The real value of charitable giving this Ramazan in Pakistan appears to be on par with or marginally less than last year, as prolonged economic stagnation has strained household finances, limiting how much people can afford to donate.

The financial strain appears to have hit the more popular consumptive giving (food supplies providing immediate relief) harder than transformative causes (healthcare and long-term social welfare donations), which enjoy greater support among relatively well-off, educated professionals. Once again, Karachi leads other cities in charitable giving.

Despite the uptick in remittances reported by the State Bank, several charitable organisations focused on consumptive options have seen a sharp decline in overseas donations, impacting their direct support operations for the poor. In February, remittances increased by 38.6 per cent year-on-year to a record $3.1 billion, according to the State Bank.

The leaders of consumptive charities attribute their shortfall to rising inflation in Western countries and a growing preference among Muslims for other competing causes, particularly aiding war-affected Palestinians.

As donations heighten in Ramazan, overseas Pakistanis give more to transformative social causes over immediate consumptive relief

Organisations serving transformative causes in health and education sectors seem to have a more stable base of overseas donors, with collections largely meeting expectations. Some reputable groups have even reported a significant increase in donations compared to last year, attributing it to their strong performance and credibility.

Despite widespread tax avoidance, Pakistanis are remarkably generous in supporting the less fortunate, donating trillions of rupees annually.

Charitable giving peaks during Ramazan, when nearly all but the poorest households contribute in cash or kind. Some estimates suggest that up to 60pc of annual charitable funds are mobilised during this month, bringing the total scale of donations to around Rs700-800bn this Ramazan.

In contrast, tax compliance remains dismal. Only 2.74 million Pakistanis, just 1.3pc of the population, file income tax returns, and of these, 35pc pay zero income tax.

“Pakistanis may be tax-shy, but they are far from socially irresponsible. Their participation in charitable giving is extraordinary. The Edhi Foundation, funded entirely by individual donations, ranks among the world’s largest philanthropic entities.

“Several other globally recognised institutions in health and education sectors, such as The Citizen Foundation, Sindh Institute of Urology (SIUT), Shaukat Khanum Cancer Hospital, Layton Rahmatulla Benevolent Trust, and Akhuwat Foundation, continue to expand their services, driven by generous contributions from both local donors and the Pakistani diaspora. Beyond these, thousands of charitable initiatives thrive, alongside extensive personal giving,” remarked an observer.

“The economic crisis of the past three years has exerted immense financial pressure on average families. Yet, driven by both faith and a sense of duty, people continue to give, seeing it as a religious obligation and fulfilment in the act,” noted a professional serving on the boards of several charities.

Dr Nausheen Mehmud, Head of Research, Pakistan Centre for Philanthropy, believes that despite financial hardships, the long-term upward trend in charitable giving in the country remains intact.

“There is no concrete evidence to confirm whether giving has increased or decreased in 2025, as data has yet to be collected. However, based on our 2023 survey, household giving amounted to Rs800bn in cash and about Rs600bn in kind.”

“While we can’t determine the exact growth rate, my guess is that charitable contributions have likely increased. Our findings show that almost everyone donates in some form, except for very poor people or beggars. Corporate giving has also risen over overtime,” Dr Mehmud stated in response to queries.

Shabbar Zaidi, former chairman of the Federal Board of Revenue and caretaker Sindh minister, who is closely associated with SIUT, stated that donations to the institution have risen by 15pc compared to the last year so far.

Karim Adeni, founding chairman of the Amanatdaar, reported a sharp decline in donations this year, particularly from the US. “This time we had to reach out to previous donors with reminders. Our major contributors are from the US, but donations declined due to inflation and competing causes like Palestine. Most of our support comes from friends and their referrals, people who trust us or know someone who does. Notably, 99pc of our donors are people from Karachi who emigrated around and after the 1980s yet feel deeply connected to Pakistan.”

“Our data shows a growing shift towards transformative donations, driven by the popular notion: don’t give them fish, teach them to fish. While this approach works well in developed countries, Pakistan’s reality is different — salaries of the lower class range from Rs20,000 to 50,000, making survival difficult. We focus on this class, and our food boxes for two save families at least Rs10,000 per month. In Pakistan, consumptive donations are not just important but essential, as many struggle to survive with dignity,” Mr Adeni explained, defending his work.

Nasim Beg, an investment analyst actively engaged in philanthropy, took a cautious stance. “A proper assessment should be made after Eid, as a significant portion of zakat contributions continue to flow in.

“However, it seems that 2025 may not see a significant change. While transformative donations are important, they remain relatively smaller in scale.

Consumptive donations, which provide direct relief to those below the poverty line, play a much larger role and continue to grow steadily,” he observed.

Published in Dawn, The Business and Finance Weekly, March 24th, 2025