Ministers have set out a new federal law that governs charitable work and fundraising in the UAE.
It effectively strengthens existing legislation brought in to stop people from illegally fundraising from members of the public and misusing that money - particularly for crime or terrorism.
Unless a person or community group had permission from a licensed charity, such as Emirates Red Crescent or Dar Al Ber Society, they would be breaking the law by 'fundraising' - asking others for money for a cause.
The new law is unchanged in that regard. What it does is addresses grey areas, such as can you as a resident collect food, clothing and goods and give them away?
Here, using an official Q&A from the Ministry of Community Development and previous reporting, we explain how the law works:
What is the new charity and fundraising law - and why do we need it?
With the Donations Federal Regulatory Law No. (3) of 2021, the government seeks to regulate how money and items are donated to good causes.
Most countries have such legislation and it is designed to protect the public and ensure donations get to the people they were intended for.
In October, when the ministry first said the law was in the works, assistant undersecretary Nasser Ismail said it would further meet international standards in "countering money laundering, terrorism financing and weapons proliferation".
In 2008, federal legislation criminalised the collection of any donations without the permission of what was then the Ministry of Social Affairs. Federal laws in 2014 then tackled donations used for terrorist financing, and in 2015, legislation was brought by Dubai's government that outlawed a donation to any unlicensed charity.
The 2021 federal law updates those - and essentially fills in the blanks.
Why is the new law important?
It addresses a number of the grey areas that remained. Previous legislation focused on raising money.
The new law expands that to mention food and goods.
At the start of the pandemic, as thousands lost their jobs and some their homes, community groups collected food and essentials to help those in need.
Soon the government, which ran a campaign to get businesses to make 100 million meals for people in the UAE and the Arab world, had to tell the public to leave such work to its personnel.
Food donation and animals
But the donation of food and medicines remained a grey area. The law now says the public cannot distribute food without permission from a licensed charity. It further says charities themselves must ensure any goods received are stored properly, are in date, and to co-ordinate with authorities.
Residents often ask The National if they can donate money to animal shelters and charities. The legal material published on Thursday does not mention animals, but you would be breaking the law by donating to a shelter that was not a partner of one of the big charities.
What else does it say?
Much of the new law actually relates to licensed charities and how they operate.
Just as a resident or community group must seek permission, charities themselves must co-ordinate with certain authorities before embarking on campaigns or asking the public for donations.
A charity looking to build a school abroad would need the permission of certain government departments before they begin sending money abroad and buying materials.
In October, Mr Ismail said that non-profit organisations “must exercise due diligence to avoid any wrongdoings related to money laundering”.
What does the law allow?
Officials sought to stress that the regulations are not intended to stop people from giving. They also contain an element of common sense.
Hessa Tahlak, assistant undersecretary at the Ministry of Community Development, said the law makes provision for helping a friend, acquaintance or someone in need.
A person can privately collect funds or items from “trusted people” and donate it to a person he or she knows, she said.
Such an act does not have to go through the authorities and can be left to best judgment.
“Tracking items that are being donated and the person carrying out the donations is very important," Ms Tahlak told The National.
"This protects the donors. We want to tell people that if you don't know where these items are going, whether it's cash or items, don't take the risk."
Similarly, readers of The National often get in touch to generously offer to help people pay their medical bills, if their insurance has run out. Most hospitals have offices which facilitate such arrangements, and there is nothing in the law that prohibits helping to pay someone's bills.
“We love giving. It's in the culture of the people who live in this country that they love giving, and we don't want to stop that, but we do want to protect them,” Ms Tahlak added.
Can I donate to good causes abroad?
While the authorities stress the need for caution, there is no known clause in this law, or previous ones, that would entirely prevent you from donating to a major international charity.
What it does say is that no transfers should be made, by an individual or licensed charity, that go against the law's executive regulations. This is the full letter of the law and how it will be implemented, which has not yet been released.
A Q&A document from the ministry says that anyone sending money abroad should have "methods of proving donations went to beneficiaries or spending them for their specific purposes".
It further tells licensed charities is that they should co-ordinate closely with foreign affairs officials on any charitable work that involves sending money abroad.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
