A form of financing that involves the combination of Islamic finance with crowdfunding so as to address financing needs of small- and mid-size enterprises (SMEs). By nature, crowdfunding is a technique whereby individuals can pool resources for a specific cause, project, or business in accordance with their religious beliefs. It can be used to support those in need of funds to invest in real economic activities based on the principles and tools of Islamic finance which promote values and ethics and equitable distribution of wealth. According to maqasid al-shari’ah (supreme objectives of Islamic law), wealth must be circulated within the economy in order to realize human welfare and progress. This requires the transfer of resources from the surplus units to the deficit units whereby investments can be carried out to the benefit of the broader community, and hence lead to socio-economic growth and narrow or remove inequality amongst community’s members.

For more, see: shari’ah-compliant crowdfunding.