[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 Note
Amid escalating tensions between the United States and Iran, attention is increasingly focused on the Islamic Revolutionary Guard Corps (IRGC), which has emerged as the core of the Iranian regime. The IRGC is officially a military organization responsible for Iran's defense. However, in reality, it can be considered a conglomerate that controls over 40% of Iran's economy. This sprawling expansion was made possible by the unwavering support of former Supreme Leader Ayatollah Seyyed Ali Khamenei. However, since his death in a U.S. airstrike in February, the IRGC has transformed into an independent entity that even the Iranian government cannot control. The Asia Business Daily has examined the true nature of the IRGC and assessed how it might influence future negotiations with the United States.

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

The financial foundation that allowed the IRGC—a military organization—to dominate the Iranian economy through more than 800 companies originates from a single non-profit foundation. The key player is the Mostazafan Foundation, once led by the late Supreme Leader Ayatollah Seyyed Ali Khamenei, who died in a U.S. airstrike this past February.

Former Supreme Leader Khamenei entrusted the foundation to successive IRGC commanders, enabling them to continuously expand operational funds and grant privileges. Fueled by relentless funding from this foundation, the IRGC has become an unrivaled powerhouse within Iran, immune to checks and oversight. Even the Iranian government cannot fully grasp the extent of its assets, prompting concerns about unchecked dominance within the country.

However, with the United States imposing a counter-blockade in the Strait of Hormuz, the Mostazafan Foundation now faces an existential crisis. After U.S. President Donald Trump held a summit with Chinese President Xi Jinping and signaled a tougher stance on Iran, attention is now turning to the extent of damage the Mostazafan Foundation—the financial backbone of the IRGC—will suffer.

Mostazafan: The Non-Profit Foundation at the Top of the IRGC's Funding Structure

AFP Yonhap News

According to Voice of America (VOA), the IRGC's main funding source is the non-profit Mostazafan Foundation. The Mostazafan Foundation, in turn, controls other religious foundations, including the Execution of Imam Khomeini's Order (EIKO) and the Martyrs Foundation. The precise assets of the Mostazafan Foundation remain undisclosed, but combined with its affiliated foundations, its assets are estimated to exceed $100 billion (about 150 trillion won).

The foundation has been able to scale up over time because it receives annual revenue from oil exports via the National Development Fund of Iran (NDFI), a sovereign wealth fund owned by the Supreme Leader. By law, 20% of Iran's oil export revenue is allocated to the NDFI. Only the Supreme Leader can withdraw funds from the NDFI, and it is believed that a significant portion is transferred to the Mostazafan Foundation each year. VOA reported, "Because only the Supreme Leader has the authority to withdraw NDFI funds, every Iranian administration has had to seek the Supreme Leader's permission to borrow from the NDFI whenever there was a budget deficit."

The U.S. government also regards the Mostazafan Foundation as a primary funding source for the IRGC and has been sanctioning it since 2020. The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) stated in a sanctions report, "On the surface, the Mostazafan Foundation is a non-profit charity that claims to benefit the poor and oppressed, but its assets were seized from the Iranian people. The Supreme Leader uses these assets to strengthen his power, reward the IRGC and political allies, and persecute the regime’s adversaries."

Transformed from a War Casualties Support Foundation into a Ruling Treasury... Now Dominated by IRGC Veterans

According to the BBC, the predecessor to the Mostazafan Foundation was the Pahlavi Foundation, established before the 1979 Islamic Revolution by the former Shah of Iran to amass slush funds. After the revolution, then-Supreme Leader Ayatollah Seyyed Ruhollah Khomeini assumed the position of chairman. He expanded the foundation’s assets by seizing property from the Pahlavi royal family and high-ranking officials.

From 1980 to 1988, the foundation provided living expenses and low-interest loans to casualties of the Iran-Iraq War. Since Khamenei came to power in 1989, the foundation has nominally promoted privatization, and the Supreme Leader no longer serves as chairman. However, every chairman since has been a former IRGC commander. The current chairman, Hossein Dehghan, a former Iranian vice president, previously served as the IRGC Aerospace Force commander. He was appointed chairman in 2023 by Khamenei.

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

AFP Yonhap News Agency

Currently, profits generated by the Mostazafan Foundation flow to the IRGC and its affiliated civilian organization, the Basij militia. According to the Clingendael Institute in the Netherlands, the IRGC primarily uses funds from the Mostazafan Foundation and its affiliated religious foundations to cover the Basij militia's operational expenses. The Basij militia is a direct subsidiary of the IRGC with over 1.5 million members. The organization functions as a paramilitary force in emergencies and serves as the IRGC's political mobilization arm during peacetime.

Merchants who join the Basij militia receive preferential exchange rates for foreign currency and are able to trade imported goods. They are also given priority in securing national business contracts. In addition, young members of the Basij militia are granted preferential admission to prestigious universities and receive extra points when seeking employment in government organizations and state-owned enterprises, according to the Clingendael Institute.

The foundation's operational details, asset scale, revenue, and fund movements are all shrouded in secrecy. The Iranian government cannot intervene in the foundation’s operations and only the IRGC’s intelligence division is known to possess audit authority.

According to Iran International (INT), an opposition media outlet, reformist and moderate political figures in Iran demanded a constitutional amendment last December—amid a surge in anti-government protests—seeking to disclose the asset management and revenues of the Mostazafan Foundation and its affiliates. The Iranian government and parliament, however, lack the authority to audit the foundation and its subsidiaries due to the Supreme Leader's special privileges enshrined in the 1989 constitution. INT reported that only the IRGC’s intelligence division has audit authority over these foundations.

Moderate factions in Iran continue to argue that the government and parliament should be granted audit authority over these foundations to curb their unchecked management and to hold them accountable for business failures. Heshamatollah Falahatpisheh, former chairman of the Iranian parliament’s National Security Committee, recently stated in an interview with the centrist Iranian media outlet Khabar, “It is problematic that organizations that account for two-thirds of the national economy are not held accountable for any business failure and cannot be punished for wrongdoing.”

However, under the protection of the Supreme Leader, demands for constitutional amendments have been rejected both in the past and present. Iran attempted constitutional reforms during the presidencies of Mohammad Khatami in 2004 and Hassan Rouhani in 2013, but failed each time. INT reported, “Amending Iran's constitution requires final approval by the Supreme Leader, and former leader Khamenei consistently opposed such amendments.”

U.S. Tightens the Squeeze on Mostazafan's Funding Sources

Even Mostazafan, which has operated without oversight, has suffered major blows since the Iran war. The U.S. Treasury Department is further tightening restrictions on the foundation’s funding sources, fearing that the IRGC might divert tolls from the Strait of Hormuz to Mostazafan.

On the 1st (local time), the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a notice stating, “We recognize that Iran is demanding compensation for safe passage through the Strait of Hormuz. Options for meeting Iran’s demands may include in-kind payments in the form of nominal charitable donations to organizations such as Mostazafan, the Iranian Red Crescent, and Iranian embassy accounts. Any shipowner paying transit fees to Iran—including charitable donations—risks being subject to sanctions.”

Mostazafan has been subject to OFAC sanctions since 2020, and ten individuals and fifty entities in the energy, finance, and mining sectors identified by OFAC as related to Mostazafan are also listed as sanctioned entities.

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