7 minute read
Requesting a Halal 401k Option
➤ Help them understand the center’s operational and financial model. Elected and selected board members often have little or no prior background in mosque or nonprofit operations, which makes digesting financials even harder. Once they fully understand the model and what’s important to monitor, they will more likely grasp and understand the financial data’s “whys and hows.” ➤ Attach a bit of financial accountability to each member’s role. This will help them care and learn. Keep discussions on programs, people or impact connected with finances; they are not separate. Helping them learn why certain numbers matter in measuring their department or committee’s progress toward the stated goals will motivate them to track specific numbers in relation to the organization.
For example, what number should board members leading a youth committee care about if they want specific outcomes for their program, or a zakat committee lead care about if he or she aims to support X number of people, programs or communities? This skill will also help them refrain from making program decisions that may impact the center’s overall financial health. ➤ Share financial information timely and in an easy-to-digest manner. Keep it brief yet comprehensive enough to be meaningful and reflect the vision. Avoid too much specialized jargon and terminology.
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For example, the commonly used term “accounts receivable” can be hard to understand. And so they may feel too embarrassed to ask what it means. If using jargon is necessary, provide its definition. Otherwise, use simple layperson language and put the term in parenthesis. Also, use images, colors, simple charts, symbolic figures, shapes and maybe words instead of actual numbers, where possible, to make financial reports look less intimidating. ➤ Share financial insights regularly in meetings. Not only does this make financial matters more familiar, but it also helps build mutual trust and transparency between the board and management/staff. Invite the accountant or finance person to meetings so board members can talk with them directly. The more the board sees and hears about numbers, the more they will begin to feel at ease when dealing with them. Their questions will reveal in which financial areas they need further training and education. ➤ Create a financial dashboard. This will help them track certain indicators for the organization’s overall financial health and program performance. For example, color-code certain areas, such as red (negative performance — too much expense), orange (on track but needs monitoring and attention — a little slip could be costly) and green (keep up the good work, well within budget + revenue).
Consider using the specific donor management software or client management tools used by some nonprofits, such as Salesforce, that automatically creates custom dashboards. ➤ Engage board members in the budgeting process. This may seem difficult and time consuming, but not doing so will likely cause these individuals to be less invested in meaningfully enforcing or monitoring those budgets. ➤ Engage them in defining financial internal controls. Although they won’t be the ones actually practicing the controls, participating in policy development will help them understand the financial processes and procedures if they are assigned a role in the policy or in other areas that involve financial risk management and monitoring. ➤ Meet in person to review financial information. Personal meetings are far more effective than just emailing intimidating, dry and stress-causing spreadsheets. Such encounters will help board members retain and make better sense of the data. Sometimes, an easier process also helps make hard things seem easier. ➤ Adopt a whistleblower policy. Doing so will help board members understand the steps and procedures in the case of a financial breach or fraud. ➤ Implement the tips consistently. Understandably, making busy board members interested in financials is a bit challenging. But incorporating two tips at a time and implementing them consistently will significantly help members improve their financial literacy and become effective financial stewards for your nonprofit’s success. ih
Sadia Qureshi is a communications consultant for nonprofit organizations.
Requesting a Halal 401k Option from Your Employer
BY AMAL OMER
As we all know, purity is a key aspect of our Islamic faith. This is not just limited to the foods we consume or personal hygiene. Purity also extends to our earnings, the source of our income, and how we invest.
Financial institutions like Azzad Asset Management and Saturna Capital offer halal investment options that screen out companies that profit from alcohol, tobacco, pornography, gambling, insurance, interest and firearms. This screening also avoids investing in conventional bonds that generate income from interest (riba) and companies with high-debt ratios.
For many of us, living in a non-Muslim society requires being diligent to ensure that we consider Islamic guidelines in all aspects of our lives. One area that can often be overlooked is our employer retirement savings plans, such as a 401k or 403b.
Typically, these plans offer limited investment options that are not halal, as they invest in the aforementioned companies or bonds. If
Requesting a Halal 401k Option from Your Employer
a halal investment option is not available at your company, there are steps you can take to ask for an accommodation.
In working to help your employer, typically the organization’s human resources department, understand your request for halal-compliant investment options, it can be explained as ethical or socially responsible investing that meets Islamic guidelines. While socially responsible funds may screen out impermissible lines of business, only halal funds will screen for financial ratios and interest.
You can also contact your company’s 401k provider to see if they offer halal funds or a self-directed option and share this in your communication with your human resources department. If the option is available, this helps spell out the solution for your employer: adding the halal funds or self-directed option to their benefit offering.
“Oftentimes employers are not aware that their employees have religious and ethical investment requirements,” said Fatima Iqbal, CFP®, senior investment strategist and financial planner at Azzad Asset Management. “We always recommend requesting a self-directed option that allows them to have a brokerage account through their retirement plan. They can then purchase halal mutual funds or have us manage the account for them as their fiduciary.”
Iqbal also advised grouping with other Muslim colleagues to lobby for the option to be made available. It can be helpful for employers to see that there is a demand for a halal-compliant 401k within the organization.
She added that “choosing not to par-
ticipate [in the 401k] can mean losing out on tax-advantaged retirement savings and potential employer matching contributions.”
It’s important to note for your employer that not having a halal-compliant option available means that you are unable to participate in the company’s 401k and therefore aren’t being provided access to the benefits offered to the other employees. You can also review your organization’s equal employment opportunity (EEO) policy, which may advise you to apply for an accommodation to access benefits based on your religious beliefs. You can also draw the employers' attention to ERISA laws: The Employee Retirement Income Security Act of 1974.
According to laws enforced by the U.S. Equal Employment Opportunity Commission, it is illegal for employers to discriminate against employees because of their religion. Although employers are not in violation of the Department of Labor laws if they do not meet employees’ ethical requirements, it’s in their best interest and their EEO policy that they accommodate equal access to the benefits offered.
And, as companies look to enhance their diversity, equity and inclusion (DEI) practices, you can highlight that offering such a plan is an asset that can help retain and attract talent. Raising the need for inclusive benefits can also help organizations better understand the role of faith as they establish DEI offices.
While Muslims are encouraged to be unobtrusive about their good deeds, living in non-Muslim societies, where we often navigate unique situations like this, God willing, it can be a sadaqa to share with others how you have pursued an accommodation in this matter or in other affairs, to abstain from the unlawful and attain the lawful. God tells us, “If you disclose your sadaqaat (charity), it is well; but if you conceal them and give them to the poor, that is better for you” (2:271) and “Those who spend their money in the night and in the day, secretly and openly, they will have their reward with their Lord. There is no fear over them, nor will they grieve›› (2:274).
Creating awareness about the need for halal investment options could also develop an incentive for financial institutions to offer such plans and for companies to include them in their benefit packages. As Muslims, we must uphold our values in all aspects of our lives, including our finances. When we take the initiative to practice our faith with the best of intentions, we can strengthen our iman, bring baraka to our wealth and make the path easier for the future-generation of Muslims. ih
Amal Omer is a freelance writer based in the Washington, D.C., area.
