How to make a Halal investment through Crowdfunding.

When it comes to making an investment in an Islamic investment, many people tread with care, worried about the Shariah compliancy of the product. Financial jargon is problematic enough and becomes even more complicated when Arabic terminology is involved.

Because of that, some people may view the latest innovation in Islamic finance, Islamic crowdfunding, with hesitation. Research shows consumer skepticism towards Islamic banking services, sadly, prevails in Muslim communities.

However, Islamic crowdfunding may be just what Islamic finance needs now. 

The growth of the Islamic finance industry is the responsibility of all Muslims and not of a few banks. Luckily, crowdfunding is as inclusive as it gets.

We previously talked about Islamic crowdfunding and its benefits. But in case you missed the posts (you really should read them!), here is a brief summary.

Crowdfunding is the funding of a project by a large group of people, through online platforms. It compensates the obvious disadvantages of using bank loans and makes funding more accessible and efficient. With crowdfunding, it is the customer who approves of your product and funds it.

This gives the average person more control over what should be in the market.This is important to the Muslim consumer especially, as they will have more power to bring halal products to the market.

Crowdfunding has many benefits, such as market research and validation, but its main advantage is perhaps in connecting the entrepreneurs directly with the customers, the “innovators with those who need innovation”.

But what does Islam say about it?

It is one of the mercies of Allah that He has made the permissible and forbidden clear. We also have a general principle set for us by the respected scholars of Islam that everything in this world is Halal and pure unless it has been explicitly forbidden or it brings harm to the person or community.

Islamic crowdfunding removes the harmful elements of crowdfunding such as interest and harmful products (alcohol, etc), and leaves only the good.

On top of that, Islam advocates charity, entrepreneurship, and anything that brings benefit to the world. Crowdfunding encourages social entrepreneurship and there are countless Muslims around the world who have brilliant ideas that, if executed, can make a positive impact on their societies. They have the brains and talents but usually lack the funds to execute their plans. Crowdfunding is the platform that can provide them those funds.

Ethis is one of the earliest platforms to recognize this potential of crowdfunding to bring good to the Ummah and the world. It is, in fact, the world’s first Islamic real estate crowdfunding platform.

Ethis  backs several social impact projects in Indonesia, especially in affordable housing campaigns.

These campaigns benefit tremendously low-income families. Below are some of the reasons why crowdfunding affordable housing campaigns should be a priority for Muslims:

​​​​​​​

It should also be noted that when families can’t afford housing they live in small rented units which aren’t big enough for them to socialize and maintain healthy relationships.

Based on the Islamic values of helping your Muslim brother in need, participating in crowdfunding is not just halal, it is strongly encouraged!

Through crowdfunding, we are able to connect with Muslims all over the world to help each other. Currently, Ethis has over 21,000 members from 25 countries. If you are interested in joining this community, visit our website, and make an account today!

Read more about Islamic Investing