FARZ

FOUNDATION
An integrated approach of Islamic Micro-finance

The First Islamic Micro-Finance

Organization of Pakistan
Contact Us
327 EDEN Center Jail Road Lahore.
URL: www.farzfoundation.org
Email: info@farzfoundation.org
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A BRIEF INTRODUCTION

The Farz Foundation is a social performance based poverty alleviation organization with a
unique and innovative Islamic Microfinance model and business design. It is the organization
which has been formed on a strong ideological foundation with the notion of “partnership
with the poor and profit and loss sharing” as its prior investment methodology. The asset
based Islamic Microfinance integrated approach is the basic tool of the foundation to get
long term sustainability, because the Farz Foundation has a strong belief that the
sustainability of the client is the sustainability of the organization. Farz foundation has also
convicted to bring social change with poverty alleviation. As for as marginalized poor and
destitute are concerning, Farz Foundation provides them “PRODUCTIVE ZAKAH” (donation)
and “QARZ-E-HASNA” (interest free loan) to start their businesses after giving them the
basic business training and providing them market linkages to make them able to Zakah
payer but not Zakah receiver.

FUNDAMENTALS
Poverty is a global challenge that the whole civilized world is addressing to alleviate it. The
philosophy of globalization and its spirit demands societies coordinate economy, social
change and development as one unit and not as divided in compartments to move ahead.
The attitude of compartmentalizing societal issues into cubicles cannot effectively contend
with the philosophy of globalization. Microfinance started with this very approach, but
unfortunately methodologies, recourses, policies, systems, and procedures to grasp a
widespread made it scattered. The race of achieving high targets detracted from most of the
institutions working for microfinance, thus leaving behind the initial focus which is the
conviction of poverty alleviation by enhancing the productivity of poor people and building
their skills to earn money with honor and dignity. Microfinance also has a social performance
motivation. Farz Foundation has a strong notion that the ultimate financial sustainability
cannot be availed without social sustainability.

However, the dream of changing the lives of poor cannot become a reality without fulfilling
the aim of social performance. No doubt, microfinance is a tool which can change not only
the individual lives of the poor, but also can bring a social revolution in poor countries
towards greater productivity. Social performance based microfinance is not a commercial
based industry. It has a belief on socio productive profitability, which occurs as a result of
prominent social change at a larger scale.

In this perspective Farz (duty) Foundation was established to accomplish the real goals and
objectives of the microfinance sector, which are currently neglected to an enormous extent.
It is a social performance based non-governmental organization with highly committed, self-
motivated, innovative and enthusiastic grassroots experts as its founding members. They
are also very experienced microfinance practitioners. Farz Foundation is registered under
Societies Act 1860 by its legal status. Farz Foundation is an organization in Pakistan aiming
towards achieving millennium development goals with a holistic approach. It is
simultaneously addressing health, education, and the financial vulnerability of poor
populations to ease their burdens while systemically alleviating poverty.

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DYNAMICS OF FARZ FOUNDATION

Farz Foundation supports a social performance movement for socioeconomic prosperity and
building a new sphere of integration. From inception, it has focused on translating the social
mission of microfinance into practice.

Micro Finance Social

Performance

Social change Integration

ORGANIZATIONAL DESIGN
The partnership will look like the following diagram with communication openly flowing
between all partners involved. In this way, each organization can maximize their strengths by
focusing on what they know and do best, delivering education services, delivering health
services, and delivering financial services. When the full partnership is established, all
directors and senior staff managers of each organization will meet to discuss the work
operations of each organization for working with the targeted group. In this way, no efforts
and program activities are duplicated, with each organization in agreement on their role for
service delivery.

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VISION
To bring social change through poverty alleviation by improving productivity and capacity of
clients and staff

MISSION
Empowering the poor through innovative products and diverse business opportunities, by
integrating social performance focused microfinance with collaborative community health
and education partnerships.

OBJECTIVE

 To become a model organization in social performance focused Islamic microfinance.

 To enhance the productivity of home based entrepreneurs’ disabled persons, HIV
people, sex workers and transgender persons.
 Provide “PRODUCTIVE ZAKAH” (donation) and “QARZ-E-HASNA” (interest free
loan) along with asset based financing to the poor, while building their capacity
for sustainable livelihoods. We will prepare them for a business product within
one year of program entry.
 To graduate the home based entrepreneurs into micro-enterprise cooperatives.
 To provide basic education, particularly business education to the poor.
 To provide basic preventative health education and first aid facilities to the poor.
 To offer environment awareness and education at the grassroots level and motivate
environmental clean-up and conservation efforts.
 To provide a stimulating and professional work environment to the staff and build
their capacity on the continuous basis.
 To support the entrepreneurial modernization and technology development of
Pakistan.
 To make the poor productive and ZAKAH payer but not ZAKAH receiver.

LEGAL STATUS
Farz Foundation is a non-governmental organization registered under the Act of 1860 and is
authorized to work on a ‘no profit no loss’ basis. At present Farz Foundation’s operations are
exclusively concentrated in urban, semi-urban and rural areas of Pakistan through
partnership with CBOs. The head office of Farz Foundation is located at Lahore Pakistan.

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GOVERNANCE
The Farz Foundation’s Board of directors is consisting of professionals having a strong back
ground of microfinance and development sectors and capable of implement effective
governance.

The board, through management, guides the organization in fulfilling its mission and protects
the organization’s assets. Fundamental to good governance every individual Director is
capable to work in partnership to balance strategic and operational responsibilities. The
board provides proper guidance to management regarding the strategic direction for the
institution, and oversees management’s efforts to move in this direction. The chair person of
the board interplays between board and management centers on this relationship between
strategy and operation, both of which are essential for the successful evolution of the
organization.

In exercising their governance responsibilities, board members consider the perspectives of

numerous external actors. Depending on the legal status of the Farz Foundation, these
actors can include providers of capital such as donors, governments, depositors or other
financial institutions; regulatory bodies and other stakeholders, including clients, employees,
and shareholders. In its governance role, the board also is accountable to all these
stakeholders and assesses continually which of these are the most important for the
institution.

BOARD OF DIRECTORS

Mr. Daud Saqlain

Chair Person BOD(Board of Directors) of Farz
Foundation
Provincial Controller Action Aid

Specialization: Gender sensitization,Development and

Governance,
Community mobilization.

Experience:22 years
Ms.Sara Duke
Member BOD of Farz Foundation
Researcher & Consultant EDA India, X Employee Fadral Reserve
Bank USA.

Specialization: Research, International Micro Finance

Consultant, Lively hood development.

Experience:15 years

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Mr.Remesh Singh Arora

Member BOD of Farz Foundation
Chief Executive Officer of Mojiz Foundation, Micro finance
Specialist

Specialization: Institutional Development, Capacity Building, risk

Management, Monitoring & Evaluation.

Experience:12 years
Ms.Dr. Huma Qureshi
Member BOD of Farz Foundation
Health & Education Management Consultant, Specialist in
program implementation & Evaluation.

Specialization:.Intagrated Development Project, Planning,

Monitoring and Evaluation, Preventive & re-Productive Health,
integrated Development and Community Development.

Experience:20 years
Mr.Nadeem Fazil Ayaz
Secertory BOD
Advocate & Member Human Rights Commission of Pakistan,LLM
International Human Law

Specialization: Human Rights, Monitoring & Evaluation,

Globalization, Effective Conflict Regulation, Training/workshop
Module Developer.

Experience:23 years
Mr.Shahid Khan
Member BOD of Farz Foundation
Executive Editor Monthly Techno Biz, Social Worker, CEO of
Global CNG.

Specialization: Entrepreneurship, Community services & Social

Work, CivilSociety Mobilization.

Experience:14 years
Mr.Farhat Abbas Shah
Member BOD of Farz Foundation
Chief Executive Officer Farz Foundation, Microfinance
Management Expert.

Specialization: Business Development, Marketing &

Advertising,Communications, Financial Management, Project
Management, Social Performance Management.

Experience: 30 years

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MANAGEMENT
Hafiz Muhammad Ali Chaudhry
Chief Finance Officer, CA finalist of the institute of charted accountants of Pakistan, MBA
Finance

Specialization: Accounting & Finance, Business Development & Strategic Planning,

Costing & Budgeting.

Experience: 6 years
Mr.Rafay Mahmood
Micro Finance Practitioner, General Manager Operation & Marketing.

Specialization: Marketing & Sales Management, Microtinae Portfolio Management, Risk

Management, Financial Management, Trend Analysis, Competitor Analysis & Management,
Customer Relationship Management, Market Intendance & Analysis.

Experience: 16 years
Mr.Waseem Ahmad Zahid
General Manager Human Resource, Administration & Training

Specialization: Human Resource Management,Human Resource Development & Training,

Seminar & Counciling Session, Organizational curve Evaluation, Team Building & Execution,
Administration.

Experience: 7 years

Mr.Tariq Javaid
MBA Finance, Monitoring Manager

Specialization: Policy Monitoring, Branch Monitoring, System & Procedure Monitoring

Experience: 6 years
Ms.Noumana Liaqat
Enterprenure Manager
Specialization: Micro-Enterprise Capacity Building, Visibility & Market Linkages,Skills
Development Management.

Experience: 10 years

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ORGNIZATIONAL STRUCTURE

OPERATIONS

AREA STRUCTURE

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BRANCH STRUCTURE

AREA MONITORING COMMITTEE

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SERVICE
PAKEGE

THE TRADE POLICY OF FARZ FOUNDATION

Farz foundation is an asset based Islamic microfinance organization. It performs under and
according to the Law of Islam to support the poor by providing them the facilities of ZAKAH
(Islamic charity fund), “QARZ-E-HASNA” (Interest free Loan), “MURABAHA” (Islamic
Trading Transaction) and “IJARA” (Islamic Leasing) as per their financial condition and
capacity to begin an income generating activity for sustaining their lives and alleviating
poverty. Farz Foundation also provides Health and Education assistance to the poor without
any cost and with the intention of “SADQAE JARIAH” (Social Responsibility).

Farz foundation does only interest free (Sood sey pak) businesses and there is not any
money exchange or business of currency involve with the customer. Farz foundation sells
commodities having ownership and possession with the condition of their physical existence
and also expresses the rent or cost and profit of the commodities at the time of agreement in
the midst of mutual consent and transparency. We do not purchase or sell Illegal, and UN
Islamic things or commodities. Cleanliness, Purity and pollution free environment is our core
value.
Although Farz Foundation is at its early stage, its vision, mission, and objectives are very
clear and are inevitability necessary for poverty alleviation, particularly in low-income
countries like Pakistan. Farz Foundation employs a multi-bottom line philosophy with an
exceptionally creative approach, with each serving as the four dynamic cornerstones of the
institution.

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TARGET MARKET
Goal of Farz Foundation is a peaceful social and economic revolution to generate the
opportunities of business partnership among poor and microfinance facilitators through the
four components of micro-productivity, social performance, integration and social change. Its
target markets are Home Based Workers, particularly women that are low income
entrepreneurs, People living with HIV, Sex Workers, Heejras (Transgender Persons),
Destitute and Vulnerable Beggars.

Farz Foundation has a faith that without empowering these population groups, the
microfinance industry cannot achieve its long terms goals. Farz Foundation has determined
the huge untapped market of home based low income workers to be a very fertile client base
for microfinance in Pakistan, which could also benefit from enhanced productivity through
the power of microfinance focused on social performance.

ASSET BASED PRODUCTS OF FARZ FOUNDATION

MURABAHA
Features Details
Trade Limit Need Based
Period of Trade 1 Year
Frequency of repayment Bi-Monthly
Profit Margin for cluster manager 18 %
Profit Margin for Group Leader 19 %
Profit Margin For Group Member 20 %
Rub-ul-Mal Share 2%
Tijarat (Murabaha) Processing Fee Rs. 100
Health Care Camping Fee 0
Collateral Social + Post Dated Cheque

Basic expenditures i.e. Health Takaful (Islamic insurance or Health care camping or
awareness), agreement process expenditures will be paid by Farz foundation, and only Life
Takaful will be paid by the client.

TARGET MARKET
The Target segment of this product is the poor who have a little skill or will to do a tiny
business, and he is at the marginal line of Zakah receivers. How ever he or she refuses to
accept any charity fund. This product to make the poor productive and successful at
generate its own income by the Islamic financing from Farz foundation.

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IJARAH
Features Details
Trade Limit Need Based
Period of Trade 2 to 3 year
Frequency of repayment Bi-Monthly
Rub-ul-Mal Share 2%
Ijara Processing Fee 1%
Health Care Camping Fee 0
Collateral Social + Post Dated Cheques
Asset Takaful As per Required

Basic expenditures: i.e. Health Takaful (Islamic insurance), agreement process expenditures
will be paid by Farz foundation, and only Life & Asset Takaful will be paid by the client.

TARGET MARKET
This product is particularly for the segment of existing entrepreneurs economically falling
down due to increasing inflation and food prices and also due to not having sufficient capital
for businesses.

The categorical purpose of this product is to protect the MEs (Micro entrepreneurs)
financially and make them sustainable.

TARGET BUSINESSES
Business examples: Embroidery, Handy craft, Dresses stitching and sewing, grocery shops,
transportation, Tire shop, Milk and food business, Beauty parlors, toy shops etc. Mechanics
shop.

PRODUCTIVE ZAKAH
Farz Foundation discourages beggary and emphasizes on productivity of financing whether
it comes as trade finance, “QARZ-E-HASNA” or “ZAKAH”. Foundation’s top priority is to
make the poor productive and to turn him or her from Zakah receiver to Zakah payer. So we
identify the deprived and make a bridge between poor and the donor. More over we also
provide capacity building opportunities to the poor to make them financially independent and
earning hand citizen. We believe if Zakah spends for any income generating activity and
becomes industrious it fulfills the aim of scarcity elimination.

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TARGET MARKET
Destitute and vulnerable poor are the target market of “ZAKAH” according to Islamic Law.

QARZ-E-HASNA
Farz Foundation also provides “QARZ-e-HASNA” to the poor who do not accept “ZAKAH” or
cannot be considered as Zakah receiver but still in need of a limited amount to fulfill their
urgency. We provide them free of interest micro financing on human grounds.

CULUSTER FORMATION PROCESS

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