Bonyad

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Bonyads are Iranian charitable trusts that control over 20% of Iran's GDP [1]. Initially set up during the time of the Shah, they were used to funnel money into the Shah's personal coffers. After the Iranian revolution, the Bonyads were used to redistribute oil income amongst the poor and amongst the families of martyrs.

Today, Bonyads are a consortium of over 120 companies which are tax-exempt, receive government subsidies, donations and answer directly to the unelected supreme leader of Iran. The Bonyads are involved in everything from vast Soybean and cotton fields to hotels to soft drinks to auto-manufacturing to shipping lines to…. Bonyads are overstaffed, corrupt, and generally not profitable. In 1999 Mohammad Forouzandeh, a former defense minister, reported that only 20% Iran's Bonyad companies were making a profit.

These organisations also compete with other private actors in the country. Private companies find it exceedingly difficult to compete with such large corporations, since they (Bonyads) have both the political and financial muscle to compete in any given market segment for as long as they like without considering the profitability of their ventures. These Bonyads, by their very presence, are hampering healthy economic competition and growth.

As charity organisations they are supposed to provide social services to the poor and the needy. Yet since there are over 120 of these organisations operating independently, the government doesn't know what, why, how and to whom this help and assistance is given. Lack of proper oversight and control of these foundations has also hampered the government's efforts in creating a comprehensive social security system in the country. ^[1]