Think Tank Offers Guidance on Islamic Investing

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c. 2007 Religion News Service

PORTLAND, Ore. _ Ethical investing caters to potential investors who want their money to earn a fair return and accomplish something good at the same time. Islamic investing goes a step further.

In the seventh century, the Prophet Muhammad, a businessman himself, saw the harmful effects of usury, the charging of excessive interest that allowed the rich to profit unfairly from the needs of the poor.

Islamic investing is based on investing only in “halal,” or “permissible,” products and the sharing of profits and losses prescribed by Sharia, or traditional Islamic law. Generally, Islamic financing forbids investment in companies that deal primarily in alcohol, pork, pornography and gambling or profit from charging and accruing interest.

Two Oregonians think that Islamic approach might appeal to non-Muslim investors, too. Mohammad Saeed Rahman, a Muslim, and Blake Goud, a Unitarian Universalist, argue that charging interest undercuts the good that social justice investments can accomplish.

The two are chairman and executive director, respectively, of the Portland-based Institute of Halal Investing, a nonprofit, online think tank ( that offers information on Islamic financing to individuals and brokers who want to know more.

“The door must swing both says,” says Rahman, who worked for 19 years as vice president at Wachovia and Merrill Lynch and has founded several business ventures under the name Rubicon Global. His commitment to Islam, and to investing, has made him a strong believer that “risks and the rewards should go hand in hand.”

Rahman draws a simple example to illustrate Islamic, or halal, financing: Someone with the talent for baking may join forces with someone who has capital to invest. Together they create a bakery, with the investor owning the equipment and the baker using his talent to make a product and build the business. The baker and the investor agree to share in the net profits. Gradually, the baker will buy out the investor’s share in the business. Eventually, the investor’s share of the net profits will fall to zero.

“An investment should be a marriage between talent and capital,” Rahman says. “Using the halal method is good for the investor. As prices go up, his share of the profits goes up. For the person doing the borrowing _ you can either manage your loan or concentrate on your business. It is difficult to do both. It is better to use all your energies to create a product and build your business.”

He and Goud, whose background is in economics and public policy, are critical even of micro-credit programs such as the Grameen Bank, whose founder, Muhammad Yunus of Bangladesh, recently won the Nobel Peace Prize.

Grameen Bank loans small amounts of money to poor women and relies on groups of shareholders to ensure the debt is repaid with interest, Goud says. He is looking into ways to adapt the Grameen model so it might be used without charging interest.

Arguments against charging excessive interest are probably as old as the practice itself. Hindu and Buddhist writing that dates from 100 years before the birth of Christ warns against charging interest on loans. Western philosophers from Plato to Plutarch condemned it. Hebrew Scripture prohibits it, and the Christian church argued about it for more than a thousand years. In 1311, Pope Clement V denounced usury, a term that by then carried the connotation of “excessive” interest. During the Protestant Reformation, Martin Luther and John Calvin expressed reservations about usury but refused to condemn it universally.

Like conventional investing, a halal approach makes some demands on the individual ethical investor, Rahman says. A petroleum company with a record of environmental disregard or damage can show up on a list of companies offered for halal investing, for example. His own reading of the Quran tells him it is sinful to cut a tree unless it is needed for protection or shelter. By that particular standard, he reasons, the petroleum company might not be halal.

“Individual investors have to make good decisions about where their money should go,” he says. The institute wants to provide information and analysis to help individual Muslims and other ethical investors decide where to put their money without sacrificing their values, he adds.

“Halal investing is a way of doing business with both compassion and love.”

(Nancy Haught writes for The Oregonian in Portland, Ore.)


Editors: To obtain a photo of Rahman at prayer, go to the RNS Web site at On the lower right, click on “photos,” then search by subject or slug.

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