Home > Article > Wealth and Giving in the Arab Region

Wealth and Giving in the Arab Region
By Barbara Lethem Ibrahim
Original post

Saudi billionaire Prince Alwaleed bin Talal
Prince Alwaleed bin Talal (AP Photo/Majdi Mohammed)

Two news items sparked debate across the Arab region recently. One reinforced Gulf stereotypes, while the other highlighted a bold out-of-the-box initiative. The first was Saudi King Salman’s official two-day visit to Washington, for which he brought an entourage numerous enough to take over a large Georgetown hotel. The second was Egyptian mega-entrepreneur Naguib Sawiris’ offer to purchase a Mediterranean island and supply it with infrastructure so that Syrian refugees could build new lives there. Both of these men have great wealth at their disposal. But while Saudi Arabia is criticized for extravagant royal spending and failure to respond to the Syrian refugee crisis, Sawiris and others offer novel—if unlikely—refugee solutions. These examples represent two extremes coexisting in the Arab region today, while in between one finds a burgeoning arena of private philanthropy and social investing. Much of it is so new that solid data and trend analysis are still lacking.

A recent Coutts Bank report sheds some light on large gifts contributed by individuals or private foundations in the Arab Gulf. Relying mainly on media accounts, the report identified more than 75 gifts of over $1 million from mid-2013 to mid-2014. Most were earmarked for education, housing, or health care for the disadvantaged. Some of the largest gifts made anywhere that year were from this region, including a Kuwaiti donation of $300 million for higher education. An interesting finding was that the Arab Gulf region leads all others included in the survey for the proportion of gifts made to causes located beyond the region. And in light of the proclivity for quiet giving encouraged by Islam, it is likely that many other major donations go unrecorded.

Traditions in the region can lead to forms of modern philanthropy that fall outside the usual categories of giving. For example, our quiet neighborhood in Cairo was enlivened this summer by the sounds of many kids enjoying a neighbor’s swimming pool. I discovered for the first time that this family has dedicated an apartment building and hired professional staff to care for 20 orphans from infancy until college graduation—a significant financial commitment. This type of philanthropy is not captured in the available data sources in Egypt nor elsewhere in the region.

In light of global calls for the wealthy to give away larger proportions of their assets, inspired by Western philanthropists such as Bill Gates and Warren Buffet, what has been the impact on Arab giving? In some cases there is a direct connection; in June 2015 Prince Alwaleed bin Talal announced that he was pledging his entire holdings—by his own estimate some $32 billion—to his foundation. He credited Bill Gates with offering both a role model and some direct encouragement. The prince said he is motivated by wanting to tackle large global problems like disease eradication while making sure that his foundation continues to be a major player beyond his lifetime. He noted that by going public with this decision, he is hoping to stimulate others to similar commitments. Of interest, his son and daughter were beside him at the press conference, and both serve on the foundation’s board, though they do not hold majority votes. Family support of such initiatives is important, since Islamic inheritance laws give children an automatic majority of a parent’s wealth regardless of the provisions of a will. Following Prince Alwaleed’s announcement, at least one other Gulf entrepreneur, Abdullah al-Ghurair, has made public his plan to pledge much of his wealth to charitable causes.

But will these huge gifts be a “game-changer” in the same way that Andrew Carnegie’s large-scale philanthropy caused a groundswell of similar giving among America’s super-rich a century ago? It is unlikely, given that patterns of significant giving are already well-established in Arab culture. And while scores of successful business entrepreneurs aspire to make an outsized impact with their giving, it is less obvious that they look to role models beyond the region. If anything, most say they are reproducing the behavior of parents and grandparents, but on a larger scale. In a mini-survey of wealthy philanthropists in six countries of the region this summer, we heard repeatedly that “giving is ingrained in our DNA,” with origins in Bedouin tradition, religious duty, and family practices.

The common pattern we observed some years back is a process in which wealthy Arabs start out by giving in fairly traditional ways—to charitable causes addressing immediate aid for the needy in their local communities—and gradually are drawn to think more strategically about solving the big problems facing the region. Many of these individuals apply the same business acumen that brought them original financial success to leverage outsized impact from their giving. One sees an appetite for high-impact philanthropy especially among younger entrepreneurs who acquired their wealth while still in their 30s or 40s. They are most likely to speak in terms of social investment rather than giving, and to target thorny problems like youth unemployment, urban poverty, or the lack of independent media. The Islamic institution of waqf and its Christian equivalent allow wealthy families to endow their favored causes with an asset such as land, a building, or stock shares.

All of the above, of course, are predicated on a liberal model of society in which citizens voluntarily offer their support to public-interest causes. The assumption is that private philanthropy will pick up where governments leave off—or fail to serve. As Benthall and Bellion-Jourdan pointed out in their 2003 text The Charitable Crescent, however, philanthropy in Muslim societies has been intertwined with politics over many centuries. Whether using charitable giving to curry favor with a ruler, as happened all too often under dictatorships in Tunisia, Egypt, and Syria, or using it to bring down rulers (think Osama bin Laden or the Muslim Brotherhood), philanthropy and power do not exist behind separate firewalls. As governments around the region hunker down in the post-Arab uprisings period, one of their first steps has been to restrict the inflow of foreign private philanthropy. (External aid to those governments, however, is welcomed with open arms). Following close behind are new regulations that render local funding for civic causes difficult or impossible. It comes as no surprise that the current profile of private giving in the Arab region steers largely clear of citizenship or rights-based causes in favor of health and education, community development, and culture.

Thus, many of us working to strengthen the philanthropy sector argue that the problem is not how to stimulate larger gifts. What is sorely needed is a public debate on the role of citizen initiatives in the future of Arab societies. That will necessarily include a discussion of the optimal balance between internal accountability versus state regulation. And clear, unambiguous definitions of allowable (non-political) causes have to replace current vaguely-worded laws that are open to abuse. For a start, governments could make public the statistics they collect annually on the civil society and philanthropy sectors, as is common practice elsewhere. This would have one immediate effect: demonstrating the significant economic contribution of local civil society to GDP in every country of the region.

Finally, we can hope that the Greek or Italian government responds positively to Naguib Sawiris’ offer to buy an island for Syrian refugees. Regardless, we should be thankful that his gesture, along with the generosity of thousands of ordinary citizens in Lebanon, Jordan, Egypt, and elsewhere are shaming governments into doing more for the humanitarian crisis unfolding between the Mediterranean and Europe.

Your email address will not be published. Required fields are marked *


Join our mailing list for occasional email news & updates.