Community wealth building group

Is this community wealth building group halal?  If it is haram, could you explain what Islamic principle it violates

Week 1 : 1 person

Week 2: 2 people

Week 3: 4 people

Week 4: 8 people

* Every person who enters the group is required to recruit two people. So the week 1 person recuits 2 people for week 2. The 2 people in week 2 recruit 2 people each, which will result in 4 people for week 3. And the 4 people in week 3 recruit two people each, which results in 8 people for week 4.*

*I had a diagram which was more clear in a Microsoft Word file, but I couldn't reproduce it here.*

Summary of the business model:

The foundation of this program, which is simply called a community wealth building group, is that each person who joins pays $500 upon joining. And within a week after joining that person must recruit two people to join. Assuming this process occurs smoothly moving forward (meaning no one drops out or is unable to pay) 21 days after joining, you will get $4000 from a group of 8 people who joined 3 weeks after you (as shown in week 4 of the above chart). And 7 days after your day 21 (meaning 28 days after joining) you give $500 to the person who joined 3 weeks before you. So in summary, once you join, every 21 days thereafter you get $4000, and every 28 days you give $500. So you make a profit of $3500 a month.

Here is a detailed breakdown of the process:

When you join in week 1, you pay $500 to the person who joined 3 weeks before you. In relation to that person, you are one of the 8 people in week 4 of their chart. The people in the week 4 position pay $500 to the person in the week 1 position. This is how it works every single month, for every single person who is part of the group.

After paying, your next week 1 responsibility is to recruit two people to join the group within a week. Those people will form the two people in your week 2 group shown in the above chart. When they join, they will likewise pay $500 to the person who joined  3 weeks before them, as part of that person’s week 4 group of 8 people. 

Your week 2 group is also expected to recruit 2 people to join within a week of their join date. When they recruit their two people, you will have a total of 4 people in your week 3 group, as pictured in the above chart. All 4 of these people, likewise, upon joining, will pay $500 to the person who joined 3 weeks before them, as part of that person’s week 4, 8-person group.

Within a week of joining, the 4 people in your week 3 group are expected to recruit 2 people also. If they do so, during your week 4, you will have 8 people.  Your week 4, 8 member group will each gift you $500 each, for a total of $4000. This is how you get paid every month.

Now your group is complete, ending with the 8 members of your week 4 group. This self-sustained group will be the source of your $4000. What happens in weeks 5, 6, 7, etc, isn’t directly relevant to you. As long as the people within your 4-week group gift their money as they should, you will continue to get your monthly gifts indefinitely moving forward.

To be more precise, you pay $500 every 28 days, and you receive $4000 every 21 days. This is how the cycle works. For example, if you join and pay your $500, on July 5^th, you would get $4000 on July 26^th. Then you would give $500 on August 2^nd, and receive $4000 on August 23^rd. And this process would continue moving forward indefinitely.  You receive your $4000 money gift on a Sunday, and you send your $500 money gift out the next Sunday.

Anyone who wants to leave the group can do so at any time. They are requested to contact someone else in their group so a replacement can be arranged to fill in the gap, but even if they don’t, there are no financial penalties resulting from their abandoning the group. Each person can drop out at any time. The system works based on trust and a sense of duty, but there is not actually an enforceable obligation.

Also, if you don’t pay your $500, that means someone who was due $500 doesn’t receive it, but there are not interest charges for missing a payment. The group might determine they don’t want you as part of the group if you aren’t reliable, or, on the other hand, if you had financial hardships and couldn’t pay your $500 one month, they are likely to give you a pass for a month, and you would then start back up the next month. But under no circumstances would you be charged a penalty for a missed payment.

If multiple people in a group don’t pay their $500, or if some of the people didn’t do their job of recruiting 2 people, you won’t get $4000. You will be paid based on however many people are in your week 4 group.  So at a max, you would get $4000. If your week 4 group is only populated with 5 people, you’d get $2500. 3 people, $1500. So even if your group is deficient, you still stand to make some money, even if you don’t get the full $4000. And in subsequent months, you can always fill in the missing gaps so you can build back up to $4000.

That is a basic explanation of the model. I don’t see anything obvious that would make this gifting model impermissible, but I have to make sure before I get involved.

Every single person is treated the same, and gets paid the same (assuming their 4 week group is populated fully). So a person who joined 3 years ago will not get paid any more than a person who only joined 2 months ago. Each will get $4000 a month. Coming in early doesn’t provide any extra financial benefit (other than starting the process of getting $4000 a month sooner).

To me, this appears to be a voluntary gifting arrangement. Each person promises to pay $500 a month. That’s basically how the model works. I don’t see issues with interest, since this only involves giving one-way monetary gifts; there is no mutual exchange of money taking place between the gifter and giftee; money only travels one way – from the gifter to the giftee.  Please tell me if you think I’m missing something in my analysis that would make this type of financial transaction impermissible.

Jazakum Allah khair,

Abdul Razak Aziz

Here is a link to a 36 minute slide presentation about this model along with a pdf of the slides. I don’t expect you to watch it, so I tried to summarize everything in the above question. But in order to provide you with as much information as possible so you can make an informed decision about its Islamic ruling, you are free to look at the video and the accompanying pdf. if you want to look at it, you are free to. You can find them here: https://jmp.sh/b/1ElyqPTXhm8nLaUZiITk