Feasibility Study on Analysing Foreign Funding of Islamic Institutions in the Netherlands

Project Overview

Background

The Dutch Parliament formulated a need for an overview of the size and scope of foreign financial support to Islamic institutions in the Netherlands. The Research and Documentation Centre (WODC) has tackled this through a three-staged approach, commencing with an assessment of the feasibility of a comprehensive estimate of foreign funding to Islamic institutions.

Goals

RAND Europe was tasked to provide an assessment of the feasibility of conducting a full analysis of the size, scope and potential influence of foreign funding to Islamic institutions in the Netherlands.

Methods

In addition to a review of the literature and documentation available on the topic of this study, and a set of scoping interviews with key informants, we have taken a quasi-experimental approach to testing the availability and relevance of publicly available information on funding of Islamic institutions in the Netherlands.

We systematically and rigorously appraised the available information and information attributes for a sample of institutions in the Netherlands (39 of a purported 450).

Findings

• We conclude that there is relatively little financial transparency among Islamic institutions in the Netherlands. For historical reasons, foreign donations to fund Islamic institutions’ large (construction) projects appear practically inevitable, but not necessarily problematic.
• The systematic review of data collected from public sector and confidential sources confirmed links to foreign funding of Islamic institutions in the Netherlands that had previously been identified by intelligence reports and in the media.
• The collected data do not allow us to create a comprehensive and reliable overview of foreign funding to these institutions in the Netherlands.
• Findings for the sample of 39 Islamic institutions confirmed presence of board members from potential source countries. However, it is not possible to derive any firm conclusions about the possible conditions under which funding is provided.
• We expect it will be legally and practically complicated, and very resource-intensive, to carry out a comprehensive assessment of all ca. 450 mosques in the Netherlands.
• We suggest that in order to improve financial transparency of Islamic organisations, institutions or their umbrella organisations are encouraged to self-report on funding they have received from abroad and how these funds were used (for example in annual reports, or to a regulator).

Author's Statement

What was the purpose of the study?

The Dutch Parliament (Tweede Kamer) formulated a need for an overview of the size and scope of foreign financial support to Islamic institutions in the Netherlands, as well as the potential influence that foreign actors may exert (partly) as a consequence of this funding. The Research and Documentation Centre (Wetenschappelijk Onderzoek en Documentatiecentrum, WODC) has tackled this through a three-staged approach, commencing with an assessment of the feasibility of a comprehensive estimate of foreign funding to Islamic institutions.

What was RAND Europe asked to do?

RAND Europe was tasked with undertaking the first stage of the research, which was to provide an assessment of the feasibility of conducting a full analysis of the size, scope and potential influence of foreign funding to Islamic institutions in the Netherlands.

In addition to a review of the literature and documentation available on the topic of this study, and a set of scoping interviews with key informants, we have taken a quasi-experimental approach to testing the availability and relevance of information, including: a systematic appraisal of data available in the Netherlands on Islamic institutions and a review of publicly available data in six potential source countries on funding of Islamic institutions in the Netherlands.

With these sources we assessed the information available for a sub-set of mosques in the Netherlands with a view to assessing the feasibility of conducting an analysis of all Islamic institutions in the Netherlands. We analysed two samples: 20 institutions were randomly selected (‘random sample’) and 19 institutions that featured regularly in the media were selected (‘purposive sample’).

What did the study results reveal about the existence of foreign funding of Islamic institutions in the Netherlands?

We conclude that there is relatively little financial transparency among Islamic institutions in the Netherlands. Partly, this is because mosques in the Netherlands have typically taken the form of associations (verenigingen) and foundations (stichtingen), which are subject to limited external oversight.

External financing of associations and foundations – whether religious or not – is common in the Netherlands and elsewhere. And despite the tradition of community-based donations, the costs of large projects, such as (re-)construction of mosques, are unlikely to be raised within the local community. As public sector funding to religious institutions does not exist in the Netherlands, large foreign donations for such projects are practically inevitable.

The reviewed documentation reveals the existence of official links between mosques in the Netherlands and foreign governments (e.g. Diyanet) or international organisations (e.g. Milli Görüş), but does not provide any indication of the possible size of such funding.

Data collected from public sector and confidential sources confirmed links to foreign funding of Islamic institutions in the Netherlands that have been identified by intelligence reports and in the media.

Is it possible to conduct a comprehensive assessment of the size of foreign funding to Islamic institutions in the Netherlands?

• We systematically and rigorously appraised the available information and information attributes for a sample of institutions in the Netherlands (39 of a purported 450).
• The collected data do not allow us to create a comprehensive and reliable overview of foreign funding to these institutions in the Netherlands.
• Moreover, a crucial type of information – that of transactions between bank accounts – is not publicly available.
• We expect it will be legally and practically complicated, and very resource-intensive, to carry out a comprehensive assessment of all ca. 450 mosques in the Netherlands.

What does the study conclude about the influence of foreign funders on Islamic institutions in the Netherlands?

On the basis of the sources reviewed it is not possible to derive any broad conclusion about possible conditions under which funding is provided. We were able to verify the potential influence on the institutions’ governance through a review of board membership over time from the Chamber of Commerce’s Trade Register records. Out of the total number of 1266 board members that the 39 sample institutions have had over more than the past two decades, 37 members have been based abroad.

Appointment of a board member from the source country of an institution’s foreign funder could be taken as an indication that the donor may have some influence on the management of or practices at these institutions. Yet caution is required in making such an interpretation, as nothing is known about the nature of these arrangements.

The frequency of foreign board membership in the purposive sample appears to be much higher than in the random sample, suggesting that institutions featured in the media are not necessarily representative of the entire population of mosques. At the moment, 17 per cent of board members in the purposive sample are ‘foreign’, compared to only 1.5 per cent in the random sample.

Other data sources, such as court cases, construction permits, literature or online sources verified several cases that were reported in the media, but provided no additional insights into funding conditions or influence.

Are Islamic institutions the only religious organisations that receive funding from donors abroad?

Islam is not the only religion with strong philanthropic traditions. Faith-based philanthropy plays an important role in other religions such as Hinduism or Christianity. However, Western countries have historically been a source, rather than a recipient, of faith-based foreign donations.

We have identified little evidence of funding from state actors abroad to other religious communities in Western countries. These findings seem to suggest that funding from foreign state actors to religious institutions in the West may be more common for Islam than for other religions.

What is the background to these findings?

• Given the historical and legal context of Islamic institutions in the Netherlands, external funding – including from donors abroad – is practically inevitable.
• Such foreign funding is not a priori problematic, let alone illegal.
• Crucial information about account transactions between international donors, intermediaries and recipient institutions (mosques) will not be accessible to an external research institution.
• There is little financial transparency among Islamic institutions, e.g. about revenues and expenditure, for external observers.
• Classified information acquired by institutions with special investigation mandate (e.g. intelligence agencies) may, in individual cases, help to trace the origins of financial flows.

What does RAND Europe recommend?

1. Focus on international intermediaries: We identified a number of (international) intermediary organisations that seem to be involved in financing Islamic institutions in the Netherlands using funds abroad. Further analysis could help to identify how their aims, activities and financial flows are contributing to this international landscape.
2. Facilitate improved financial transparency among Islamic institutions in the Netherlands: We suggest that institutions or their umbrella organisations could self-report on funding they have received from abroad and how these funds were used (for example in annual reports, or to a regulator). The government or a regulator may facilitate this process by offering expertise, templates and capacity to prepare annual accounts.
3. Engage in a dialogue with source countries’ diplomatic missions. Our findings suggest that dialogues with individual source countries already exist and offer good opportunities to share information about foreign funding to institutions in the Netherlands on the basis of mutual trust.
4. Focus intelligence efforts and resources on those organisations that are not transparent. While it is unlikely that all institutions would comply with self-reporting (as is the case in other sectors), effort and resource could then be focused on a small sample of non-transparent institutions, leaving the majority to benefit from an increase in trust.