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International Perspectives on Crowdfunding
Is Crowdfunding Sharia Compliant?

Sophie Nivoix, Fatima Zahra Ouchrif,
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CHAPTER
Is Crowdfunding
10 Sharia Compliant?
Sophie Nivoix and Fatima Zahra Ouchrif
ABSTRACT
The comparative analysis of the characteristics of both crowd-

funding and Islamic finance shows that there is little divergence
between these financing tools. In fact, an “Islamic crowdfund-
ing” has recently emerged, with activities in several countries,
despite a conceptual status which has to be confirmed because
of the absence of consensus about its exact name. Meanwhile,
platforms of “Islamic crowdfunding” are quite heterogeneous
as far as the proposed financing type and the reference to
Sharia are concerned.
Keywords: Islamic finance; Islamic crowdfunding;
crowdfunding platform; Sharia compliance; Sharia board
Introduction
The comparative analysis of the characteristics of both crowdfund-
ing and Islamic finance shows that there is little divergence between
these financing tools. In fact, “Islamic crowdfunding” has recently
emerged; it is active in several countries, despite its uncertain
conceptual status due to the absence of consensus about its exact
name. Meanwhile, platforms of “Islamic crowdfunding” are quite
heterogeneous as far as types of financing and references to Sharia
are concerned.
185
186 SOPHIE NIVOIX AND FATIMA ZAHRA OUCHRIF
Research Goal and Methodology

A lack of financing is a major issue for numerous entrepreneurs in the
emerging and developing countries, especially for small and micro-
enterprises. Besides, in the Middle East and North Africa and partly in
Asia, some investors are reluctant to finance projects that are not
Sharia compliant. These two obstacles to the development of economic
activity may be removed by using either crowdfunding or Islamic
finance. The purpose of this chapter is to study whether these two types
of responses are compatible, or whether “Islamic crowdfunding” raises
difficulties related to its characteristics. First, we will present both
crowdfunding and Islamic finance, then define “Islamic crowdfunding”
on a theoretical level. We will also present the emergence of crowd-
funding in several countries as well as our empirical study of the
concept of “Islamic crowdfunding” and its market. This will enable us

to assess the compliance of all types of crowdfunding with Sharia.
Because of the variety of data required, we used a qualitative
method to analyze the closeness of the relationship between crowd-
funding and Islamic finance. We built up an interview guideline based
on four topics: the concept of Islamic crowdfunding, the activities of
Islamic crowdfunding platforms, the compliance of projects with
Sharia, and the viewpoint of project managers and crowdfunders about
Sharia compliance. The interviews were carried out either by e-mail
subsequent to a questionnaire or, most of the time, by phone or Skype.
Our sample includes three Islamic-oriented platforms, that is,
Easi-up (a Sharia compliant platform located in France) represented
by Amine Nait-Daoud, Shekra (a Sharia compliant platform located
in Egypt) represented by one of its managers, and Yomken (a plat-
form labeled “Sharia-friendly” located in Egypt) represented by
Tamer Taha. In order to supplement these data we also interviewed
Layal Jebran, project manager at Zoomaal (a conventional platform
located in Lebanon) and Boubkeur Ajdir, Islamic finance scholar
and member of a Sharia-Board in France.
CROWDFUNDING: A RECENT CONCEPT

Literally “financing by the crowd,” crowdfunding is defined by
Lambert and Schwienbacher (2010, p. 6) as “implying an open
public offering, mostly through internet, of financing resources.”
These authors differentiate four main kinds of crowdfunding. The
first is donation, when the project manager (individual, association
or NGO) appeals for funds from the crowd without offering mate-
rial rewards (e.g., United Donations), or with material rewards
related to the financed project (this is often called pre-selling crowd-
funding). The value and nature of the possible counterpart usually
increase with the crowd participation level (e.g., Kisskissbankbank).
Is Crowdfunding Sharia Compliant? 187
The second type is royalty-based crowdfunding: the crowdfunders

are seen as co-producers and receive a percentage of the revenue of
the project they support, related to their contribution level. The third
and most recent financing possibility is equity crowdfunding. The
investor gets company shares and thus has the right to receive divi-
dends like any shareholder (e.g., Wiseed). The fourth type is debt
crowdfunding among individuals that may be with or without inter-
est rates. The role of the platform is that of intermediary between
lenders and borrowers (e.g., Proper Marketplace or Prêt d’union).
This category is close to microfinance (e.g., Babyloan).
In terms of evaluating such projects, Bessière and Stéphany (2014)
indicate that non-financing criteria also matter. They point out that
there is a gap between the firms’ governance that exists in crowdfund-
ing and the more financial-oriented governance of Business Angels in
venture capital funding or by banks in the case of loans.
THE MAIN CHARACTERISTICS OF ISLAMIC FINANCE

Islamic finance differs from conventional finance in three key points
(Kabir Hassan, Kayed, & Oseni, 2013): loans with interest (“riba”)
are prohibited, speculation (“gharar”) is prohibited, and certain
activities (related to alcohol, pork and its derivatives, gambling, por-
nography) are also prohibited. These principles have led to the crea-
tion of specific financial contracts in order to answer to the needs of
both enterprises and individuals. In particular, there are two types
of partnership contracts (“mudaraba” and “musharaka”) which are
based on profit sharing (“mudaraba”) and profit and loss sharing
(“musharaka”). We also have to mention that a musharaka contract
can be permanent, meaning that the crowdfunder stays in the firm
over the long term, or decreasing, which enables the crowdfunder to
gradually sell his/her shares in the firm. As a matter of fact, decreasing
musharaka imitates the financing flows of loans that are refunded
through equal installments or constant annuities, while profit sharing
takes the role of interest. A major advantage of partnership contracts
is that they limit the moral hazard borne by the crowdfunder while
avoiding guaranteeing payment as in the case of bank loans. Other
contracts are also used, such as leasing contracts (“ijara”) or order to
manufacture contracts (“istisna”). Besides these, Sharia encourages
donations in several ways: mandatory donations that depend on indi-
viduals’ earnings (“zakat”) or voluntary donations (“sadaqah”). As
for loans, the only possibility is interest-free loans (“qard”).
Considering the conventional financial institutions, which are
secular by nature, the question of knowing whether they should inte-
grate some Sharia compliant contracts among their products is simi-
lar to that related to slaughterhouses or food companies about the
Sharia compliance of their products. Such companies do not work
according to a religious logic, but a commercial one: they do not

promote a religion or an ideology but respond to the demand of
some of the consumers. The development of Islamic finance in non-
Muslim countries is certainly related to the existence of a demand of
a fraction of the population, but even more to a demand from
certain firms, more particularly if they are large and able to bring
investments (from the Gulf countries for example).
“ISLAMIC CROWDFUNDING” FROM A THEORETICAL VIEWPOINT

If Islamic finance has experienced widespread expansion since the
beginning of the century, “Islamic crowdfunding” is only just emer-
ging. Indeed, as in conventional finance, crowdfunding represents a
new means of financing, dedicated to a specific demand and limited
to business creation or projects managed by SMEs. These specific

characteristics explain the recent emergence of this activity; “Islamic
crowdfunding” also exhibits a participatory viewpoint as well as
being Sharia compliant. We have to mention that crowdfunding can
easily combine several means of financing such as the crowd and an
investment fund (De Buysere, Gajda, Kleverlaan, & Marom, 2012,
p. 17); this is not problematic for Islamic finance if the fund is
Sharia compliant in its investment choices.
Then we have to analyze the question of the religious identity of
a financial activity and its authentication. Islamic banks have a
Sharia Board that checks and authenticates the religious compliance
of the banking operations. Such a Board is sometimes questionable
as scholars with both financial and religious knowledge are fairly
rare and much in demand by firms. Their demands in terms of remu-
neration and their flexibility in interpreting the Quran vary from
one scholar to another, and their decisions fluctuate from one bank
or one country to another. As for crowdfunding platforms, religious
certification appears to be even more difficult because they lack suffi-
cient resources to finance their own Sharia Board. Can the platform
be labeled as Sharia compliant by its founders alone? What is the
relationship between the religious compliance assessment of a
crowdfunding website, its communication tools and its real activity?
Can a product or a service be Sharia compliant if it has not been
certified by an acknowledged religious authority? Can compliance
according to the product characteristics alone be sufficient? And to
what extent can compliance be partial (projects partially financed by
loans, by other funders, or related to a non-compliant firm, or a
non-compliant activity such as the Islamic financial indexes, which
have tolerance limits concerning non-compliant operations and
the use of loans by the firms they include)? Crowdfunding can help
projects to emerge, and be a means but not an end in itself, as
Islamic finance may be a tool of development for certain countries
that reject conventional finance. Compliance should therefore be

assessed according to the final goal and not simply the means used.
Indeed, a Hadith a text describing the acts and words of the pro-
phet Muhammad that supplements the Quran, indicates that “the
value of acts depends only on their intentions” (Abboud, 2007).
Finally, some authors such as Jha (2013) question the direction
taken by Islamic finance in recent years. As a matter of fact it tends to
adapt the instruments of conventional finance without offering com-
pletely different tools inside a value system and an economic organiza-
tion that would normally exhibit more obvious clearer religious roots.
If Islamic finance attracts a fraction of Muslim customers,
including in non-Muslim countries, it is still unknown whether the
proportion of potentially interested entrepreneurs is the same as that
of potentially interested customers. In the same way, some entrepre-
neurs or non-practicing Muslim investors may prefer conventional

financing (such as bank loans, Business Angels, or conventional
crowdfunding for example) if these are more profitable in terms of
total cost or amounts of funding.
We can thus draw a first comparison between the means of
financing used by crowdfunding and the tools of Islamic finance
(Table 1), in order to point out their common possibilities.
It is worth mentioning that since an Islamic fund giving zero-
interest loans (qard hassan) cannot receive funds from a conventional
loan, it could directly use charity like zakat (Nekaa, 2013, p. 94).
Indeed, zakat represents 2.5% of annual earnings and constitutes
a regular long-term financing source.
Table 1: Convergences and Divergences between Crowdfunding Tools

and the Sharia.
Crowdfunding Type Islamic Tool Available Divergence with the Sharia
Donation without Mandatory donation depending Ban on some activities (related to

compensation on individuals’ earnings (zakat) pork and its derivatives, alcohol,
or voluntary donation (sadaqah) gambling, pornography)
Eligibility of the receiver in the
case of zakat
Donation with material Bai Salam or istisna Prohibition of some activities
compensation (or
pre-selling)
Share acquisition Profit and loss sharing contract Prohibition of some activities
(equity-crowdfunding) (musharaka, either permanent or and of speculative positions on
decreasing) or profit-sharing securities (future contracts, short
contract (mudaraba) buying, or short selling)
Loan Funding loans without interest Prohibition of some activities,
(qard hassan), leasing contract ban on interest
(ijara)
THE BEGINNING OF ISLAMIC CROWDFUNDING IN FRANCE

This is a particularly recent activity inside what is also a fairly recent
crowdfunding business. For example Easi-Up is an Islamic
finance compliant crowdfunding website which began in France
in March 2014. This means that it finances only projects whose
Sharia compliance has been checked. Like other crowdfunding plat-
forms such as KissKissBankBank or Ulule, Easi-Up creates, a rela-
tionship between individuals or associations and individual fund
providers. Sharia compliance means no speculation, no interest rates
(the only loans allowed by Easi-Up are interest-free), and no activity
related the consumption of pork or pork derivatives, alcohol or por-
nography. The website charges 5% commission on transactions and
2% fees. Easi-Up indicates that three kinds of financing are favored:
the first is donation, mostly to fund associations and charities (except
humanitarian actions), second is pre-selling, which helps to finance

product development and allows lenders to be part of the privileged
few who will receive a preview product, and third is the zero-interest
loan which is dedicated to students and whose amounts are only used
to finance tuition fees, with a maximum value of 10,000 euros.
As for competition on the Islamic segment of the crowdfunding
market, in 2014, Aoon (Arabic word meaning help) was created.
The website baseline states that it is the “1st ethical crowdfunding
platform”; this is somewhat ambiguous and could lead to an
association between the words “ethical” and “Islamic.” Indeed, in
describing how the site works, one reads that it can finance “huma-
nitarian, educational, spiritual, artistic, cultural, innovative, etc.”
projects but there is no direct reference to Sharia. Meanwhile,
Aoon’s founder says that “Aoon is a dynamic example of what
Muslims do, and of what Muslims really are.”1
Other platforms have opened (or are under construction) in
France under an Islamic label. For example, CrowdMuslim or
Noorassur are platforms dedicated to Islamic finance and have some
crowdfunding activities.
THE DEVELOPMENT OF CROWDFUNDING IN MOSTLY MUSLIM

COUNTRIES
In Egypt, the Shekra platform does not label itself as Islamic; how-
ever, it only chooses projects that are compliant with Sharia and
social responsibility. The platform helps to finance start-ups, and
here the exit of initial investors does not imply the entry of new
shareholders but the repurchase of shares by the founders through
1
Video where Aoon is presented by its founder: http://www.aoon.org
a decreasing musharaka contract. Here again we can see the con-

tractual aspect of profit and loss sharing, which is a major principle
in Islamic finance. This platform seeks to meet a financing need that
could not be met by venture capital, not only in Egypt but also in the
whole of the Middle East and Gulf region whose financial markets
are not developed enough to provide entrepreneurs with the relevant
funding. This platform acts more like a venture capitalist than simply
like an intermediary between project managers and potential crowd-
funders. Unlike other conventional platforms, Shekra only finances
the projects of a closed network of investors and justifies this choice
by the necessary thoughtfulness and cautiousness of the investors
who have to respect the confidentiality of project details. Such a
choice could question both the notion of crowd as a main component
of crowdfunding and funders’ lack of professionalism.
In the same geographical area we can mention other crowdfund-

ing platforms such as Aflamnah, an artistic creation-oriented platform
based in Dubai, Nabbesh also in Dubai, Eureeca launched in Dubai
in 2013 but which is expanding in Lebanon and developing both a
crowdfunding and an investment capital activity, or even Yomken in
Cairo or Zoomaal in Beirut. It is important to point out that among
the selection criteria of the projects by these platforms there is no
systematic reference to the Sharia. Indeed the website of Zoomaal
only mentions a prohibition of alcohol, violence, politics, religion,
and pornography, while Eureeca does not indicate any criteria for
rejecting projects. The situation is the same for Yomken, which sees
itself as Sharia-friendly, but not as Sharia-compliant because of the
lack of a Sharia-Board which would be too expensive for a small
structure, either as an internal or an external service. The problem of
checking the religious compliance of the Islamic crowdfunding plat-
forms is thus complex. Besides, some platforms like Zoomaal exclude
some kinds of projects, such as those financed with donations or
personal projects (financing students for example).
As a consequence, we can say that the recent emergence of
crowdfunding in Muslim countries is both an answer to the lack of
seed capital, the lack of a large banking network in areas where
Internet is a substitute to remote funders, and an answer to the wish
of religious compliance of some investors. In the same way, for
distant financial transactions there is a risk about the origin of the funds
and their real use (possible laundering of money from tax havens).
OUR EMPIRICAL ANALYSIS OF ISLAMIC CROWDFUNDING AS A

CONCEPT
During the interviews, we opened the discussion with a general
question about the ease of combining crowdfunding and Islamic
finance. This question aimed to gather the first ideas of platform
managers about this topic. As a matter of fact, most people reacted

positively and justified their viewpoints as follows: “both have the
same principles” (Yomken), “the state of mind of crowdfunding is
similar to the one of investment related to Islamic values” (B. Ajdir),
or “Islam is only simplicity and easiness” (Easi-Up). We noticed that
the answer of Zoomal, despite its absence of a mentioned link with
Sharia, was also positive: “crowdfunding and Islamic finance are
easy to mix.” At the same time, the interviewees qualified their posi-
tive opinions with items related to the kind of project and the ban
on interest. The manager of Shekra made a hierarchy in the ease of
combining the two concepts, depending on the type of crowdfund-
ing as follows: “donation-based crowdfunding and pre-selling
crowdfunding are easier to mix than equity-crowdfunding,” while
“the most complicated to mix is loan-based crowdfunding.”
Considering the incompatibility between crowdfunding Islamic

finance, the majority of people insisted on the compatibility of the
two concepts, either absolutely in the case of Zoomaal (“we have
seen no incompatibility up to now”), or relatively speaking but with-
out mentioning incompatibilities in the case of Shekra (“on the theo-
retical viewpoint (maqasid) both are necessarily in the same line”),
or even before mentioning the incompatible aspects (Easi-Up and
Yomken). B. Ajdir talked about these issues without going back to
the actual issues of compatibility. Indeed, the incompatibility issues
that were mentioned are: the nature of the projects, the ways of
using the funds, and interest-bearing loans (forbidden in Islamic
finance but used in crowdfunding).
Beyond the meaning of the words “Islamic crowdfunding,” one
of our goals was to examine the legitimacy of this concept.
Moreover, we intended to determine whether Islamic crowdfunding
is a new activity or if it is just part of the crowdfunding offered by
specialized platforms. Answering this question, A. Nait-Daoud from
Easi-Up confirms that this activity really exists as there are several
platforms operating throughout the world, but at the same time he
thinks that it is a segment of crowdfunding. Nevertheless, according
to B. Ajdir, “it is not really a new concept, it is the same concept [as
crowdfunding] with different rules.” Using the conceptual triangle
of Ogden and Richards (1923) simplified by Dumez (2011), we will
now analyze the conceptual status of this practice. According to the
simple conceptual triangle, a concept results from the mix of three
items: name, understanding, and extension.
First, looking at the name, we noticed that the word Islamic was
not very popular among our interviewees. Indeed, for A. Nait-
Daoud, “nobody talks about ‘Islamic crowdfunding’” and according
to B. Ajdir, the word “Islamic” restricts the practice to Muslims,
although, he explains, from the Islamic viewpoint, the exclusion of
non-Muslims is not allowed. The manager of Shekra used the words
“Sharia-compatible crowdfunding” instead of “Islamic crowdfund-

ing” without expressing an explicit rejection of the word Islamic.
As for the understanding of the concept of Islamic crowdfund-
ing, B. Ajdir told us that “there is no Islamic definition of crowd-
funding, but there is a definition of crowdfunding whether it is
Islamic or conventional.” This meaning was confirmed by the reac-
tions of the other interviewees. We noticed that the definitions they
used included either only renaming the concept (“Islamic crowd-
funding can be defined as a Sharia-compliant financing” according
to Zoomaal) or only the general concept of crowdfunding and the
kind of projects to finance (Yomken and Shekra), the respect of
Sharia principles (Shekra) or the respect of Islamic ethics (Easi-Up).
After indicating that Islamic crowdfunding is “typical crowdfund-
ing,” T. Taha (Yomken) added that it is “a combination between
crowdfunding and Bai Salam contract.”

Finally, the extension of the conceptual triangle concerns “the
empirical cases to which the concept will or will not be applied”
(Dumez, 2011, p. 69). This point is particularly related to the name of
the practice that is studied. Indeed, if we name it “Sharia-compliant
crowdfunding” this implies the validation of the concept by a Sharia
Board, which is not always possible for the majority of platforms. As a
consequence, this excludes those platforms that practice the concept in
a so-called “Sharia-friendly” way. In the words “Islamic crowdfund-
ing” the religious connotation included in the word “Islamic” may
refer to Muslims and thus limit the target of the concept to a subset of
the crowd. Meanwhile, B. Ajdir points out that there is no difference
between the names “Islamic crowdfunding” and “Sharia-compatible
crowdfunding.” Among the names discussed above there is also
“crowdfunding compliant with Muslim ethics,” however this could
also be rejected, this time by platforms using a Sharia Board and
wishing to enhance their compliance for marketing purposes.
THE MARKET OF ISLAMIC CROWDFUNDING

First of all, according to B. Ajdir who is a member of a Sharia Board,
no studies have been conducted about this topic so far in France.
Moreover, B. Ajdir and A. Nait-Daoud pointed out the novelty of this
concept, which appeared in France only in 2014. According to B. Ajdir,
there is not really enough data to know how it is developing currently.
Depending on individuals’ experience, they mentioned the opportunities
and constraints related to the French market. Regarding opportunities,
B. Ajdir highlighted that the Muslim community in France includes
many entrepreneurs (“it is an entrepreneur community!”) and that these
entrepreneurs need funds. A. Nait-Daoud added that “the concept has
already emerged … people rapidly get used to it … they are involved in
it.” As for the constraints, B. Ajdir indicated the French Muslim
community’s lack of knowledge about Islamic financial instruments in

general and about crowdfunding as a new phenomenon. A. Nait-
Daoud also noticed the small amounts of money related to this new
activity (“if we put it all together, we may reach less than half a million
euros, which is very little, so things are just beginning!”).
At the international level, L. Jebran explains that Islamic crowd-
funding does not exist in Lebanon as far as he knows. On the con-
trary, Shekra’s manager is convinced that “the market is huge” for
two reasons: “the sensitivity of financial flows to Sharia” and “the
importance of the religious dimension for entrepreneurs.” As for
T. Taha, he underlines that “there is no specific market for Islamic
crowdfunding because the market is not large enough for crowd-
funding generally speaking.”
Now if we look at the average amount of funds asked per pro-
ject, we can see that the platforms are fairly heterogeneous. This can
largely be explained by the various different targets of each plat-
form, as we will see in the coming paragraphs. The proportion of
projects that are fully financed by the first three Islamic platforms
we studied are very close, with results far beyond those of Zoomaal
(Table 2). Nevertheless, these figures may not be sufficient for com-
paring the platforms’ performances for two reasons. Firstly, the
Islamic platforms are very young. This issue was pointed out by
Shekra’s manager who said, “We are still beginning, so our data are
not significant up to now.” Secondly, the platforms offer different
kinds of crowdfunding. Moreover, the number of successful projects
varies greatly from one platform to another. For example, Zoomaal
exhibits 45 successful projects versus 17 for Easi-Up, meaning a
ratio of 1 5 if we consider the number of financing demands.
ISLAMIC CROWDFUNDING PLATFORMS AND ISLAMIC CONTRACTS

According to B. Ajdir and A. Nait-Daoud, the Islamic platforms operat-
ing in France are Easi-up, Aoon, Reno’StudBank, and CrowdMuslim.
These two interviewees also mentioned that several platforms are under
Table 2: Comparison of the Amounts Financed among the Islamic

Platforms.
Platform Average Amount of Fund Requested per Project Fully Financed
Projects in %
Easi-Up 8,000 euros for students and 15,000 euros for schools 88
Shekra 50,000 US dollars, that is, about 45,000 euros About 70
Yomken 500 euros 70
Zoomaal Between 10,000 and 15,000 US dollars, that is, an 41
average of about 11,000 euros
construction, such as Musulman-Participatif and Fundeen. At the world

level we noticed that the best-known platform is Shekra whose manager
explains that “there is no other platform with an ‘Islamic solution
label’.” He also points out that “there are some attempts in Europe and
in Malaysia but they have not yet begun.” T. Taha insisted on the het-
erogeneous activities of the platforms: “we are not really competitors
because each platform operates on a niche.”
Here again, we noticed that most of the platforms often reject
the word “Islamic” in their presentation.
Although the platforms do not label themselves as Islamic, the
arguments they indicate to justify their Sharia compliance are:
project selection criteria (projects have to be compliant with Muslim
ethics and not be harmful to society), means of financing (no
interest-bearing loans), and social aspects (for Yomken). B. Ajdir
considers the type of financing as the main element to check for a

platform’s compliance. With regard to this point, the platforms
showed us the Islamic contracts they use: sadaqah for plain
donation, qard hassan for zero-interest loans, bai salam or istisna
for pre-selling, and finally musharakah, mudarabah and decreasing
musharakah for equity-crowdfunding.
THE IMPORTANCE OF THE SHARIA BOARD FOR ISLAMIC

CROWDFUNDING
In our sample, the Islamic platforms using a Sharia Board are Easi-
Up and Shekra, whereas Yomken does not (according to T. Taha
“there is no need for it, it works as well as with a Sharia Board,” and
the small size of the projects does not require such a Board). As for
the costs related to the services of a Sharia Board, A. Nait-Daoud
thinks that the use of such a Board depends on the platform’s finan-
cial goal. Indeed, Easi-Up is certified by such a Board because it is
not a profit center and does not seek to be financially self-sufficient.
A platform’s certification by a Sharia Board can be analyzed in
two ways. The first factor is the importance of this certification for
the crowd (project managers and crowdfunders), and the second is
related to the religious extent of this certification. Regarding the first,
B. Ajdir (member of a Sharia Board) pointed out that “we have not
enough experience to know if it is necessary or not! In two or three
years a survey should be done among donors/investors in order to
know what convinced them that the platform was Islamic.” As for
the second factor, B. Ajdir insisted that according to Sharia itself, it is
not compulsory to use such a Board; however the authorities of
Muslim countries make it mandatory in the case of Islamic finance.
To conclude, he added that “in order to say we are Islamic we have
to prove it, and to prove it we’d better make it credible through an
external Sharia Board,” because “we cannot be judge and jury!”
THE BUSINESS MODEL OF CROWDFUNDING PLATFORMS AND

SHARIA COMPLIANCE
The platforms in our sample unanimously confirmed that their busi-
ness models are Sharia compliant. Indeed, A. Nait-Daoud told us that
Easi-Up asked project managers to pay fees before the crowdfunding
campaign. According to him, this fits the wakala contract in Islamic
finance. In the same way, B. Ajdir pointed out the compliance of
platforms’ systems of compensation where all types of “Islamic”
crowdfunding take fees on funds related to the wakala contract. He
confirmed that this is also relevant in the case of donation-based
crowdfunding. This means that the business model of conventional
platforms is also Sharia-compliant, as mentioned by L. Jebran (“yes,
we are Sharia-compliant”). The business model of Shekra is partly
different as the platform itself receives compensation with equity
shares. Shekra indicates that this means of compensation applies one

of the Islamic finance principles, that is, the profit and loss sharing.
When we look at the themes of the financed projects, we notice
that besides the compliance of these projects, the three “Islamic”
platforms are specialized in specific projects. For example, Easi-Up
finances education and job access projects, Shekra is start-up
oriented and Yomken is involved in innovative projects. However,
Zoomaal, which is not considered as “Islamic,” presented a wide
variety of target themes (films, music, technological prototypes, etc.).
In some cases of Islamic finance, experts accept a percentage of
activities that are considered as non-compliant. This is why in the
interviews we mentioned the possibility for “Islamic” crowdfunding
platforms to finance non-compliant projects at the same time as
compliant ones. B. Ajdir insisted on the platform’s capacity to
finance two types of products: halal and conventional. In this case,
the Islamic label would be relevant to the products rather than to
the platform itself. The interviewees indicated that their platforms
do not finance non-compliant activities, but Zoomaal does not
exclude Sharia-non-compliant projects.
As for a possible partnership between Islamic crowdfunding
platforms and conventional funders, B. Ajdir answered that if “while
saying we are fully Islamic we work with a bank partner which
lends money with interest, this is a problem.” Partnership with con-
ventional funders is not an issue for the Islamic viewpoint in itself:
what matters is that the platform checks that the service it exchanges
with its partner are Sharia-compliant. In fact, Shekra already has
partnerships with conventional funders and Easi-Up is open to part-
nerships, but only if they respect Islamic finance principles. As for
Yomken, it has no partnerships with conventional funders and is
not thinking of entering such partnerships, but this may be for
reasons of strategic choice and not only for compliance reasons.
We can also point out that according to the answers about selec-
tion criteria for choosing project managers, Islamic platforms do not
use particularly Sharia-related items. For Easi-Up, these criteria are
prospective project managers’ reliability checked through credit ana-
lysis, their good reputation and the absence of any negative history;
for Shekra it is mostly experience assessed through a due diligence
process, and for Yomken the main factor is the project managers’
communication skills.
THE SPECIFIC CASE OF DONATION-BASED CROWDFUNDING

In Islamic finance, “there are eight beneficiaries of zakat who are
named in the Quran: (…) charities are for the needy, the poor, and
for those who work there, for those whose hearts are to be won, for
those who are in yokes, for those who are heavily indebted, for the
cause of God, and for the distressed wayfarer” (Boşca, 2012,

p. 104). As a consequence, we wondered to what extent it is man-
datory to check the eligibility of beneficiaries of donation-based
Islamic crowdfunding, and what are the possible uses of zakat funds
in order to finance projects through donation. Considering the first
point, A. Nait-Daoud confirmed that the sadaqah (i.e., donation)
can be given without considering the social level of the beneficiary
because this kind of donation is not compulsory. As for the second
point, he told us that fund raising with zakat for crowdfunding pro-
jects has to be combined with an eligibility check. He mentions that
the Sharia Board could play a very important role in such case.
Meanwhile, B. Ajdir insisted on the difficulty of collecting zakat
donations through platforms for two reasons: on the operating level
it is not easy as it would be difficult, on both technical and data
processing viewpoints, to define and check the eligibility criteria.
Moreover, platform support of zakat distribution might replace the
role of zakat associations. Paradoxically, B. Ajdir offers to help
these very associations through the platforms.
Finally, as for checking the origin of funds received by
“Islamic” platforms, B. Ajdir pointed out that “it is better to check
it but it is not mandatory.” This was confirmed by A. Nait-Daoud,
who mentioned that Easi-up checks comply with the law. Both
indicate that if a crowdfunder declares illegal funds, the “Islamic”
platform has to either refuse these funds or, according to the princi-
ples of Islamic law, direct the crowdfunder towards other projects.
Conclusion
This theoretical and empirical study has enabled us to show several
interesting facts. First, there are few divergences between crowd-
funding and Islamic finance, and their incompatibilities concern
minor aspects. Meanwhile, “Islamic crowdfunding” certainly exists

as a recent practice, but its conceptual status has yet to be
confirmed, as there is no consensus about its exact name, a name
that combines two notions from different contexts.
Moreover, we have pointed out that the number of “Islamic
crowdfunding” platforms is increasing, but that they are heteroge-
neous as to the type of crowdfunding offered, their reference to
Islam, and their targets. The most frequently used type is pre-selling
and the “Islamic” label is rarely put forward. As for the Sharia
Board, it is expensive but plays a major role in guiding the platform
and enhancing its credibility.
Finally, we have seen that the projects financed by “Islamic
crowdfunding” have to be Sharia-compliant, even if the platforms
do not select the projects with Islamic criteria, do not exclude
cooperating with conventional funders and have no Islamic obliga-

tion to check the origin of funds. A way for further research would
be to analyze whether the donors and investors are convinced that
these platforms are really Islamic, and to what extent this influences
their behavior.
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Boşca, L. (2012). Le riba et la zakat dans le système économique islamique. Cogito:
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International Perspectives on Crowdfunding

Is Crowdfunding Sharia Compliant?

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The comparative analysis of the characteristics of both crowd-

Research Goal and Methodology

concept of “Islamic crowdfunding” and its market. This will enable us

CROWDFUNDING: A RECENT CONCEPT

The second type is royalty-based crowdfunding: the crowdfunders

venture capital funding or by banks in the case of loans.

THE MAIN CHARACTERISTICS OF ISLAMIC FINANCE

according to a religious logic, but a commercial one: they do not

“ISLAMIC CROWDFUNDING” FROM A THEORETICAL VIEWPOINT

to business creation or projects managed by SMEs. These speciﬁc

that reject conventional ﬁnance. Compliance should therefore be

neurs or non-practicing Muslim investors may prefer conventional

Table 1: Convergences and Divergences between Crowdfunding Tools

Donation without Mandatory donation depending Ban on some activities (related to

THE BEGINNING OF ISLAMIC CROWDFUNDING IN FRANCE

humanitarian actions), second is pre-selling, which helps to ﬁnance

THE DEVELOPMENT OF CROWDFUNDING IN MOSTLY MUSLIM

a decreasing musharaka contract. Here again we can see the con-

In the same geographical area we can mention other crowdfund-

OUR EMPIRICAL ANALYSIS OF ISLAMIC CROWDFUNDING AS A

managers about this topic. As a matter of fact, most people reacted

Considering the incompatibility between crowdfunding Islamic

“Sharia-compatible crowdfunding” instead of “Islamic crowdfund-

crowdfunding and Bai Salam contract.”

THE MARKET OF ISLAMIC CROWDFUNDING

community’s lack of knowledge about Islamic ﬁnancial instruments in

ISLAMIC CROWDFUNDING PLATFORMS AND ISLAMIC CONTRACTS

Table 2: Comparison of the Amounts Financed among the Islamic

construction, such as Musulman-Participatif and Fundeen. At the world

considers the type of ﬁnancing as the main element to check for a

THE IMPORTANCE OF THE SHARIA BOARD FOR ISLAMIC

THE BUSINESS MODEL OF CROWDFUNDING PLATFORMS AND

shares. Shekra indicates that this means of compensation applies one

THE SPECIFIC CASE OF DONATION-BASED CROWDFUNDING

cause of God, and for the distressed wayfarer” (Boşca, 2012,

minor aspects. Meanwhile, “Islamic crowdfunding” certainly exists

cooperating with conventional funders and have no Islamic obliga-

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