Bridging the wealth gap: What to do about global inequality

A January 2017 report issued by Oxfam found that the eight richest individuals in the world have a net wealth of $426 billion–equivalent to the total amount of wealth held by the poorest 50% of the global population (some 3.7 billion people). That same report found that the world’s 10 largest corporations together have revenue greater than the 180 poorest countries combined. Impact investing has a role to play in addressing this shocking inequality of wealth. Although many tools are necessary to reduce wealth disparities, participation banking and trade finance are especially promising and should be supported by the investor community. Participation banks: Serving the underserved Public perception of the finance industry holds that it only exists to benefit the rich, exacerbating the wealth gap and entrenching inequality. While this may be true in many cases, participation banking is different. Part of the community banking movement, participation banking requires financial institutions share responsibility for the poor in society. Each bank takes part in socially responsible activities by setting aside a certain amount of its total funding sources to serve the community in which it operates. One example of the better banking behavior common among participation banks is providing interest-free loans

January 25, 2017 No Comments

Azzad Wise Capital Fund increases social impact with trade finance investments

(FALLS CHURCH, Va., February 23, 2016) – Azzad Asset Management today announced that it has further magnified the social impact of its flagship mutual fund by adding investments in ethical trade finance deals. These investments may provide returns for investors while helping underserved populations in Asia and Africa obtain reasonable financing to grow businesses and cooperatives. The Azzad Wise Capital Fund (WISEX) is the first halal fixed-income fund in the United States. By investing primarily in sukuk and community development banks, it can provide an alternative fixed-income investment option that contributes to social development without dealing in interest-based transactions. Through WISEX, the Virginia-based investment firm is participating in a group of syndicated ethical trade finance deals arranged by the International Islamic Trade Finance Corporation (ITFC), an unaffiliated entity. The ITFC, an organization under the auspices of the Islamic Development Bank Group, is charged with advancing trade and improving the economic conditions of people around the world. See: Global Community Investing as an Asset Class (YouTube) The ITFC helps businesses gain better access to trade finance without exorbitant rates of interest or fraud and provides them with the necessary trade-related capacity building tools to help them compete successfully in the global

February 23, 2016 46 Comments

Promoting peace through trade

In a speech to the United Nations General Assembly on countering violent extremism, President Barack Obama quoted Shaykh Abdullah bin Bayyah, founder of the Forum for Promoting Peace in Muslim Societies, as saying, “We must declare war on war so the outcome will be peace upon peace.” This noble sentiment is certainly worth pursuing, but how do we start to make it a reality? The answer, in part, could be found in the resurgence of Islamic finance. Although modern expressions of Islamic finance began only in the 1970s, they employ timeless principles such as profit-and-loss-sharing that can provide an alternative to some of the more speculative and exploitative aspects of conventional finance. Combining foundational ideas with their modern applications could be part of the strategy to undermine the root causes of war by alleviating poverty in underdeveloped parts of the world. Trade as a tool for good According to the World Bank, extreme poverty has fallen dramatically in emerging economies since 1981. About 70% of the developing world was living under $2 per day in that year, but this rate fell to just over 36% in 2011. The United Nations says that trade has been a primary reason for this

January 26, 2016 No Comments