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.

Social
Micro Finance
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.

Finacial
Services

Target
Population Business &
Home-based Envoirnmental
Health Care
Workers Education
Service
Service
Through CBO Partner
Through CBO Partner

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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.

BAARD 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 BODs of Farz Foundation
Research & Consultant EDA India, X Employee Fadral Bank USA.

Specialization: Research, International Micro Finance Consultant,

Lively hood development.

Experience:15 years

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Mr.Remesh Singh Arora

Member BODs 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 BODs 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 BODs
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 BODs 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 BOGs 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 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

CEO BODs

Head of Head of
Head Head of Internal
Operation & Finance & Head of HRD
Monitering Audit
Marketing Account

OPERATIONS

AREA STRUCTURE

Area Manger

Health Care
Area Accountant
Coordinator

Business ,
Envoironment ,
Education
Coordinator

Branch (A) Branch (B) Branch (C) Branch (D)

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BRANCH STRUCTURE

Branch Manager

Accountant

Feild Officer Feild Officer Feild Officer Feild Officer

AREA MONITORING COMMITTEE

Head of Area Monitoring

Committee
Branch Manager of (A)
Branch

Member Of Committee Member Of Committee

BM of (E) Branch BM of (B) Branch

Member Of Committee Member Of Committee

BM of (D) Branch BM of (C) Branch

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SERVICE PAKEGE

Financial
Service
Health

Business &
Environmental
education

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.

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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.

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

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 FARZ FOUNDATION

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.

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

•Mobilization
Step 1

•Community Meeting
Step 2

•Home screening
Step 3

•Business Screening
Step 4

•Final Formation Meeting

Step 5

•Asset Purchasing
Step 6

•Sale Agreement
Step 7

•Disbursement
Step 8

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