Crowdfunding Vs Islamic Crowdfunding

HasanAngels: Muslim Angel Investors syndicate

#EthisEduSeries Ep 1: Crowdfunding Vs Islamic Crowdfunding


Assalaamualaikum warahmatullahi wabarakaatuh,

My name is Ahmad Sabree and I work at Ethis.

Today, we are going to be talking about crowdfunding vs Islamic crowdfunding. You may have heard of crowdfunding, as it’s a popular buzzword nowadays. People are using it to raise money for reward-based projects, charity-based projects, equity projects and lending projects. Now, we have something new called Islamic crowdfunding and we want to share that with you.

First, we’ll give you a brief overview of what crowdfunding is – it is essentially the coming together of people via an online platform to raise funds, in order to collectively support a project. The funds that are raised can be used towards a variety of projects as mentioned earlier, such as charity, reward, lending or equity.

This industry has now been growing exponentially over the last few years. In 2012, 2.7 billion worth of total funds were raised. In 2013, this amount increased to 6.1 billion. In 2014, it jumped to 16 billion and in 2015 it already grew to a whopping 34 billion! The size has multiplied exponentially over the years and we are excited to see what 2016 has in store for us!

Now, it is time to explore how Muslims can make use of this crowdfunding and related technology to take care of their financial needs in a way that is in line with their values.

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So, that brings us to the question, what is Islamic crowdfunding?

Simply put, Islamic crowdfunding is the combination of the following:

  1. The technology of crowdfunding.
  2. The principles of Fiqh Muamalat, which are the principles of business interactions of dealings in Islam.
  3. The modern contracts of the Islamic Finance industry.

We put all these three things together and we get the services that we call Islamic crowdfunding.

We are very excited about this because there are many Muslims out there doing Islamic crowdfunding in their own different ways. At Ethis, we do Islamic crowdfunding on the investment side. We help people come together online to invest in projects using profit-sharing, or Mudharabah, and ultimately contribute to building real estate properties and infrastructure. Upon successful completion of the project, a portion of the profits is shared among the investors.

The reason why we decided to choose Islamic crowdfunding as a business is because it allows us to work together as a community, and we can collect funds from people without having to use banks as the “middle man”. We can now do investment projects with an interest-free model, where people agree to share the risk and the rewards of the project that they invest in.

So this is a new era of Islamic Finance where we are not limited by what’s inside of the banking industry as far as rules are concerned, but at the same time, we are able to receive similar benefits. This opens up a world of opportunity that we are very excited to explore!

We are looking forward to sharing more about Islamic crowdfunding with you, and hope that you will try it out for yourself too!

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Check out our next episode here!

MY Ethis

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Ethis Malaysia: Islamic Equity Crowdfunding
halal investment

We operate ethical investment platforms approved by regulators in Indonesia, Malaysia, and Dubai, and also run a charity platform Global Sadaqah serving ordinary people, high-net-worth individuals, corporates and government entities. Best known for crowdfunding impact investments for Indonesian social housing development projects we adhere to the United Nations Global Compact ethical standards and are based on Islamic finance.