Cooperative Islam

I was going to write about the amazing stuff I’ve seen happening in northeastern Ohio over the last few days. However, the unfortunate events at Ft. Hood have me distracted. The perpetrator was apparently an Arab-American who was at least sympathetic to extremist Islam. So whether or not this came out of religious motivation, I’m afraid we’re in for another round of Muslim-bashing.

Whatever Hasan’s motivations, it is important for us to remember that he is one person, and that violently radical Islam is only a very small piece of the picture. In general, Muslims are a pretty peaceful bunch until provoked. And isn’t that true of all of us? Remember, remember, the fifth of November is also Guy Fawkes Day, commemorating a notorious Catholic terrorist.

In any case, Muslims deserve credit for launching an extremely brave and useful dialogue with Christians two years ago, called “A Common Word Between Us and You.” This writing is at a web site which should be familiar to all people who wish to see an end to our current religiously-tinted struggle. Please, please, please take some time to check it out, including the following Christian response and this Jewish response. We can’t afford another round of post-9/11 style fear and hatred, and it is up to peace-loving people to make sure that we don’t get drowned out this time.

I’ll be presenting on interfaith cooperative economics twice this weekend, so it seems like a good time to dust off a paper I wrote last year, which looked at more cooperative expressions of Islam (as well as Christianity and Judaism). Here are some excerpts from a that paper, outlining some of the admirable steps that Muslims have taken toward building a more just and equitable economic order. The links are in the footnotes, but I hope that isn’t too much of a deterrent to further research.

Keep in mind that this research is a year old, and some projects described as launching may well be launched. It might be time for me to give it a little update…


The Muslim analog to insurance is called takaful, which translates as “guaranteeing each other.” The main difference is that risk is shared in order to avoid the Islamic prohibition on gambling. Many takaful organizations are members of the International Cooperative and Mutual Insurance Federation (ICMIF), whose website has a separate section addressing the special subject of takaful. More than two-dozen ICMIF Takaful members can be found in Africa, the Middle East, South Asia, North America and the Caribbean. In some cases, general insurance cooperatives have begun offering takaful, as is the case with The Co-operators, located in Canada.[1]

In the interest of building further bridges to Muslims, ICMIF lists more than 100 non-member providers on its takaful directory.[2] Some of these provide a glimpse into the theological reasoning behind the model.

Takaful International of Bahrain provides a particularly useful overview of the cooperative nature of takaful. It points out that in order to be halal (lawful) an insurance arrangement must avoid charging or paying interest, gambling or speculation, and unclear conditions for the insured. The ultimate goal is to organize in a “context of co-operation and solidarity for the good of society.”[3]

Takaful is also applied to foster economic development. Bandeh Aceh, Indonesia, is home to the Mahardika cooperative, which offers “microtakaful” policies for the very poor residents of that province, who are still recovering from the 2004 tsunami. Mahardika has now started offering savings and loan services, and in doing so has grown tenfold by providing financing with an average amount of $500.[4]

The Islamic rule against riba (usury, or interest) supports cooperative financial arrangements. Recent years have seen an explosion of “shariah-compliant” finance, which has been the cause of significant controversy and those who declare these practices halal are sometimes derided as “rent-a-sheikhs.” A 2007 Wall Street Journal article on Islamic finance described the many ways that hedge funds and other investment vehicles are being repackaged as halal, even though “Islam prohibits all kinds of speculative behavior that is embedded in Wall Street’s DNA.”[5]

An analysis of whether the various “shariah-compliant” banking products are halal or haram (unlawful) is beyond the scope of this paper, but suffice to say that there are many organizations which seek to follow shariah by means of cooperative organization. Islamic finance cooperatives may perhaps limit these ethical grey areas by merging borrowers and lenders into the single class of members.

Credit unions are making some inroads into even the most conservative Muslim society. The World Council of Credit Unions has explored the role that credit unions might play in building a financial industry in Afghanistan, where it has already assisted in the creation of two such cooperatives. Their research paper on the subject concluded that credit unions are appropriate to the nation’s culture, but inasmuch as they (and formal banking, in general) are somewhat exotic and brought by outsiders, it will be important and challenging to build a local sense of ownership.[6]

Islamic cooperation also occurs in pluralistic nations in which Muslims are a minority. For example the Muslim Community Cooperative (Australia), which has grown to nearly 7000 members and A$120 million (€70 million) in mortgages. It describes its core purpose is “To provide goods and services to members in accordance to the Islamic law of life and the principles of co-operation.”[7]

The Takaaful T&T Friendly Society is located in Trinidad and Tobago, and provides several services to strengthen that small nation’s small Muslim community. These include a funeral benefits program and a hajj (pilgrimage) fund and a cooperative for waqf (a charitable trust of property).[8]

Several Islamic cooperatives exist or are forming in the United States. Pioneer Muslim Credit Union was founded in 1981 and serves nearly 5000 members in the Houston area.[9] Another credit union is being developed in Minneapolis by the African Chamber of Commerce, and already has 1500 prospective members.[10]

Islam does not seem to have the same affinity for communalism that is sometimes found in the Jewish kibbutz or monastic-inspired Christian communities. Indeed, the Qur’an teaches against withdrawing into monastic life. (57:16)

Even so, there are cooperative living arrangements in some Muslim communities. These may be limited to North America, and might be inspired more by cultural preferences than Islamic values. Nevertheless, they provide a glimpse at what a Muslim approach to cooperative housing might entail…

Canada has several housing cooperatives, although these do not take the form of resident communities, which tend to bring members together in a single property or cluster of properties. Instead, it is a mutual financing arrangement in which members select a property that suits them, which is then purchased by the cooperative once the member has made a sufficient initial investment. The member continues to buy shares over a number of years until he or she has acquired enough shares to match the value of the home. At that time, the member and the cooperative make an exchange.

Two of these are sister cooperatives. Islamic Cooperative Housing Corportation (ICHC) has purchased more than 500 houses for members, and transferred ownership of nearly 200 of these to its members. This cooperative was legally limited in its size, so a second co-op was formed along similar lines, called Ansar Co-operative Housing Corporation (ACHC). This co-op has already purchased more than 100 homes and transferred at least 14 of these to members.[12]

Qurtuba Cooperative is located in Quebec, and was started as part of a financial initiative launched in 1991. Its general processes are rather similar to those of ICHC and ACHC. Qurtuba, like the others, has investor memberships, which provide a dividend for those who do not gain the benefit of housing from the cooperative.[13]

Given the strong Islamic values that support cooperative economics, it may certainly be the case that the examples discussed here are only the tip of the iceberg. The limited statistics available support this supposition.

In any event, Takaful is spreading rapidly worldwide, and is projected to surpass $7 billion in premiums by 2015.[14] Islamic banking is reportedly managing approximately $200 billion worldwide[15] but it is not clear to what extent this is being done along mutual lines. In any case, Islamic principles have inspired a widespread degree of cooperative organizing, and this is certainly an area for further research and discussion.

[1] Retrieved August 26, 2008 from


[2] Retrieved August 26, 2008 from

[3] Retrieved August 26, 2008 from

[4] Retrieved August 26, 2008 from

[5] Retrieved August 26, 2008 from

[6] Retrieved August 28, 2008 from, (p. 19).

[7] Retrieved August 28, 2008 from, (p. 2 and second cover page).

[8] Retrieved September 1, 2008 from

[9] Retrieved August 28, 2008 from

[10] Retrieved August 28, 2008 from

[12] Retrieved August 28, 2008 from

[13] Retrieved August 28, 2008 from

[14] Retrieved August 28, 2008 from

[15] Retrieved August 28, 2008 from

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1 Response to Cooperative Islam

  1. Ben says:

    The Fort Hood shooting must be put in context. Fort Hood has the highest suicide rate in the US Army. As a military psychiatrist the shooter had to bear during the last decade thousands of confessions from military servicemen tormented by the atrocities they committed in Iraq and Afghanistan. As a muslim he was driven mad by all the horrors committed against other innocent muslims. Many of those who committed these horrors couldn’t themselves stand them and put an end to their own lives.

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