Corona virus, UK Mosques and Financial impact

Mosques in UK play a vital role for the Muslim community. They open every day for the five daily prayers and for the evening school. They hold large gatherings of worship every Friday and every night of Ramadan. Many large Mosques provide funeral and wedding services.

Due to Government advice, Mosques across the UK have closed. Ramadan this year will fall during the lockdown which normally is the busiest period for Mosques. This Ramadan, they will fall silent with doors shut to thousands of worshippers that flocked to them every day and night – this is a devastating loss to those who planned to visit their local Mosque during this Ramadan.

The spiritual loss of collective worship is clear but with this there is also a significant income drop that these Mosques now face. Friday collections, evening school fees and special donations raised during the month of Ramadan are all in jeopardy. Mosques are free with no entry fees; all donations are voluntary, and these donations are used to fund the daily running costs of the Mosques. Their closure means their access to cash and donations has suddenly stopped.

The impact in numbers

Friday collections and evening schools’ fees make around 75% of the total yearly income of the Mosques. In large Mosques, this part is still significant being around at least 50% of the yearly income. A three-month closure of the Mosque will drop the yearly income by at least 20% and this is without the Ramadan donation effect. The closure during Ramadan will eat away a big opportunity to raise funds – often for Mosque expansions.

The payroll costs of Mosques represent around 50% of the total yearly costs with some staff on self employed contracts. The true staff cost (payroll plus self-employed) could reach up to 75% of the total yearly costs. During the closure, there are some costs Mosques will save but I don’t expect this to be significant. We are in summer months so gas and electricity usage will not be high.

The closure has stopped the income leaving Mosques with costs to bear. The Government Job retention scheme will fund 80% of the salaries, bearing in mind that a vast majority of Mosque employees are either on national minimum wage or not far from it. The Government is yet to set up a portal for the claims and once set up there may be delays before the money hits the Mosque bank account. This will pose a cashflow challenge.

Action plan

In these challenges time, the following are some of the actions Mosques should consider:

1. Payroll: Continue processing the payroll for furloughed employees even if you don’t have the cash to pay the employees. The Government will compensate 80%, back dating to 1 March 2020. If the employees are not on the payroll then there is no compensation. I expect the Government to extend the period of this scheme if the situation does not improve.

2. Self Employed: There is no support from Government to fund Mosques for the self-employed who provide services to the Mosque – The Mosque may be able to immediately stop their service or reduce their payments. If the Self Employed are depended on the Mosque income and there declared income is not enough then they should apply for Universal Credit.

3. Online: Switch to online solutions for teaching children to compensate the evening school income. This is a sudden requirement and many Mosque staff may not be trained or tech savvy. National member organisations (I.e. MCB, MINAB) should urgently set up working groups or platforms that can provide volunteers, guidance or vet suppliers that Mosques may choose to provide this service.

4. Databases: Those Mosques that had created donor databases should use this database to encourage donors to set up monthly or weekly direct debits, focusing on Friday collections and sadqa. Those Mosques that do not have a donor database, they should immediately start compiling one. The lock down may continue for a longer period if the NHS capacity is breached or not controlled as expected by Government. Mosques must act now and not assume this will be over soon.

5. Ramadan: Develop fund raising campaigns for Ramadan that may involve social media (Facebook, YouTube channels) and donation boxes at homes of regular worshippers.

6. Restricted funds: Majority of the Mosques don’t have restricted funds given the nature of the general use of Mosques by worshippers. If a Mosque does hold restricted funds, these are for either Mosque construction or for various International appeals focused on poverty. Restricted funds can only be spent on the purpose they were given for. However, the Charity Commission has released guidance on using restricted funds to fund or cope with an unexpected event like the one unfolding at present – this should be the last resort and the Commission has encouraged taking professional advice.

7. Qard-e-hassan: Raise qard-e-hassan to cope with the closures – Unlike many other businesses, Mosques have a sustainable business model. As soon as the lock down is over and Friday prayers and evening schools start – the cash generation will start immediately. Mosques will always have a mechanism to pay back the raised qard-e-hassan, same may take longer as a result of this crisis.

8. Reduce costs: The impact of a three-month closure of Mosques and Business will have a financial impact that will last for years to come. This is the time when Mosques should start to streamline their costs and explore long term savings that can be made. Once the lock down is over, it is most likely the donors will have less to donate. This may impact many of the planned Mosque expansion projects and the funding of ongoing costs.