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How to unlock Arab philanthropy

Mahmoud El-GamalProfessor, Economics
Rice University

Mahmoud A. El-Gamal, PhD, is a professor in the Department of Economics at Rice University, where he also holds the endowed Chair in Islamic Economics, Finance, and Management.

The TakeawayHistorically, charity in the Arab world has been largely personal and directed to those nearest the giver. Despite significant variations by country, institutional philanthropy remains underdeveloped in the Arab Middle East as a whole. Solutions for developmental failings in the Arab world lie in understanding the region’s rich religious traditions and then implementing them through modern institutions.

Philanthropy in the Arab Middle East as a whole remains underdeveloped compared with other regions with similar income levels, despite significant variations among Arab countries.1 Partly as a result, populous Arab states with limited hydrocarbon resources continue to struggle with poverty, illiteracy, and disease. Even oil-rich Saudi Arabia saw poverty levels rise during the 1990s when oil prices were low—a harbinger of future challenges.

There are many historical, cultural, and political factors driving underdevelopment in the Arab philanthropy sector, of which I shall focus on three. First, institutional philanthropy has tended to be conflated with an older tradition of charity as a religious duty undertaken mainly at the individual level. Second, we see significant competition for philanthropic resources among various social networks and institutions with different objectives and modes of operation. Finally, philanthropy in the region has been inhibited by complicated relationships among Arab governments and the growing number of civil-society organizations in the region.

From charity to philanthropy

The key to unlocking Arab philanthropy is to understand the essential humanism of the Abrahamic religious tradition. All three of the region’s major religions (Islam, Judaism and Christianity) stress the importance of charity. Most Arabs are religiously minded. Indeed, the term “secular” is rarely used in a positive sense in the Arab world, because it has atheistic connotations. As a result, Arab philanthropy is often couched in religious terms. This is true for most philanthropy in the region, whether practiced by organizations, informal networks, or individuals.

“Abrahamic charity emphasizes discreet acts of individual kindness.”

Historically, charity in the Arab world has been largely personal and directed to those nearest the giver. Even today, most philanthropy in the region is dedicated to the immediate relief of suffering from poverty, disease, and other hardships. This is quite different from, say, the Millennium Development Goals, which take a more systematic approach to enhancing human development in an institutional framework that may eventually eliminate the sources of suffering.

Abrahamic charity emphasizes discreet acts of individual kindness. The Islamic tradition, for example, encourages “giving (secretively) so that the left hand does not know what the right hand has spent.” In the Judaic tradition, this corresponds to the second-highest rung on Maimonides’ famous ladder of charity, or tzedakah, which is the Hebrew equivalent of the Arabic word sadaqah.

Arab philanthropy is not static, of course. Recent initiatives in charity, philanthropy, and corporate social responsibility have become more institutional and strategically developmental in their orientation, while retaining mostly religious structures and rhetoric. Notable growth areas include building institutions to deliver health care and education across the region. In general, however, philanthropy in the Arab world remains rooted in an older tradition of religious charity.

Resource competition

The modern Middle East features stiff competition for a limited pool of philanthropic resources. Traditional social networks vie for contributions with networks connecting middle-class businessmen and other networks linking middle-class professionals or their spouses, as well as philanthropic foundations established by rulers and business leaders

Recent studies have shown that such networks foster intraclass (horizontal) solidarity, but little interclass (vertical) integration.2 This lack of vertical integration tends to inhibit progress toward long-term development goals. For example, it’s commonly believed that certain political organizations in the region recruit supporters from disadvantaged communities by delivering social services such as education and medical care. This belief is largely false. Research shows that such efforts undoubtedly improve the image of the organization that provides the services. However, their main practical impact is to create stronger ties of trust and loyalty among the group’s existing members. This limits the scale and scope of social services that philanthropic organizations rooted in social networks can provide. It also invites duplication of effort, to the detriment of developmental impact.

Uneasy bedfellows

Given rapid population growth across the region, labor-rich countries like Egypt face dwindling per capita worker remittances. Resource-rich countries like Saudi Arabia suffer from declining per capita oil rents. Arab governments generally recognize the need for civil society to play a bigger role in the provision of social services. However, government and business leaders often feel politically threatened by the growing influence of civil-society organizations. This happens because organized charity work tends to strengthen and politicize horizontal solidarity ties within the various social networks that operate the charities.

Consider the Arab uprisings of the past three years, all of which have featured class conflict dressed in religious or political garb. And to the extent that some forms of charity in the Arab Middle East have directly or indirectly contributed to militant activities (for example, by providing financial support to orphans of families affiliated with Hamas), Arab governments have often invoked security concerns to justify curbing the activities of civil-society organizations.

The promise of Arab philanthropy

A more vibrant and effective philanthropy sector can assist significantly in addressing development gaps identified in the United Nations Development Programme’s Arab Human Development Reports. Thanks to religious affinities, labor and capital migration, and financial flows from the Arab Middle East to the broader Islamic world, Arab philanthropy can also have positive effects far beyond the region.

For this to happen, solutions to the social problems that philanthropy seeks to solve cannot be limited to new legal and regulatory mechanisms, just as democratization cannot be limited to the mechanics of political parties and elections. Mahatma Gandhi famously said that those who wish to separate politics from religion do not understand what religion is. The same applies to those who would try to separate philanthropy from religion. Solutions for developmental failings in the Arab world, whether in philanthropy or in politics, lie in understanding the region’s rich religious traditions and then implementing them through modern institutions.

1 The Middle East is a difficult region to define. Broader political definitions have included not only North Africa and Israel but also Turkey, Iran, and—at times—Pakistan and Afghanistan. There are numerous problems with grouping such diverse countries into an ostensible region, but the common factor here is clear: they all (excluding Israel) have majority Muslim populations. For this short essay, I shall focus my attention on the Arab countries of the Middle East and North Africa. While these countries do not constitute a homogeneous or fully integrated region, they share common religious traditions, official language, and centuries of regional mobility and intermarriage.

2 The Judeo-Islamic tradition does encourage vertical integration. For example, the highest rung on Maimonides’s ladder of charity is business partnership with the poor, a form of vertical integration that allows people to escape the poverty trap. This form of partnership finance was also discussed extensively in the early literature on Islamic finance but is practiced very rarely.

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