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Islamic Social Finance is an emerging discipline. It refers to finance that is not-for-profit and driven by Islamic philanthropy and includes zakat, waqf, sadaqa, qard, kafala and composite mechanisms that includes one or more of the above. Often these are also combined with for-profit Islamic finance, e.g. banking, insurance and various financial market products and mechanisms.

While philanthropy-based and not-for-profit modes attracted the attention of early researchers of Islamic economics and finance, they apparently failed to catch the fancy of the professionals and practitioners. As a result, after growing at a frenetic pace for over four decades, mainstream Islamic finance is now understood to comprise banking, insurance and financial market participation. These are for-profit segments of the Islamic economy. The impressive growth has also been matched by a large-scale increase in research and documentation pertaining to these segments. At the same time there appears to be a gross imbalance in resources committed to research and documentation of the Islamic social, philanthropy-based and not-for-profit sector.

The Jeddah-based Islamic Research and Training Institute of the Islamic Development Bank Group was among the first to note this imbalance with concern and launched the Islamic Social Finance Report (ISFR) as its flagship multi-year project in 2014 primary to address data and information gaps pertaining to the zakat, waqf and non-profit Islamic finance sector in various member countries of the OIC and IsDB. The ISFR 2014 was launched by IRTI in association with Thomson Reuters in February 2014. Soon Islamic social finance as a new paradigm reverberated in a multitude of forums, seminars and conferences across the globe.

In a meeting of the Governors of Central Banks and Monetary Authorities of the OIC Member States, in Surabaya, Indonesia on 6 November 2014, H.E. Mr. Iyad Ameen Madani, the OIC Secretary General called for the rejuvenation of Islamic social finance for the purpose of mobilizing adequate resources to address the problems of financial exclusion, poverty and unemployment among the vulnerable groups of population in OIC Member States. Based on the deliberations, the Meeting adopted its Final Communique containing a set of recommendations to further increase intra-OIC cooperation in this domain. Organized by the Bank of Indonesia and the OIC, the Meeting was attended by Governors and Deputy Governors from more than 30 OIC Member States, representatives of the Islamic Development Bank Group and regional and international financial institutions, such as Asian Development Bank, World Bank and International Monetary Fund.

On May 23, 2016, a special session at the first ever World Humanitarian Summit organised by the UN at the beautiful city of Istanbul was dedicated to the theme, “Islamic Social Finance as a New Alternative for Humanitarian Financing.” The speakers at this session – the Sultan of Perak, the Secretary General of OIC, the President of IDB, experts from the World Bank, the UNDP, the WFP and other international bodies -acknowledged the significance of this sector. They called for serious efforts to strengthen the sector to significantly enhance its contribution to humanitarian financing.

Many Islamic economists believe Islamic social finance to be aligned better with the Islamic goals or what are known as the objectives of Shariah (Maqasid al-Shariah) in sharp contrast to Islamic for-profit finance that may have been experiencing a mission-drift.

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OIC Secretary General Calls for Revitalizing Islamic Social Finance, accessed from http://alummahworld.com/article/146/oicidb on January 16, 2015