[The Revolutionary Guard Inc.]②The Source of Financial Power: A Nonprofit Foundation That Faces No Audits

Transformed into the Supreme Leader’s Private Treasury
Iranian Government Barred from Assessing Operations

Editor's NoteThere is growing attention on the Islamic Revolutionary Guard Corps (IRGC), which has emerged as a core pillar of the Iranian regime in the ongoing conflict between the United States and Iran. Officially, the IRGC is a military organization responsible for Iran’s armed forces and national defense. In reality, however, it functions as a conglomerate that controls more than 40% of the Iranian economy. This tentacular expansion was fueled by the unwavering support of the former Supreme Leader, Ayatollah Seyyed Ali Khamenei. However, since his death in a U.S. airstrike this past February, the IRGC has become an independent entity that even the Iranian government cannot control. The Asia Business Daily examined the true nature of the IRGC and considered its potential impact on future negotiations with the United States.

Building view of the Mostazafan Foundation headquarters located in Tehran, Iran. Mostazafan Foundation website

The financial foundation that enabled the Iranian Revolutionary Guard Corps (IRGC)—a military organization—to dominate the Iranian economy through over 800 companies originated from a nonprofit foundation. The organization at the center of this is the Mostazafan Foundation, which was led by the late Supreme Leader Ayatollah Seyyed Ali Khamenei until his death in a U.S. airstrike this past February.

Former Supreme Leader Khamenei entrusted the foundation to successive IRGC commanders, continually expanding its operating funds and awarding it various privileges. With constant financial injections via this foundation, the IRGC became an unchecked power within Iran. Even the government is unable to ascertain the foundation’s assets, fueling concerns about unchecked dominance even within Iran.

However, with the United States imposing a counter-blockade on the Strait of Hormuz, Mostazafan now faces an existential crisis. As U.S. President Donald Trump signaled a tougher stance against Iran following his summit with Chinese President Xi Jinping, attention is focused on how severely Mostazafan—the IRGC’s main financial pillar—will be impacted.

Mostazafan: The Nonprofit Foundation at the Pinnacle of IRGC’s Funding Network

AFP Yonhap News

According to Voice of America (VOA), the primary financial source for the IRGC comes from the nonprofit Mostazafan Foundation. Mostazafan also controls the Execution of Imam Khomeini’s Order (EIKO) and the Martyrs Foundation, both religious foundations. The exact assets of the Mostazafan Foundation are not publicly disclosed, but when the assets of its affiliated foundations are combined, the total is estimated to exceed $100 billion (approximately KRW 150 trillion).

The foundation has been able to scale up primarily because it receives annual oil export revenues from the National Development Fund of Iran (NDFI), a sovereign wealth fund owned by the Supreme Leader. Iranian law mandates that 20% of oil export revenues be deposited into the NDFI. Only the Supreme Leader has the authority to withdraw funds from the NDFI, and it is presumed that a significant portion of these annual profits are transferred to the Mostazafan Foundation. VOA reported, “Since only the Supreme Leader can withdraw NDFI funds, successive Iranian governments have had to seek permission from the Supreme Leader to borrow from the NDFI whenever a fiscal deficit has occurred.”

The U.S. government has also targeted the Mostazafan Foundation as a major source of IRGC funding, imposing continuous sanctions since 2020. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) stated in its report on Iran sanctions: “On the surface, the Mostazafan Foundation is a nonprofit charity that provides benefits to the poor and oppressed, but its assets have been confiscated from the Iranian people.” OFAC further pointed out, “The Supreme Leader of Iran uses these assets to consolidate power, reward the IRGC and political allies, and persecute the regime’s adversaries.”

The Transformation from a War Casualty Support Foundation to the Regime’s Treasury... Now Dominated by IRGC Alumni

According to the BBC, the predecessor of the Mostazafan Foundation was the Pahlavi Foundation, established by the former Shah of Iran before the 1979 Islamic Revolution to accumulate slush funds. After the revolution, then-Supreme Leader Ayatollah Seyyed Ruhollah Khomeini assumed direct control as chairman, expanding the foundation’s assets by confiscating wealth from the royal family and senior officials.

From 1980 to 1988, the foundation was responsible for providing living expenses and low-interest loans to victims of the Iran-Iraq War. After Khamenei came to power in 1989, the foundation nominally shifted toward privatization, and the Supreme Leader no longer served as chairman. However, all subsequent chairmen have been former IRGC commanders. The current chairman, Hossein Dehghan, a former Iranian vice president, previously served as the commander of the IRGC Aerospace Force and was appointed chairman by Khamenei in 2023.

Iranian Government Unable to Assess Assets... Only IRGC Has Access

AFP Yonhap News Agency

Currently, the profits generated by the Mostazafan Foundation’s funds are funneled to the IRGC and its affiliated civilian organization, the Basij militia. According to the Netherlands Institute of International Relations Clingendael, the IRGC primarily uses funds from the Mostazafan Foundation and its affiliated religious organizations to cover the Basij militia’s operating expenses. The Basij is a direct subsidiary of the IRGC and boasts more than 1.5 million members. In times of crisis, it serves as a paramilitary group; in peacetime, it operates as a political mobilization force for the IRGC.

Merchants who join the Basij militia receive preferential foreign exchange rates for trading imported goods and are given priority in national business contracts. Additionally, Basij-affiliated youths are granted preferential admission to prestigious universities and receive extra credit when applying for government and state-owned enterprise jobs, according to the Clingendael Institute.

All aspects of the Mostazafan Foundation’s operations, asset scale, revenues, and fund flows remain shrouded in secrecy. The Iranian government cannot interfere in the foundation’s management, and audit authority reportedly rests solely with the IRGC’s intelligence division.

According to the Iranian opposition media outlet Iran International (INT), reformist or moderate politicians in Iran demanded a constitutional amendment last December—at the height of anti-government protests—to force the disclosure of the Mostazafan Foundation’s and its affiliates’ asset management and revenue status. However, both the Iranian government and parliament lack audit authority over Mostazafan and its subsidiaries, due to constitutional provisions enacted in 1989 that guarantee special privileges for the Supreme Leader. INT reported that only the IRGC’s intelligence division holds such authority.

Even now, moderate factions in Iran argue that the government and parliament should be granted audit authority over these foundations and be able to hold them accountable for business failures in order to curb their reckless management. Heshmatollah Falahatpisheh, former chairman of the Iranian Parliament’s National Security and Foreign Policy Committee, recently told the centrist Iranian media outlet Khabar, “It is problematic that organizations which account for two-thirds of the national economy cannot be held responsible or punished for any business failure or wrongdoing.”

Nevertheless, constitutional amendment demands have been rejected both in the past and present under the protection of the Supreme Leader. Iran attempted constitutional changes during the administrations of former President Mohammad Khatami in 2004 and former President Hassan Rouhani in 2013, but all efforts failed. INT reported, “Constitutional amendments in Iran require the Supreme Leader’s final approval, and the late leader Khamenei had consistently opposed such changes.”

The United States Tightens the Squeeze on Mostazafan’s Funding Network

Even Mostazafan, which has operated without any oversight, has suffered significant blows since the Iran conflict began. The U.S. Department of the Treasury is tightening controls over Mostazafan’s funding, fearing that IRGC will divert Strait of Hormuz transit fees to the foundation.

On the 1st (local time), the U.S. Treasury’s Office of Foreign Assets Control (OFAC) issued a notice stating, “We are aware that Iran is demanding compensation for safe transit through the Strait of Hormuz” and warned that “among Iran’s demands, other forms of payment—such as nominal charitable donations to organizations like Mostazafan, the Iranian Red Crescent, and Iranian embassy accounts—might be options. Any shipowner paying transit fees to Iran, including charitable donations, is at risk of being sanctioned.”

Mostazafan has been subject to OFAC sanctions since 2020, and the list of sanctioned entities includes 10 individuals and 50 organizations in the energy, finance, and mining sectors identified by OFAC as connected to Mostazafan.

This content was produced with the assistance of AI translation services.