR 10.3 Billion under its name.
The top motivations for giving are altruistic desire, Family legacy, Religious faith, personal experience and satisfaction. Apart from these motivations to give, affordability of giving is a major factor as donors give according to the proportion of their earning. Survey results show that needy individuals are the primary recipients of charity. This explains why beggars are the main beneficiaries. About 67% of the respondents preferred giving to individuals as compared to organizations.
In case of giving to organizations, principal beneficiaries are mosques and madrassahs. Food donations account for more than 60% of all reported in-kind giving, regardless of the province.
Among religious factors, Zakat is one of the biggest when it comes to giving out charity in Pakistan. The survey result shows that around 87% prefer self distribution of Zakat whereas, bank deduction is 3% and 2% of the population is good with both bank deduction as well as self distribution. Again majority of this amount is distributed among individuals as compared to organizations.
People are also unaware about tax exemption benefits as a result of giving to nonprofit organizations. The increased education of this factor can certainly increase the giving pattern towards trustworthy and registered NPOs.
This detailed survey and its analysis is a clear indication that the “Giving back” attitude exists in the DNA of this nation. The total of PKR 240 Billion shows that charity collection is a huge industry in itself the primary purpose of which is off course to bring a positive change in the society. However, NPOs need to develop a very robust audit system for the funding they receive; strong Shariah compliance need to be in place for the Zakat funds and highest level of transparency must be ensured to develop the trust of the donors. If a bit better transparent and structured approached is used to channelize such a huge amount either in terms of continued charity or in the form of taxation, it can surely make a huge difference for Pakistan in times to come.
Author is MBA from IBA and Team Leader for Fund Raising and Resource Mobilization at Indus Hospital and Health Network

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