Waqf (Islamic Endowment)

Waqf (Islamic endowment)

Billions of dollars ($) are being hoarded in waqf assets and funds, globally. It is paramount that the waqf assests and funds are targeted towards solving societal challenges and creating social impact for the benefit of the ummah (community).

We have experience in consulting globally in the waqf sector.  Our team specialises in waqf investment and management strategies. We particularly specialise in investing waqf  funds in Islamic Social Entrepreneurship (ISE) practises that provide social impact in terms of community empowerment, poverty alleviation, social justice and sustainability initiatives.

The aim of the waqf-SE model is to provide a platform for an economy of earnings and provisioning whereby the profits or surpluses from ISE will be deployed for either distribution to the designated beneficiaries or for re-investment in other SE investments.

The core components of the waqf-SE model are the wāqif, mawqūf, waqfī’ah, the waqf institution, the waqf-SE investment strategies and the mawqūf ‘alayh, as exhibited in the figure below which highlights the  ‘Modus operandi of the proposed waqf-SE model’.

The wāqif endows an asset as mawqūf, whereby transferring the endowment permanently to the ownership of Allah (SWT) and dedicating the usufruct to the designated beneficiaries. The endowment needs to be held and kept safe, according to the terms and conditions documented in the waqfī’ah. The waqfī’ah will document the mawqūf, the mutawallis that will be responsible and entrusted for managing the waqf, the mawqūf ‘alayh and the proportions for distribution to the beneficiaries.

As waqf funds need to generate profit from the investment of the endowment fund, it is proposed that the waqf-SE model invest the endowment funds in SE ventures which are sharī’ah compliant, must have a social impact value creation activity in the investments itself and should generate financial returns for the waqf.

The waqf institution can either directly engage in the SE ventures like a social enterprise or in a profit and loss agreement with other social entrepreneurs like a special purpose funding house. Instuments such as mushārakah/ sharikah can be utilised when engaging in business partnership while muḍārabah can be deployed when financing a profit-sharing venture.

The financial return is dependent on the investment but it needs to be kept in mind that the actual investment in SE practices is of benefit to the ummah as it is creating some sort of social impact.

The profits from the SE ventures need to be channelled back to the waqf fund for either distribution to designated beneficiaries of the waqf in accordance with the proportions stated in the waqfī’ah or re-investment of some of the profits in other SE ventures and distribution of some of the returns to the beneficiaries of the waqf.

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