How ISIS and al-Qaeda are financed rarely is discussed as a question of comparison. That is because the two follow markedly different financing models. The principle distinction between ISIS and al-Qaeda is that the former has defined itself as a governing caliphate, organized to rule vast expanses of conquered territory, whereas al-Qaeda is a franchised confederation seeking not to govern but to inflict lethal violence on victims falling outside its narrow ideological boundaries. Because ISIS governs territory that engages in military conflict as well as provides conquered subjects civil administration, revenue needs are roughly the same as any other province or administrative region. Therefore, ISIS must raise predictable amounts of revenue to meet its payrolls, feed and arm its soldiers, and tends to a myriad of service delivery activities. For example, when ISIS overruns an Iraqi oil producing region, it typically inherits a functioning engineering corps, a functioning (if terrorized) civil service, and a fully operational banking system.
Owing in large part to gruesome executions, business and government operations in ISIS-conquered territory usually return quickly to pre-conflict levels. Through 2014, cash stripped from government banks in vanquished territories provided an estimated $500 million to continue local government services and add military support. ISIS’ total “net worth” has been estimated by a British intelligence official to be in the neighborhood of $2 billion.
The exploitation of oil fields has also generated significant funds in spite of the recent decline in crude oil prices. According to a recent RAND study, "ISI[S] raises most of its money domestically in Iraq and Syria. Its income streams include oil smuggled to other countries in the region, extortion, taxes - especially on non-Muslim minorities - and other essentially criminal activities."
What ISIS adds to the pre-existing mix of fundraising options is its own brand of levying special taxes to support particular objectives. For example, Iraqi or Syrian civil service workers are required to hand over a percentage of their salaries - often as high as 50% - for the privilege of continuing to work for the new Islamic caliphate.
Comparisons between ISIS and al-Qaeda fundraising raise questions that are about degree as well as kind. The key discriminator is ISIS’ ready access to hundreds of millions of dollars in oil revenue that al-Qaeda has neither sought nor appears to covet. By comparison, al-Qaeda got its start well before 9/11, bankrolled substantially by Osama bin Laden’s personal fortune estimated at $300 million. Al-Qaeda’s leaders, starting with bin Laden, have also been labeled serial diverters of charitable contributions originally destined for non-terrorist health, welfare, and educational services. Finally, leaders of prominent Arab Gulf states have been contributors to al-Qaeda - whether indirectly through charities or more directly into targeted bank accounts - for their own private reasons.
Al-Qaeda is also known to have been active raising funds across a spectrum of predatory criminal activities. These include terrorist staples like kidnapping and extortion with lucrative activities added more recently that include organized theft rings (e.g. autos) and smuggling of the contraband, as well as drug dealing and human trafficking.
The diversity of questionable as well as outright illegal fundraising traces to established rackets - like smuggling - thriving for decades in regions where al-Qaeda operates, offering precedents for expanding those rackets. As a research report on al-Qaeda’s preference for crime derived revenue specifies, “currently, its cells, branches and affiliated groups are obliged to act autonomously; many of them have, to a great extent, to finance themselves, including by means of ordinary [i.e. predatory] crime.”
Whether al-Qaeda fundraising differs more in degree than kind from ISIS ultimately becomes a question of secondary importance. The primary issue that so far has eluded control efforts is how to interdict the torrent of money from underground economic pursuits that terrorist leaders have transformed into multiple revenue streams. With hundreds of millions of dollars—and possibly billions—safely residing in terrorist controlled banks, support for ideologically driven activities show no immediate signs of diminishing.