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How Regional Developments Impact the Future of Major Charities

07 November 2016

Rapid political and economic transformations in the region over the past years have impacted the work of charities, especially major ones that are relatively independent, including Iran’s “Bonyad” charities and “Hizmet” movement in Turkey.

These two models have unique and regional characteristics since they play traditional roles of providing social and cultural services, and also participate some local and overseas economic activities. This is unlike other charities in regional countries that have limited impact and focus on supporting citizens inside the country, or relief work overseas under international supervision.

However, these models have been impacted differently in light of domestic and foreign transformations surrounding them. Turkey’s Hizmet (Service) is close to collapse after a crackdown and accusations by the Turkish government that it supported the failed coup attempt in July 2016. Iran’s Bonyads (Foundation) have faced many problems after economic sanctions against Iran were fortified since 2011. However, they may gain financial and economic weight in the coming phase after economic sanctions were lifted in early 2016.

Multiple roles

As well as their traditional key roles of providing social services, some charities in the region are involved in extensive economic activities, as follows:

1. Domestic role: Iran’s Bonyad charities have special status inside Iran with the support of the Iranian authorities, so their role extended beyond basic assistance to the poor and veterans. They became involved in several economic activities in various sectors, including food, energy, transportation, agriculture and construction, and also took advantage of government incentives such as tax exemption, soft loans, and so on.

As a result of these privileges, charities expanded their contribution in the Iranian economy to reach 20 percent of GDP, according to some estimates, or $85 billion annually.

Mostazafen, the top welfare organization, comes second to the state-owned National Iranian Oil Company in terms of business activities. It manages around 350 companies and factories in several sectors, spends 50 percent of profits on charity work and invests the other half in economic and commerce activities. In 2003, its activities amounted to around ten percent of the government’s budget.

Next in line is Astan Quds Razavi a charity foundation based in Mashhad, Iran, with $15 billion in assets through activities in car manufacturing, agriculture, real estate, and others.

The Hizmet movement in Turkey, created by Fethullah Gulen to provide social and culture activities, succeeded in extensive expansion inside and outside Turkey in recent years amid an atmosphere protecting public freedoms in the country during the early days of the Justice and Development Party coming to power.

Until recently, Hizmet managed 1,500 educational institutions, 15 universities in 140 countries, and the Asia Islamic Bank that has more than 180 branches in Turkey. Some estimates report there are more than 9,000 firms around the world associated with the movement. Overall, the movement manages around $150 billion in assets.

2. Foreign role: In a strategic move to increase their influence, these charities have carried out activities overseas in charitable aid or even some economic and commercial capacity that mostly occurs covertly.

Among the most prominent Bonyads operating overseas is the Imam Khomeini Relief Committee which is active in several countries, most prominently Iraq where it began work in 2004 in Najaf, and extended to most provinces. Its regional role includes caring for more than 11,000 Iraqi orphans and 3,700 Iraqi families. The charity also works in Lebanon, Somalia, India, Pakistan, Tajikistan, and elsewhere.

Along with its assets in education overseas, Hizmet partakes in other activities such as humanitarian relief during disasters through “Kimse Yok Mu” (Is Anybody There) that assists disaster victims around the world. It aided victims of the Tsunami in southeast Asia, earthquakes in Pakistan and Peru, and ethnic and political violence in Darfur by rebuilding schools and opening new clinics there.

Embrace Relief is another charity based in New Jersey, USA, which is active in the Americas, Asia and Africa focusing on aid to refugees and education. It assists Syrian refugees in Turkey and Africa, and helps with potable water, orphan support, healthcare, and hunger. It built a restaurant in Kenya to feed 1,500 Somali refugees daily. It also assists disaster victims. According to its 2015 report, the charity spent $3 million on its work and helped 382,000 people.

In parallel, the role of official Turkish institutions overseas is on the rise, including the Turkish International Cooperation and Coordination Agency affiliated to the cabinet, and some NGOs such as Ihsan for Development and Education and Hassana Foundation. Activities mainly focus on providing food, material and financial aid to the poor in East Africa such as Somalia, Djibouti, Ethiopia, Senegal, Chad and others. They also support infrastructure in some of these countries. According to statistics, Turkish charities and humanitarian organizations distributed meat to nearly five million people around the world during the 2016 Eid festivities.

Transformations of significance

Rapid domestic and regional transformations in the past months are a double edged sword for major charities in the region. They stabilized some of them, but were a direct threat to others, as follows:

1. New expansion: In recent years, Iranian economic activities were impacted by increased sanctions against Iran since 2011 with a negative growth rate in some years, such as 2012/2013 at -6.8 percent. This recession impacted oil and non-oil commerce that Iranian charities are involved in.

Lifting sanctions since early 2016 will benefit both Iranian Revolutionary Guard and Bonyad charities because it will allow them to gradually do business at home and abroad, and make successful investments. Despite the current drop in oil prices, these institutions remain the biggest winners from lifting sanctions, benefiting from non-oil activities at home and exporting overseas.

2. Existential threat: Hizmet is facing many dire existential problems affecting its ability to operate in Turkey; it is accused by the authorities of participating in the failed coup attempt in July 2016, after which the government put a stranglehold on the activities of its affiliates across the country.

It is clear so far that educational institutions associated with it are the most impacted by this siege. In July, 2016, the Turkish Ministry of Education shut down 800 schools associated with Hizmet and put many other institutions under state guardianship, including 15 universities, 110 student hostels, and 1,125 charities. Humanitarian aid also stopped, most notably Kimse Yok Mu, while 35 healthcare charities and 19 professional and labor unions were shut down.

Overseas, Maarif Foundation in charge of Turkish education activities abroad is trying to take control of 65 schools belonging to the movement in 15 countries. It succeeded in shutting down Hizmet’s three schools in Somalia, while Caucasus University in Azerbaijan is now under new government management.

More recently, the government in Iraqi Kurdistan took over the management of Hizmet’s schools and institutions as a first phase to selling them – after it signed an agreement with Turkey in September 2016. Other countries promised to look into the matter, most notably Kazakhistan and Pakistan, who are now looking into shutting down 24 educational institutions belonging to Hizmet.

3. Stranglehold: It appears financial links between Lebanon’s Hizbullah and some Shiite Iranian charities are gradually dissolving as the law “banning international funding for Hizbullah” came into effect in April, 2016. In light of this law, approved by the US Congress in December 2015, there were indicators that some Lebanese banks will close the accounts of several Lebanese associations to avoid US sanctions. These include Imdad Islamic Charity, Al-Shaheed Association, and Mabarrat Charity, which are linked to Iranian charities.

Other regional countries have been trying to curb the influence of non-government charities for years, either because they were funding terrorist groups or supporting banned political associations at home.

In conclusion, current developments in the region may undermine the influence of independent charities, contrary to the expected growth of charities that are directly linked to regional powers.