Islamic Gift Economy: Economy for the common-good – Be the change maker and bring back the economy of abundance

The concept of Islamic Gift Economy (IGE) shifts the paradigm in human behaviour and attitude in relation to the values, norms and beliefs towards māl (wealth) and embeds the concept of mutual giving and sharing based on Islamic doctrine. The purpose of the concept is to revive the solid pillars of Islamic economic system of giving and sharing, with the aim of implementing an economic system which is primarily driven for the common-good, following the foot-steps of Prophet Muḥammad (SAW), in terms of provisioning and earnings and the market structure.

In essence, IGE challenges the private individual centric mind-set of neo-liberalism. Contrary to the principles of neo-liberalism whereby the focus is on profit generation, the notion of IGE is based on al-itqtiṣād al-infāqī (the economy of provisioning) and common-good whereby the focus is on mutual consented giving and receiving for benefit of achieving material both in the physical form and spiritual well-being.

There are four main differences between IGE and the present day modern economy. First, the current modern economy is based on the idea that the world’s resources are scarce and limited. Second, the contemporary economy creates a materialist environment, thereby fostering a mind-set that human beings have unlimited needs and desires which need to be fulfilled. Rafudean (2014) explains that the modern economy does not have a spiritual core which can restrict human desires, creating a materialistic world with unlimited needs. Third, the current day economic system does not cater for the common good due to the lack of communal interest, leading to inequality in the distribution of māl and resources. Fourth, underlying belief in spirituality and the reliance on the Creator is absent in present day economy.

IGE is defined by Setia (2011, p.72) as “the provisioning and sharing, by mutual giving and receiving, of natural and cultural abundance for realizing material and spiritual well-being”. The above definition of IGE takes into account resources in the material (physical form) and also the spiritual higher metaphysical significance of resources in relation to the source and provider of the resources.

There is no concept of relative scarcity in Islam and according to Ismail (2010), resources are sufficient and abundant enough on earth to provide the basic needs (food, shelter, cloths, and so forth) of 50 billion human beings. Therefore, Islamic economics is essentially an economics of abundance, and never an economics of scarcity. The principles of IGE is grounded in the Islamic belief that the natural and cultural resources of the world are abundant and therefore the material needs, wants and desires of human beings should be limited and in tawāzun/’iffah (moderation). The concept of IGE is centred on the Islamic attribute of shukr (gratitude) which cultivates contentment and satisfaction with life and with the material possessions that one owns. This in return, nurtures karām/iḥsān (generosity) towards others as a pathway of showing shukr towards Allah (SWT). A means of pleasing Allah (SWT) and gaining raḥmah (mercy) from Allah (SWT) is by doing common-good for the prosperity and advancement of maṣlaḥah ʿāmma (communal interest) instead of focusing on individual maṣlaḥah nafsiyya (private interest) which can lead to greed.

Islam has a rich culture and tradition of giving and the majority of domains of exchange were voluntary, devotional and communal. This can be demonstrated from the history of Islamic economics, especially from the concepts of waqf (Islamic endowment), waṣīyah (bequest), ṣadaqah (voluntary charitable contribution (in kind)), hibah / hadīyah (gift), zakāh (mandatory alm), qarḍ ḥasan (goodly personal loan) and farā’iḍ (estate division).

The concept of IGE is derived from the foundation of Islam and the traditional and cultural practices of giving by Muslims throughout the world for over 1000 years. The IGE framework is designed to revive the notion of the gift economy based on Islamic religious teachings and to provide a mechanism to incorporate religion, social and commercial exchanges that are formally embodied in the traditional fiqh (Islamic jurisprudence based on the code of conduct expounded in shari’āh (Islamic law) ) of ibādah (devotion) and muʿāmalah (commercial and social transaction), such as zakāh, waqf, ṣadaqah, hibah / hadīyah, farā’iḍ, waṣīyah, qarḍ ḥasan, ‘ariyyah (lending something for use), ijārah, ja‘ālah (job wages), muḍārabah (venture capital or financing a profit-sharing venture) and mushārakah/sharikah (business partnership).

Thus, IGE redefines the science of economics as the science of iktisāb (earnings) and infāq (provisioning) of al-ma‘āyish (livelihoods) for maṣlaḥah ‘āmmah (the common good) (al-Ghazālī, 2013). It provides solutions to the present day economic challenges and revives religious, social and commercial exchange mechanisms by cultivating deeply rooted collaborative platforms and focusing on the provisions for earning and livelihood, including strategies for investment and trade.

Implementing IGE practically requires the addressing of the provisions for legitimate earnings and livelihoods and the sound infrastructure of an ethical and moral sūk (market). The building of the masjid and the sūk were the two initial projects initiated by Prophet Muḥammad (SAW) in order to build a strong ummah (community), when he migrated to Madināh. This highlights the importance of providing an environment where provisions for legitimate earnings and livelihoods, and the infrastructure of an ethical and moral sūk foundation, in order to build a strong ummah. The above is an example to emulate especially at a time when building and uniting the Muslim ummah is an essential part of the dīn (religion/way of life) in creating peace in the world.

  Provisions for Earning and Livelihood

IGE is a holistic economic system and is incorporated on a collaborative economic model based on the operative principles of ta‘āwun (cooperation), ‘an tarādin/murādātin (mutual consent) and mushārakah (business partnership). The notion of IGE is established on the operative principles of high akhlāq (morality and ethics), which are found in the Islamic theology of raḥmah (mercy), shukr (gratitude), karam/iḥsān, tawāzun/ ‘iffah, khilāfah (trusteeship/vicegerent) and amānah (trustworthiness/accountability).  

The Notion of Giving (and Receiving)

According to a ḥadīth Prophet Muḥammad (SAW) said: “No one of you becomes a true believer until he likes for his brother what he likes for himself” (al-Bukhārī Volume 1, Book 2, Hadīth number 13). The above ḥadīth highlights the importance of good will and communal interest.

The rationale behind IGE is to provide a communally focused environment of giving back to the community through the practice of common-good. This conforms to the doctrine of Islam whereby māl is considered as belonging to Allah (SWT) and human beings as having the responsibility of khalīfah of the māl(wealth). The concept of IGE is designed to promote material and spiritual well-being in society by restoring and bringing back the culture and tradition of mutually consented act of giving and receiving and to provide a platform for collaborative partnership across public, private, and social domains. The collaboration is aimed at nurturing a relationship that can mobilize financial and human capital resources aimed at targeting solutions that can solve societal challenges by creating both social impact and profit.

Economic models that practice the act of mutually consented acts of giving and receiving provide a framework of ‘inclusiveness’ and ensure that no one is left out of the economic pie thus proving a state of stable equilibrium in the economy. The perception of giving and receiving requires a deep-reflection on religious, social and commercial exchange mechanisms and on serving communal and public interests rather than individual and private agendas. (Setia, 2011 and al-Ghazālī, 2013)

The teachings of Islam give importance to the charitable intention of giving. The verse: “Allah will enrich them of His bounty. Allah is of ample means, Aware.” [Qur’ān 24:32] explains that faḍl is from Allah (SWT). Muslims believe that if they utilise their māl in the manner prescribed by Islam, they will please Allah (SWT) and receive faḍl from Allah (SWT) and rewards in the ākhirah. They believe that the act of giving does not decrease their māl but instead they will receive more faḍl from the Creator, both materially and spiritually as it is one of the acts that greatly accumulates rewards, as reported by Abū Hurayrah who narrated the ḥadīth: “Charity does not in any way decrease the wealth and the servant who forgives, Allah adds to his respect; and the one who shows humility, Allah elevates him in the estimation (of the people)” (Muslim Volume 4, hadīth number 6264). The Qur’ānic verse “... And whatever good you [believers] spend is for yourselves, and you do not spend except seeking the countenance of Allah. And whatever you spend of good - it will be fully repaid to you, and you will not be wronged.” [Qur’ān 2:272], clearly instructs mankind to spend by giving and what one gives will be repaid (either in this world or on the day of judgement).

The act of giving charity should not be a means of gaining praise from others or exhibiting superiority for owning māl. Instead the act of giving should be with ikhlāṣ (sincerity or purity of intention) and for the sake of pleasing Allah (SWT). It should be seen as a mechanism to earn good deeds as explained by Imam al-Ghazālī that “sincerity it is that all your deeds be for God, and that your heart be not gladdened by men's praise nor that you care about their censure”. The act of giving needs to be with pure intention of pleasing the Creator and is part of ʿibādah . It is also essential to ensure that the dignity of the poor people receiving the alms is protected, hence it is recommended to give without publicity as explained in the Qur’ānic verse: “If you disclose your charitable expenditures, they are good; but if you conceal them and give them to the poor, it is better for you, and He will remove from you some of your misdeeds [thereby]. And Allah, with what you do, is [fully] acquainted.” [Qur’ān 2:271]. The emphasis on concealing the act of giving is cited in the following ḥadīth: “A person who practices charity so secretly that his left hand does not know what his right hand has given” (al-Bukhārī Volume 24, Book 2, hadīth number 504). The above ḥadīth also highlights the fact that the giver does not have to keep count of the alms given away as Allah (SWT) keeps an account of everything.


Islam teaches that it is Allah (SWT) who gives provision and rizq (sustenance) to all his creations as reported in the hadīth: ‘Umar [ibn al Khattab] (RA) narrated that he heard Prophet Muḥammad (SAW) saying: “If you were to trust in Allah genuinely He would give you provision as He does for the birds which go out hungry in the morning and come back full in the evening.” (Tirmidhī hadīth number 5299)

The Qur’ānic verse: “And He provides for him from (sources) he never could imagine. And if any one puts his trust in Allah, sufficient is (Allah) for him. For Allah will surely accomplish his purpose: verily, for all things has Allah appointed a due proportion.” [Qur’ān 65:3], provides evidence that rizq is allocated in proportions by Allah (SWT) and we as human beings need to have trust in Allah (SWT).

The verse “And whatever you have of favour - it is from Allah” [Qur’ān 16:53], can be understood that māl is rizq from Allah (SWT). “And it is He who has made you successors upon the earth and has raised some of you above others in degrees [of rank] that He may try you through what He has given you” [Qur’ān 6:165], can be interpreted to mean that human beings have been granted the role as khalīfah in this world and that māl can be a means of testing.

Islam teaches that the natural resources in the world are considered as blessings and faḍl from Allah (SWT). The verse of the Qur’ān: “if you count the bounty of Allah you will not exhaust it” [Qur’ān 14:34], implies that resources are not limited and are renewed as Allah (SWT) is the constant provider for all his creation. In conformity with this verse, the IGE framework is based on the concept of “economics of abundance”, instead of the Western economic concept of “economics of scarcity”. Rafudean (2014) states that IGE is founded on the principles of a spiritual economy which asserts that the physical and cultural resources are in abundance and that human needs and desires should be limited in order to foster the spiritual inner self.

Imam al-Ghazālī states: “Beware of worldly greed for it will ruin your religion” (al-Ghazālī, 2012). According to Setia (2011), the anxiety over the illusion of scarce and limited resources embeds greed into the human heart and soul, which ultimately leads to the urge of accumulating and hoarding. It is in fact greed for the love of resources that gives an illusion of scarcity and creates an artificial inflated market (Eisenstein, 2011 and Eisenstein, 2014). When the world’s resources are considered as abundant and continually renewed, human beings can control their greed and only consume according to their needs.

Self Reliance

Charity is highly recommended in Islam and the faḍl of the act of giving has been quoted several times in the Qur’ān and ḥadīth. There are several instances and circumstances when people are eligible for and deserving of charities such as zakāh, ṣadaqah, and so forth.

Setia (2014) claims the Qurʾān gives clear directions that infāq in general is a preferred manner of earnings and not by suʾāl (beggary). Islam strongly advocates self-reliance strategies and discourages dependency on hand-outs as it is not considered a good act and should only be exercised in extreme cases as demonstrated by the Qurʾānic verse and ḥadīth cited below:

The verse: “[He] who made for you the earth a bed [spread out] and the sky a ceiling and sent down from the sky, rain and brought forth thereby fruits as provision for you” [Qur’ān, 2:22], provides evidence that Allah (SWT) has provided abundant resources for mankind for their rizq and there is a share of the economic pie for all individuals. Another verse: “And when the prayer has been concluded, disperse within the land and seek from the bounty of Allāh, and remember Allāh often that you may succeed” [Qur’ān, 62:10], is a clear indication that human beings are responsible for seeking ḥalāl rizq through work or trade instead of depending on others for handouts.

The ḥadīth below illustrates the importance of infāq through self-reliance means of earning a livelihood. This ḥadīth also clearly instructs the avoidance of the acts of suʾāl and dependency:

The Prophet Muḥammad (SAW)’s companion Anas bin Malik (RA) narrated that an Ansari (helpers) man came to Prophet Muḥammad (SAW) to beg from him. Prophet Muḥammad (SAW) asked him if he owned anything in the house. When the Ansari man replied that he had a blanket, which he used for wearing as well as for spreading on the ground and a wooden bowl from which he drank water, Prophet Muḥammad (SAW) told him to bring them to him. So the Ansari man took the two things to Prophet Muḥammad (SAW) which he took in his hand and said, “Who will buy these two things?” A man said: “I will buy them for one Dirham”. The Prophet Muḥammad (SAW) said: “Who will offer more than a Dirham?” Another man said: “I will buy them for two Dirhams”. So the Prophet Muḥammad (SAW) gave the blanket and bowl to him and in return accepted the two Dirhams, which he gave to the Ansari man and said: “Buy food with one of them and give it to your family. Buy an axe with the other Dirham and bring it to me”. So the Ansari man did exactly that, and Prophet Muḥammad (SAW) took the axe and fixed a handle to it, and said to the Ansari man: “Go and gather firewood and I do not want to see you for fifteen days”. The Ansari man went and gathered firewood and sold it. He came back after fifteen days and he had earned ten Dirhams. The Prophet Muḥammad (SAW) said: “Buy food with some of it and clothes with some”. Then Prophet Muḥammad (SAW) said to the man: “This is better for you than begging as it can become a spot on your face on the Day of Resurrection. Begging is only appropriate for one who is extremely poor or who is in severe debt or one who must pay painful blood money.” (Abū Dāwūd, ḥadīth no. 1641 and Setia, 2014b)

‘Umar [ibn al Khattāb] (RA) stated that “None of you should sit unoccupied without seeking sustenance and say, ‘O my Lord, give me sustenance,’ for you are well aware that the sky does not rain down gold or silver” (al-Ghazālī, 2013, p.10). On seeing Zayd ibn Maslamah cultivate his land, Umar (RA) mentioned “You are doing the right thing. Be independent of people for that will be more protective of your religion and more munificent of you in respect of them...” (Al- Ghazali, 2013, p.10).

Taking a leaf from Prophet Muḥammad’s (SAW) life, apart from holding various high level roles and responsibilities in the communities, he practiced a self-reliant life-style, even in his private life, as cited in the ḥadīth below:

The Prophet participated in foot races, wrestled and sew his shoes and Thoub with his own hands. He also mended his bucket of water, milked his sheep, patched his Thoub, served himself and his family and carried mud bricks when the Masjid was being built.” (Gaffer, 2014)


Islam differentiates between the basic needs and luxuries so that people can lead a balanced life in tawāzun/`iffah.

Māl needs to be acquired and utilised in tawāzun/’iffah. The verse: “And [they are] those who, when they spend, do so not excessively or sparingly but are ever, between that, [justly] moderate” [Qur’ān 25:67], describes spending in moderation. Ibn ’Ali Al-Dimashqi (2011) explains that Islam is against extravagance and indulgence in worldly pleasures and māl should be spent on necessities within the Islamic parameters of what is allowed and necessary.

Adherence to the Islamic principles of māl puts boundaries on one’s own desires and lust as luxuries can influence and lead one to bad conduct. The Islamic doctrine teaches tawāzun /’iffah through two parameters, namely i). practicing Islamic way of life by balancing necessities and luxuries, and ii). appreciating and enjoying the faḍl (bounties) from Allah (SWT) within out isrāf (wastage). (Abdul Halim et al., 2012).


The verse: “And We have certainly established you upon the earth and made for you therein ways of livelihood. Little are you grateful” (Qur’ān 7:10), highlights the importance of shukr which is the door that opens the faḍl from Allah (SWT). The key to opening this door is through the recognition and appreciation of the Creator’s blessings bestowed on human beings.

Imam al-Ghazālī stated that “know that thankfulness is from the highest of stations and it is higher than patience, fear, and the detachment of the world” (al-Ghazālī, 2012). Resources are gifts and favours from the Creator and, therefore, it is essential to show shukr to the Creator for all the bounties and blessing that have been bestowed on mankind. Shukr suppresses the compulsion for greed as being grateful in essence enables one to be content with the bounties and blessings.

The Qur’ānic verse: “Remember Me – I will remember you. Give thanks to Me and do not be ungrateful.” [Qur’ān 2:152], instructs human beings to show shukr to the Creator.

The verse “And verily We gave Luqman wisdom, saying: Give thanks unto Allah; and whosoever giveth thanks, he giveth thanks for (the good of) his soul. And whosoever refused - Lo! Allah is Absolute, Owner of Praise” [Qur’ān 31:12], asserts that showing shukr to the Creator is in fact a favour for the person who shows shukr. Besides, it is a means of pleasing Allah (SWT).

The verse “If you are grateful, I will certainly give you increase, but if you are ungrateful, My punishment is severe.”(Qur’ān 14:7), highlights the importance of shukr and Allah’s (SWT) promise that if one shows shukr then the Creator will grant him / her more blessings and bounties.

          Karam/ Iḥsān

The terms of karam/iḥsān (generosity) fosters the consciousness of social responsibility and the eagerness to carryout acts of good deeds, which according to Islamic teachings will lead to the state of excellence and perfection. Māl, according to Islamic teachings, is a blessing from Allah (SWT) and human beings need to show shukr by the acts of karam/ iḥsān.

Prophet Muḥammad (SAW) was a very generous man and Muslims are encouraged to be generous to others. To highlight the importance of generosity in Islam, it is cited in a ḥadīth that “Once the Prophet Muḥammad (SAW) offered the ‘Asr prayer and then hurriedly went to his house and returned immediately. I (or somebody else) asked him (as to what was the matter) and he said, “I left at home a piece of gold which was from the charity and I disliked to let it remain a night in my house, so I got it distributed”. (al-Bukhārī Volume 2, Book 24, hadīth number 510)

The rewards and benefits of karam/iḥsān are cited repeatedly in the Qur’ān and ḥadīth, and generosity in the form of zakāh is one of the five pillars of Islam. Karam/iḥsān is considered as an investment for both in this duniā and ākhirah as every generous act pleases Allah (SWT) as stated in the verse: “Say, Indeed, my Lord extends provision for whom He wills of His servants and restricts [it] for him. But whatever thing you spend [in His cause] - He will compensate it; and He is the best of providers” [Qur’ān 34:39].

The Qur’ān directs people to give things that one loves and desires for himself / herself as stated in the verse: “O you who believe! spend (benevolently) of the good things that you earn and or what We have brought forth for you out of the earth, and do not aim at what is bad that you may spend (in alms) of it, while you would not take it yourselves unless you have its price lowered, and know that Allah is Self-sufficient, Praiseworthy” [Qur’ān 2:267].


A ḥadīth narrated by narrated Jarīr bin ‘Abdullah states that Prophet Muḥammad (SAW) states: “Allah will not be merciful to those who are not merciful to mankind” (al-Bukhārī Volume 9, Book 93, ḥadīth number 473). The importance of rahmah (mercy) is reinforced by the two Qur’ānic verses below: “Thereafter he is one of the ones who believed, and enjoined one another to have patience, and enjoined one another to do merciful deeds” [Qur’ān 90:17] and “Those are the companions of the position of rightness” [Qur’ān 90:18].

Islam teaches Muslims to be lenient and generous in dealing with others, particularly in business transactions, as the ḥadīth reported by Ibn Mājah declares “Whosoever gives a loan on one dinār and defers its payment to a certain time, for him is the reward of charity for each day until the time [to pay up] arrives. And when the time is up and [still] he gives him respite thereafter, for him each day is the reward of charity to the value of the loan.” (al-Ghazālī, 2013).

   Sūq and its Structure

One of the issues with the current market structure is the interference of market equilibrium. Ismail (2014) claims there is evidence that economic decision-makers have incentives to manipulate unstable and inefficient markets which eventually leads to financial crisis. Inefficient markets are caused by manipulating the supply and demand equilibrium and creating many unmet needs. The non-profit sector is under financial pressure mainly due to non- inclusion of the positive elements of the free-market, in its structure (Johnson, 2000 and Pallotta, 2010).

Ismail (2014) explains that originally, the free market concept was designed for the preservation of the environment, social justice and empowerment of the poor. However, the current free market, based on the capitalism model of development, has failed to deliver all of the above and instead has widened the gap between the rich and the poor, increased environmental devastation and has also degraded moral values due to ethical deprivation. State Capitalism, according to Ismail (2014) is causing the segregation of social values from the economic system, due to the global failure of free-market economy. Ismail (2014, p.1) describes State Capitalism as a new wave of capitalism which creates tools and mechanisms that serve the national interest (including the interest of ruling elites) rather than providing a platform of opportunities for individuals, thus preventing free market economic environments. The present day capitalistic economic model essentially ensures the survival of the fittest. It is essential for a true free market structure to have an embedded moral ethos which is free from any personal vested interest.

   Sūq Structure from of Prophet Muḥammad’s (SAW) Era

Prophet Muḥammad’s (SAW) hijrah (migration) to Madīnah demonstrates the techniques required to build an ummah. According to Setia (2014), Prophet Muḥammad (SAW), upon arrival at Madīnah established the communal masjid and the sūq al-nabī (market of the Prophet), both of which became the pillars of the Islamic socio-economic system of its era. Prophet Muḥammad (SAW) established the market in Madīnah, independent from other markets and designed it for the emerging and growing Muslim community.

The sūq al-nabī was based on the principles of al-sūq ṣadaqah (the market is charity) and became a socio-economic hub of the community, enabling the Muslims of Madīnah to earn a living and at the same time was a “charitable endowment for the public good” (Setia, 2014b, p.153). The market was seen as a transactional platform for everyone and was open to all, especially for the marginalised people to engage in transactions in order for them to earn a living so as to support themselves and their dependents. The surplus was reinvested into the community. The Prophet’s market model in Madīnah was replicated during the Ottoman era and was known as the market welfare economy whereby the market and welfare interest were combined as a single economy for the common-good (Setia, 2014b).

The notable elements contributing towards the prosperous trade and commerce during the Prophet Muḥammad (SAW)’s era in Madīnah, according to Setia (2014b, p.164), were mutual trust between the parties involved in commercial transactions, ribā was prohibited and was replaced with business partnership, the market was a “free-trade zone” with no imposed taxes and big emphasis on akhlāq ensuring that contracts were deemed as binding,  prohibition of manipulated price control mechanisms, manipulative acts of monopoly, hoarding, bribery, perjury, fraud, deceit, counterfeiting, and so forth.

Markets based on strong foundations of akhlāq are in fact an extension of a masjid. Akhlāq is pivotal in “maintaining the integrity of market function” which lead to the flourish of the market of Prophet Muḥammad (SAW) (Setia, 2014b, p.164). The model of the market was indeed for the socio-economic advancement which integrated personal interest of profit making with communal interest of common good.

Prophet Muḥammad (SAW) was against price fixing and a free market structure was practiced during Prophet Muḥammad (SAW)’s era, whereby the price was set by the market, as illustrated from the ḥadīth reported by Ibn Hanbal, Abu Daud, al- Tirmidhī and Ibn Majah: “When the prices of goods became high during the Prophet Muḥammad (SAW)’s time, the people asked him to fix the price in the market for them. Prophet Muḥammad refused to fix the price and replied: Allah is the One Who fixes prices, Who withholds, Who gives lavishly, and Who provides, and I hope that when I meet Him none of you will have a claim against me for any injustice with regard to blood or property.

In reference to economic equilibrium between supply and demand, Ibn ’Ali Al-Dimashqi (2011) explains that a stable economy requires al-ḥāṣil (the revenues) equal to al-mamlakah (the provisions) to provide rizq for the people and ensures security of life and māl. In order to prevent the distortion of equilibrium in the supply and demand dimensions, the following regulatory ethical tools, based on Islamic teachings, are recommended by Ismail (2014, p.12): i). no manipulation of price by the buyer, ii). no hoarding in order to avoid idle resources, iii). accurate measurement to ensure justice, iv). accurate information on the goods and services so as to avoid unfair contracts, v). no illegal money in order to avoid fictitious activities.

For more knowledge on Islamic Gift Economy, please refer chapter 4 of the book entitled: “Waqf (Endowment): A Vehicle for Islamic Social Entrepreneurship”. Please click here for details on the book.

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