Dua Financial Standards for (all size) Charities

During the past decade the number of Muslim charities raising funds has increased. Smaller charities have become large and larger charities have become more complex. As the size and reach of charities increases, the need for better and robust financial governance significantly increases. It is only through this, donor monies can be protected and spent properly on charity projects the donors intended for.


In addition to donors, the banks and the Charity Commission take financial governance and anti-money laundering risks very seriously as well. When things go wrong, interventions from both can have an effect of impairing charity operations significantly.


Charity Commission interventions have sanctioned Trustees and CEOs and when Banks feel unfordable with financial governance they have closed bank accounts and / or stopped bank transfers to vital operations.


What does good financial governance look like in a small or large charity? – this is where wrong questions can result in wrong answers – Trustees, managers and donors sometime fall prey to this.


What does good financial governance look like in a small or large charity – this is where wrong questions can result in wrong answers – Trustees, Managers and Donors sometime fall for this.


Low or no overheads does not mean good financial governance and neither does a good marketing pictorial report on beneficiaries nor a slick emotional video shown by a fundraiser.


Donors have the right to ask questions as it is donor money at the end of the that becomes management salaries, admin costs and relief to beneficiaries.

However, these questions must be the right ones to ensure charities prepare the right answers.


The Dua Financial Governance Standards do exactly that – they provide a comprehensive and meaningful framework for the right questions and for charities a relevant standard through which they can demonstrate their governance.


The Dua Financial Governance Standards does that – provides a comprehensive and meaningful framework for the right questions and for charities a relevant standard through which they can demonstrate their governance.


There is lots of guidance already available online – the problem with much of this guidance is the lack of knowledge and experience how they should be applied. Not one size fits all. These various guides are often not tailored to the size or the charity risks. They often have an effect of identifying gaps the charity already knew existed.


Dua Standards


The Dua Standards helps charities demonstrate responsibility, create trust and transparency, and reduces risk of fraud, error & inefficiency.


The standards focus on four clear outcomes:

  1. The Trustees are adequately involved and accountable.

  2. High level financial controls are in place.

  3. The staff and skill dealing with finance are suitable

  4. The charitable spend including Zakat spend is adequately controlled


The outcomes are matched to a total of 18 criteria tailored to four different income sizes of charities. This ensures the standards remain relevant to income size and underlying risks of the charity.



The approach to assessing compliance to the standard is designed to also produce / recommend credible action plans where gaps are noted. These action plans help those charged with governance to steer the management and charity in the right direction.


The result is an improved and enhanced financial governance that protects donor monies and makes the monies reach and travel further for the charity beneficiaries worldwide.


Next steps


Email the team at Dua Governance info@duagovernance.com for further information and timings for an independent professional review. This will include a certification with a credible action plan for any gaps identified.

Islamic Finance, Mosques & Charities – the Missed Opportunity

This blog represents the well received presentation by the author, he gave as a guest at the launch of the Birmingham City University’s UK’s first Islamic Finance undergraduate degree course.


Islamic Finance has become a multi-billion dollar industry and is fast growing. Despite this growth and reach, this industry has had little to offer Mosques, charities and for the wider uplifting of the state and economies of disadvantaged Muslim societies worldwide.


Islamic Finance has worked to make wealthy Muslims wealthier by helping them avoid the guilt that comes with breaching shariah guidelines – Although there is nothing wrong with that, in my opinion Islamic Finance has a bigger role to play in promoting the finances and impact of Mosques and charities, especially in the UK context.


Islamic Finance is a component of the Islamic Economic system which aims to create a fairer and just society in which hard work is rewarded, those that are at disadvantage are supported, business and entrepreneurship is promoted, and infrastructure is built that benefits all – Mosques and charities play an equally important role in achieving these objectives.


In UK, the top 20 International Muslim charities raise around £400m with around £100m raised in Ramadan alone (see blog). In total when combined, the UK Muslim charity sector can be estimated to be raising around £500m each year. This is despite it being a relatively young sector (only 30 years +) but a fast-growing sector.


Mosques are built using Qard-e-Hasan financing

The majority of Mosques in UK are successfully built using Qard-e-Hasan, interest free community loans, and this is also the case when they extend their facilities. There is no Islamic Finance solution in UK that provides this interest free facility to Mosques in spite of the underpinning strong business model of Mosques.


Each Mosque has a ever growing number of worshippers and donors. They are engaged in a never-ending cycle of Friday prayers and Ramadan worship, during which funds are raised to return the loans.


Mosques are the heart of Muslim community – this is where everything starts from (i.e. marriages), sustains (i.e. prayers and education) and ends (i.e. funerals) – promoting them should be the first priority of the Islamic Finance sector.


Islamic loans for buildings and ICT systems


The UK Muslim INGOs have seen a significant growth in their income. With this growth, a time comes to upscale the back-office facilities and the ICT systems – this is crucial for good governance. Some of these required investments are significant and can’t be covered by the general funds raised in one year and therefore the financing solution makes business sense.


Despite the fact that these charities have stable income and have the ability to payback loans, there are no interest free solutions available to them. The existing solutions are too focused on private and commercial initiatives.


Ultimately the beneficiaries suffering in the most remote parts of the world pay the price for the inefficiencies and weak governance caused by this lack of investment.


Foreign exchange (forex) costs with no hedging solutions


UK Muslim charities transfer around £250m each year worldwide to support beneficiaries. Sometimes the transferred currency has to exchanged up to three times before it reaches the beneficiaries. This poses a significant cost on the charity finances.


Unlike the mainstream non-Muslim charities where they have hedging products available to mitigate their forex costs, the UK Muslim charities have none.


Surplus cash – nowhere to go


In 2020, I analysed the accounts of the top 20 Muslim charities and noted that they held around £107m in cash balances (see blog). UK Muslim charities raise around 40% of their annual income in the month of Ramadan. This is then spent through out the year based on the need and ability to deliver.


The business model of the UK International Muslim charities is such that there will always be surplus cash held by them. It is unfortunate that there are lack of suitable Islamic Finance short term investment / finance solutions in place that can provide low risk returns and at the same time provide benefit to the UK community.


Islamic Finance products – Sustainable relief of poverty


The UK Muslim sector often lacks the required focus and priority on activities that are at the heart of sustainability and capacity building for the long term relief and impact in UK and worldwide. The nature of these activities requires Islamic Finance input and initiative. For example:


a) Micro Finance – building capacity and self-reliance


These are small interest free loans to the poor and disadvantaged individuals for business and self-reliance. Micro finance projects are carried out by some household UK Muslim charities worldwide but not on the scale needed and required on the ground – partly because this is not popular with UK fundraisers and also due to local registration restrictions.


However, In my opinion this activity has a significant potential in UK where a significant number of unemployed or disadvantaged youth and old can benefit. For this to work, an Islamic Finance approach is needed where businesses, professionals, charities, and government agencies need to partner and devise solutions.


b) Endowments (Waqf) – investment in the future


Waqf has historically been at the heart of Muslim charity with its long-term benefits in this world and in the hereafter. However, this approach is often ignored by donors over activities that provide benefit today (i.e. food projects) and also by charities due to their lack of ability to deliver such projects – these projects could be investments in self-sustaining buildings, infrastructure and businesses.


Endowments are investments and although are a charitable product, there delivery is no different from any commercial endeavor. This requires the right and experienced business and commercial skill, hence endowments projects to succeed have to be large in scale so that they can afford the required delivery cost efficiently and effectively.


Muslim charities often lack the right corporate structure, skill and will (due to the long-term nature) to understand and manage the risks associated with endowment projects – this is where Islamic Finance sector can play a role in coming up with large scale funds and delivery partners.


In summary, there is a significant role Islamic Finance sector can play within the Mosque and Muslim charity sector – this is often ignored over profits for the wealthy. By focusing on the Mosque and charity sector, the impact of Islamic Finance can reach far and wider in UK and beyond.


End –


Author: Nasir Rafiq is the Founder and Director of Dua Governance Chartered Accountants and Business Advisors – He is a widely experienced Fellow Chartered Accountant (ICAEW) and a Charity Financial Governance Expert.


Email: info@duagovernance.com

Reading between the lines – Human Appeal Inquiry

The Charity Commission on the 28th October 2021 published its decision of its 3 ½ year long inquiry into Human Appeal. This was a comprehensive investigation that has had a profound impact on the charity itself and some of the individuals involved.


This decision has caught my attention as I feel it has some important governance learning for the wider Muslim charity sector, especially charities with international operations.


In 2019, I analysed the accounts of 20 of the largest international relief charities. I found collectively, they raised £350m in UK of which around £80m was raised alone in Ramadan. Hence, there is a lot at stake, and it is imperative that charities learn lessons from such Inquiries.


Background to Human Appeal Inquiry


On 18th April 2019, the Commission opened a statutory inquiry (a serious inquiry) into Human Appeal. The inquiry focused on how Human Appeal trustees conducted themselves in relation to their duties, decision making, due diligence and financial controls.


At the time the Inquiry opened, the charity was of a significant size with an income of £36m, operations in 24 countries and over 100 full-time staff including six directors and a CEO.


My reading of the Inquiry report


The Commission report is a valuable read and trustees of all Muslim charities should read and understand the findings in this report, as much of it, is relevant to all International NGOs.


I will set out my observations below, reading between the lines.


The Trustees can’t wash their hands off overall responsibility

In large charities, trustees employ the executive and delegate responsibilities to them. This does not mean trustees have no responsibility and when something goes wrong, the trustees can simply blame the CEO and get away with it.


The Inquiry concluded that there had been misconduct and/or mismanagement in the administration of the charity by its then Trustees and identified that a significant factor in the misconduct and/or mismanagement was insufficient oversight of the charity’s executive by the then Trustees.


Steve Roake, Head of Compliance Visits and Inspections at the Charity Commission, said “While trustees of larger charities will delegate certain tasks to staff members, we and the law are clear that trustees retain ultimate responsibility for running their charity. and our guidance is clear that trustees must ensure that robust reporting procedures are in place. Responsibility for ensuring they have sufficient information and are adequately informed to make decisions rests with the charity trustees”.


It should be noted that in the detailed report, the Commission did not single out the CEO for misconduct, never mind gross misconduct.


Ignorance of Trustee(s) is not a defence


The Commission report states that part of a trustee’s role is to review proposals and challenge assumptions critically and objectively in making decisions.


No one should be able to direct the trustees or drive decisions through without sufficient consideration. Trustees who simply defer to the opinions and decisions of others aren’t fulfilling their duties.

In large charities (especially), it is imperative that formal systems and process are in place that provide scrutiny over Executive decision making – this does not mean, the Executive are deprived of decision making – This is one bicycle that requires both tyres to run in sync for good governance.


Trustees approve the strategy and budget. The Executive run the charity and provide timely and robust feedback to Trustees so that they are adequately and collectively assured and informed.


It is insufficient for the CEO to rely on informal relationships with the Chair of Trustees or a small of group of trustees.


It is not enough for due diligence to be done by management; Trustees must have systems in place that can adequately assure them that due diligence is actually done


Often when asked, trustees assume due diligence of donors and partners is done by management because they are paid to do it. When public funds and donor monies are involved, this is not sufficient or a responsible answer by any standard.


There is a stark difference between assumption and assurance. When someone else’s money is involved which is the case with donor monies in charities, trustees should not be relying on assumptions and mere alone representations from the executive.


A system of internal control, policy and independent assurance on their effectiveness is something that should be in place as a standard in large charities.


The Muslim charities are often lacking in this area, often because trustees have never experienced similar systems in place elsewhere and there is no compulsion within the sector for such systems to exist. This attitude needs to change – the level of funds and risks involved in the sector demands this.


Submitting true and fair statutory returns on time matters and it’s the trustees that are ultimately responsible

Charities with annual income above £1m require a statutory audit of their year end financial statements. The External Auditors are required to give an “opinion” on whether the charity’s financial statements are true and fair presentation of charity finances and activities.


There are two main types of opinion – Unqualified opinion: means a clean opinion where the auditors consider the financial statement true and fair. Qualified opinion: means a bad / adverse opinion where the auditors raise serious concerns over the financial statements.


Human Appeals submitted 2017, 2018 and 2019 (last three years) financial statements consistently show a qualified opinion disclaimer from its External Auditors.


The reason for these qualified disclaimers is due to unreliable financial records and a risk of material misstatement in its reported income and expenditure. The qualified opinion also relates to a material uncertainty that the auditors felt exists that may cast significant doubt on the charity’s ability to continue as a going concern.


This is a damning verdict on the state of Human Appeal finances, how they are managed and recorded from an independent Auditor. For a charity that raises Zakat and Sadqa monies, this is problematic, more so, as questions can be raised on its ability to account for Zakat monies properly.


The Commission recognised the qualifications of Human Appeal accounts in their Inquiry and were critical of the late and non-submission of the accounts. The Commission considered this to be misconduct and/or mismanagement in the administration of the charity and the Inquiry finds that the trustees of the charity at the time are responsible for this.


It’s the responsibility of the trustees to ensure adequate and capable resources are secured and in place for reliable financial records. International charity accounts are complex accounts with significant compliance burden, this should never be underestimated and ignored by trustees.


My conclusions


Fundraisers work hard to raise funds, they become the face of the charity. They use various strategies to convince donors on the credibility of the charities they represent.


As a result of their work, the money they raise is not just money, it represents someone’s emotions, trust, a memory of a deceased loved one or a simple sacrifice of personal funds.


It is sad when the trustees of that charity let their fundraisers and donors down by not fulfilling their legal and moral responsibilities.


The Commission in the report recognised the progress made during the Inquiry by the current Human Appeal trustees and as a result the charity is in a stronger position going forward.


However, the Commission also recognised remaining areas where significant improvements are still required. Reading through the report, the state of finances maybe one of them.


Author: Nasir Rafiq is the founder and director of Dua Governance Chartered Accountants and Business Advisors –


He is a widely experienced Fellow Chartered Accountant and a charity financial governance specialist.


End –

Basic Finance for Charity Trustees

Blood flow in the body is vital for a living and healthy human being.


Finance in charities is like blood in the body. There is no charity activity without it. Money buys the goods and services for the most in need and connects the donating hand to the one that receives it.

In humans high blood pressure and cholesterol can lead to disease, heart attacks and death. Like humans charities follow the same path.

Cashflow problems, banking freeze, fraud, bad accounting and waste of money leads to beneficiaries losing out and in extreme cases a bust charity – unlike local government, charities are not bailed out and die their death. Recent Covid19 crisis has shown this far and wide.


To stay healthy humans need to work on their diet, regularly exercise and see the doctor for check-ups.


Charities are no different.

The political and social environment is constantly changing and the economic conditions are not always favorable. Quality of staff, training, regular performance reviews and checks by internal and external professionals, keeps the finances strong and healthy.

To be healthy, we don’t need to be health experts. We just need to know and do the basics. These basics can be life and death in the long term.

We have organised a Webinar – Finance Basics for Charity Trustees to discuss the basics of finance that should matter to Trustees of any size charity.


As a trustee, you don’t need to be a finance expert. All you need is to ask the right questions at the right time from the right people – our webinar is designed to equip you with just that.

Register now @ https://bit.ly/3DGXJSC. All registrants will receive a copy of the recording.

Gift Aid for Mosques

During the Covid19 crisis Mosques suffered as they had to close and there was no Government support available.


Despite this, many Mosques played a vital role. They managed Covid19 safe funeral prayers, promoted spiritual wellbeing using online facilities and supported the vulnerable in the community by reaching out to them.


The pandemic crisis has highlighted the importance of maximising the support available from Government. Gift Aid is one of the main way, the Government supports charities – Mosques often lose out by not having the systems in place to make the correct gift aid claims.


Even bucket donations collected during Friday prayers can attract gift aid with the right systems in place.


Our live webinar is designed to address the knowledge gap. We have joined up with Grant Thornton Tax experts who have direct experience in helping a Mosque claim significant funds in Gift Aid.


The webinar will be hosted by our Founder Director Nasir Rafiq, a widely experienced financial governance expert that helps many charities of all sizes and types within the Muslim Charity sector.


Date: Thursday 2 Sept, 6-7pm, Registration link https://tinyurl.com/w5u9at79.


A copy of the recording is available. Please email info@duagovernance.com for a copy with following details:


1) Name

2) Contact email

3) Organisation name

Overheads in Charities – Good Governance

Overheads are support and administration costs that Charities incur in delivering their charitable objectives. In a small organisation this may be borne by Trustees with no impact on charity accounts whereas in large charities this cost becomes unavoidable.


Overhead costs and activities either incurred by the charity or by the donors directly are important, as without these costs or activities, it is impossible to deliver charitable objectives.


Trustees and Directors have a legal duty to ensure that charity funds are spent wisely, properly and according to charity objectives. Consequently, robust administration of funds becomes a necessity for Muslim charities and the wider charity sector generally.


Support costs however can be rationalised, if charities are able to effectively capture, control and plan their support costs, for example:

  • The business case for support costs should be reviewed against the risk management and accountability needs of charities.

  • Consistent good financial controls and robust year end reporting of support costs through the annual accounts and internal reports;

  • Effective budget monitoring of support costs through out the year; and

  • Smart business planning to reduce the impact of support costs on public donations, for example the use of trading income, specific business donors.

By Nasir Rafiq (Founder and Principal Dua Governance)


An Expert in Governance and Internal Control

Let Your Numbers Talk

Good Governance requires charities to use good quality financial information for decision making and accountability. The year-end financial statements prepared by charities provide the following minimum benefits:

  • An annual feedback on use of reserves and financial activities. This is often a year old and may not represent the current state.

  • If audited, then independent certification to confirm whether the financial data held by the Charity is materially ‘true and fair’ – meaning there are no ‘big problems’ in the accounts.

  • The Executive and Trustees can be held accountable for income and spend.

  • A discipline is enforced for keeping records and maintaining audit trails of income and spends.


In addition to the above, charities that aspire to improve their governance should use their financial statements as effective tools to improve control, inform strategy and achieve transparency, for example:

  • The financial statements should make sense to trustees and those charged with governance. They should inform decision making and strategy otherwise there is a risk that decisions may not reflect ground reality. This could potentially lead to disastrous consequences or waste of resources.

  • Charities should use the year-end process to take stock of their financial controls. Financial controls and financial statements are interlinked. Late or poor quality financial statements are often as a result of inadequate financial controls.

  • The financial statements must be user friendly, reflecting the nature of the charity. This raises the charities profile and credibility among its donors and external bodies such as banks, institutional funders and regulators.

By Nasir Rafiq (Founder and Principal Dua Governance)


An Expert in Governance and Internal Control