Review Article - Critical Evaluation of Waqf Contribution to Socio-Economic Development: A Comparative Work on Waqf and Foundations

Critical Evaluation of Waqf Contribution

to Socio-Economic Development:

A Comparative Work on Waqf and

Foundations

Reviewed by

Norhaliza Mohd Nor(G1221618)

ECON 7625

TABLE OF CONTENTS

1. Introduction………………………………………………………………………... 2

2. Bibliographic Listing and Rating....………………………………………………..

4

3. Review of Selected Articles…………...………….……………………………….. 17

3.1 Administration and Management.…………………………………..………...

18

3.2 Legal…………….…………………………………………………...………. 18

3.3 Finance and Accounting……...…………………………………………….... 19

3.4 Governance…………………………………………………………………... 19

4. Waqf Contribution to Socio-Economic Development in Comparison

with the Contribution of Foundations, Trusts and Endowments…………….…….

20

4.1 Increasing the Education Level of the Society……………………………….

21

4.2 Increasing the Rate of Employment…………………………………………..

23

4.3 Reducing Poverty…………………………………………………………….. 24

5. Conclusion………………………………………………………….……………... 25

6. References………………………………………….……………………………… 27

1

1. INTRODUCTION

Over the past few years, the third sector has become more

and more popular and many institutions are set up to operate

in this third sector. Economists and economic scholars have

long recognized the value and the contribution of this third

sector. In Islamic economics, waqf is one of the most

important instruments that is present in this third sector,

that can play a very significant role in uplifting the socio-

economic status of the Muslim society, whilst in the western

society, foundations play a huge role in promoting economic

growth of the western countries.

Waqf has proven to be so significant and popular

especially during the Ottoman Empire, to the extent that city-

building was synonymous with waqf endowments. Baskan (2002)

wrote and this has been quoted in various literatures to

describe the flourishing of waqf during the Ottoman Empire:

“…a person would have been born into a Waqf house, slept in a Waqf cradle, eaten

and drunk from Waqf properties, read Waqf books, been taught in a Waqf school,

received his salary from a Waqf administration, and when he died, placed in a Waqf

coffin and buried in a Waqf cemetery” to describe the flourishing of

waqf during the Ottoman Empire.

2

Unfortunately, the popularity of waqf did not last. Today,

most people perceive waqf only as a religious act in giving

away lands for the development of mosques, religious schools,

orphanages and cemeteries. Not many see waqf as a powerful

financial instrument in developing productive properties that

will further enhance the wealth of the Muslims and ultimately,

improve the socio-economic condition of the society. This is

however different in the case of foundations. In the United

States of America, it is found that grants from foundations

amounting to USD37.85 billion in 2010 contributed to immediate

and short-term job creation and wages, GDP and tax revenues.

It is also found that the foundation grantmaking in the US

generated nearly USD970 billion in goods and services, and

more than USD570 billion to America’s GDP based on long-term

return on investment and economic multipliers.

This paper aims at reviewing articles that have been

written on waqfs, and critically evaluate the contributions of

waqf to the socio-economic development of the society. In

doing so, the works on foundations will also be reviewed so

that comparisons can be made between waqf and foundation, and

areas of improvements for waqf can be identified.

3

2. BIBLIOGRAPHIC LISTING AND RATING

WAQFS

NO TITLE OF LITERATURE AREA SUB-AREA AUTHOR SOURCE YEAR RATING

1 Quantitative Analysis of Waqf Endowment Deeds: A Pilot Project

Past andpresentpractices

Administration

RuthRoded

Journal –The Journalof OttomanStudies IX

1989 3 *

2 The Influence of Awqaf on Economic Development

Impactsof waqf

Economy ZaimSabahatti

n

Website –http://awqafsa.org.za/

2012 5 *

3 The Waqf as a Prop for the Social System (Sixteenth-Twentieth Centuries)

Impactsof waqf

Social GabrielBaer

Journal –Islamic Lawand Society

1997 3 *

4 Waqf System as a Redistribution Mechanism inOttoman Empire

Impactsof waqf

Socio-Economic

BirolBaskan

ConferencePaper –The 17th

Middle EastHistory and

Theory

2002 5 *

4

Conference

5 Waqf: An Islamic Instrumentof Poverty Alleviation– Bangladesh Perspective

Impactsof waqf

Socio-Economic

FoyasalKhan

Journal –Thoughts onEconomics

2012 5 *

5

6 Waqf-Based Microfinance: Realizing the Social Role of Islamic Finance

Impactsof waqf

Socio-Economic

HabibAhmed

ConferencePaper –

International Seminar

on“Integrating Awqaf inthe IslamicFinancialSector”

2007 5 *

7 Cash Waqf: An Innovative Instrument for Economic Development

Islamicfinancialinstrumen

t

Legal

Economy

HaslindarIbrahim,AfizarAmir &Tajul

AriffinMasron

Journal –International Reviewof SocialSciences

andHumanities

2013 5 *

8 Certain Legal and Administrative Measures forthe Revival and Better Management of Awqaf

Revivalof waqf

Legal

Administration

SyedKhalidRashid

IRTIWorkingPaper

Series (WP#1432-02)

2011 3 *

9 Financing and Investment inAwqaf Projects: A Non-

Revivalof waqf

Finance MuhammadAnas

DiscussionPaper –

1994 3 *

6

Technical Introduction Socio-Economic

Zarqa IslamicEconomicStudies,IBIS

10 The Role of Awqaf in Developing Islamic Civilization: Definition, History, Functions and Articulations with Society

Role ofwaqf

General MohammedAbattouy& SalimT.S. Al-Hassani

Article inthe book

“King AbdulAziz

Endowmentfor the Two

HolyMosques”

2013 4 *

11 An Ideal Financial Mechanism for the Development of the Waqf Properties in Malaysia

Revivalof waqf

Finance MohammadTahirSabit

Mohammad,Abdul

Hamid MarIman &IsmailOmar

Journalarticle

(unpublished) –

UniversitiTeknologiMalaysia

Institutional

Repository

2005 3 *

12 Awqaf of the Muslim Community in the Western Countries: A Preliminary

Preservation of

waqf

Legal MonzerKahf

http://www.monzer.kahf

.

(Un-dated

)

3 *

7

Thoughts on Reconciling theShari’ah Principles with the Laws of the Land

properties and

revenues

com

13 Cash-Waqf a New Financial Instrument for Financing Issues: An Analysis of Structure and Islamic Justification of Its Commercialization

Islamicfinancialinstrumen

t

Legal

Finance

MajidKhademolh-oseini

Imam SadiqUniversity

2008 4 *

14 Colonial Intervention & Transformation of Muslim Waqf Settlements in Urban Penang: Case Study of Capitan Kling Mosque Waqf &Acheen Street Mosque Waqf

Presentissue

Legal KhooSalma

Nasution

ConferencePaper –Second

International

MalaysianStudies

Conference(Universityof Malaya)

1999 3 *

15 Financing the Development of Awqaf Properties

Impactsof waqf

Finance MonzerKahf

ConferencePaper –

Seminar onDevelopmentof Awqaf

1998 3 *

8

(IRTI)16 Financing the Development

of Waqf Property: the Experience of Malaysia and Singapore

Islamicfinancialinstrumen

t

Finance MustafaMohd

Hanefah,et. al

ConferencePaper –

International

Conferenceon WaqfLaws and

Management:Reality andProspects(IIUM)

2009 3 *

17 Towards the Revival of Awqaf: A Few Fiqhi Issues to Reconsider

Revivalof waqf

Legal(fiqh)

MonzerKahf

Paperpresentedat a forumon IslamicFinance andEconomics(Harvard

University)

1999 3 *

18 Islamic “Waqf Endowment” – Scope and Implications

General General AhmedRaissouni

Book –ISESCO

2001 4 *

19 Obstacles of the Current Concept of Waqf to the Development of Waqf

Presentissues

Legal MohammadTahirSabit

Journalarticle –Malaysian

2006 4 *

9

Properties and the Recommended Alternative

Mohammad& AbdulHamid Mar

Iman

Journal ofReal Estate

10

20 The Role of Waqf in Improving the Ummah Welfare

Role ofwaqf

Socio-economic

MonzerKahf

ConferencePaper –

International Seminaron “Waqf asa PrivateLegal Body(Islamic

Universityof NorthSumatera)

2003 4 *

21 Strategies to Develop Waqf Administration in India

Revivalof waqf

Legal Hasanuddin Ahmed &Ahmedullah Khan

Book(Research)(IRTI)

1998 3 *

22 The Investment of Waqf Landas an Instrument of Muslims’ Economic Development in Malaysia

Islamicfinancialinstrumen

t

Legal ZulkifliHasan &MuhammadNajib

Abdullah

ConferencePaper –Dubai

International

Conferenceon

Endowments’Investment(Awqaf andMinors

2008 5 *

11

AffairsFoundation,

Dubai)

23 The Role of Islamic Institution in Achieving Equality and Human Development: Waqf or Endowment

Role ofwaqf

Socio-economic

AsmingYalawae &Izah MohdTahir

ConferencePaper –

5th AnnualConferenceof the HDCA

2008 4 *

24 The Role of the Islamic Waqf in Strengthening SouthAsian Civil Society: Pakistan as Case Study

Role ofwaqf

Social AndrewWhite

Journalarticle –

International Journalof Civil

Society Law

2006 4 *

25 Waqf and Its SociopoliticalAspects

Role ofwaqf

Socio-economic

MonzerKahf

Article(IRTI)

1992 4 *

26 Waqf: A Quick Overview General General MonzerKahf

Article Un-dated

3 *

27 Waqf – A Sustainable Development Institution forMuslim Communities

General General ImtiazAli

Article(Takaaful

T&TFriendly

2009 4 *

12

Society)

28 Waqf, Perpetual Charity andPoverty Alleviation

Role ofwaqf

Socio-economic

AbulHasanM. Sadeq

Journalarticle –

International Journalof SocialEconomics

2002 4 *

29 Waqf as a Social Entrepreneurship Model in Islam

Role ofwaqf

Socio-economic

Habibollah

Salarzehi, HamedArmesh &DavoudNikbin

Journalarticle –

International Journalof Business

andManagement

2010 4 *

30 Waqf: Enabler in Social Economic Development & Poverty Alleviation

Role ofwaqf

Socio-economic

IzzatSyazwanMustafaKamal

Article(INCEIF)

2013 5 *

31 Islamic Philanthropy: The Case of Waqf in Poverty Alleviation and Social Economic Development

Role ofwaqf

Socio-economic

KefaChesireChepkwony

Mastersarticle

2008 5 *

32 Integrated Waqf Based Islamic Socio- Mohamed Journal 2014 2 *

13

Islamic Microfinance Model (IWIMM) for Poverty Alleviation in OIC Member Countries

financialinstrumen

t

economic AslamHaneef,et. al.

article –Middle-EastJournal ofScientificResearch

33 An Overview of the Effectiveness of the Administration of Waqf Landin Malaysia

Presentissues

Administration

ZulkifliHasan

Journalarticle –

Shariah LawReport,

Current LawJournal

2008 3 *

34 Role of Waqf in Enhancing Muslim Small and Medium Enterprises (SMEs) in Singapore

Role ofwaqf

SME ShabanaHasan

ConferencePaper –

8th

International

Conferenceon IslamicEconomics

and Finance

2011 4 *

35 Weaknesses of Current Capital Raising, Financing,and Investment Methods of Awqaf (Islamic Trusts)

Islamicfinancialinstrumen

t

Finance AminahMohsin &MohammadTahir

ConferencePaper –2011

Internation

2011 5 *

14

SabitMohammad

alConferenceon SocialSciences

andHumanity

15

36 The Development of Waqf Accounting in Enhancing Accountability

Revivalof waqf

Accounting RosniaMasruki &ZurinaShafii

Journalarticle –

Middle-EastJournal ofScientificResearch

2013 3 *

37 Waqf Estates in Bangladesh – Analyzing Socio-Economic Profile and Exploring Potential but Unexplored Expenditure Options

Revivalof waqf

Socio-economic

MuhammadFazlulKarim

ConferencePaper –Seventh

International

Conference– The

TawhidiEpistemology: Zakat and

WaqfEconomy

2010 4 *

38 The Economic Significance of Waqf: A Macro Perspective

Impactsof waqf

Economy MochammadArif

Budiman &DimasBagus

WiranataKusuma

ConferencePaper -The 8th

International

Conferenceon Tawhidi

2011 4 *

16

MethodologyApplied toIslamic

Microenterprise

Development

39 The Relationship between the Waqf Institution in Islamic Law and the Rule ofLaw in the Middle East

Comparative study

Legal HosseinEsmaeili

Article –Flinders

University

Un-dated

4 *

40 Economics of Philanthropic Institutions, Regulation and Governance in Turkey

Past andpresentissues

Legal

Governance

MehmetBabacan

Journalarticle –Journal ofEconomic

and SocialResearch

2011 4 *

41 Ottoman central administration and war finance, late seventeenth century.

Role ofwaqf

Finance

Economy

KayhanOrbay

Conferencepaper –

XIVInternation

alEconomicHistoryCongress

(Helsinki,

2006 4*

17

Finland)

18

FOUNDATIONS, TRUSTS AND ENDOWMENTS

NO TITLE OF LITERATURE AREA SUB-AREA AUTHOR SOURCE YEAR RATING

1 Societies, Trusts/Charitable Institutions, Waqfs and Endowments

Comparative study

Legal Dept. ofAdministrative

Reforms &Public

Grievances

9th Report –Second

Administrative ReformsCommission,Governmentof India

2008 4 *

2 The Legal Framework of the NonProfit Sector in Pakistan

Non-profitsector

Legal Zafar H.Ismail

Article(PakistanInstitute

ofDevelopmentEconomics

2013 3 *

3 The NonProfit Sector in Brief: Public Charities, Giving and Volunteering, 2012

Non-profitsector

OverallPerformanc

e

Amy S.Blackwood, KatieL. Roeger& Sarah

L.Pettijohn

Article(Urban

Institute)

2012 4 *

19

4 Philanthropic Foundationsand Development Cooperations

General Socio-economic

SimonScott,et. al.

Article –DAC Journal

2003 3 *

20

5 The Role of Legal Doctrine in the Decline of the Islamic Waqf: A Comparison with the Trust

Comparative study

Legal JeffreyA.

Schoenblum

Journalarticle –VanderbiltJournal ofTransnation

al Law

1999 4 *

6 Global Community Foundations: Implicationsfor Sustained Socio-Economic Development

Comparative study

Socio-economic

ChrisMkhize

Article –(UthunguluCommunityFoundation

–http://www.ucf.org.za)

Un-dated

5 *

7 Cooperation, Trust and Economic Development: An Experimental Study in China

Socialquality

Economy JunyiShen &

XiangdongQin

DiscussionPaper

Series –ResearchInstitute

forEconomics

andBusiness

Administration, KobeUniversity

2013 3 *

21

8 A Comparative Study Between Charitable Trustsin Common Law and the Institution of Waqfs in Islamic Law

Comparative study

Legal AinulJariaMaidin

A MastersDissertation (IIUM)

1994 4 *

9 Trust, Social Quality andWellbeing: A SociologicalExegesis

Socialquality

Socio-economic

Paul Ward&

SamanthaMeyer

Journalarticle –

Developmentand Society

2009 3 *

22

10 Bowling Together, BowlingAlone: The Development ofGeneralized Trust in Voluntary Associations

Socialquality

Trustdevelopmen

t

DietlindStolle

Journalarticle –PoliticalPsychology

1998 3 *

11 The Social Enterprise: Towards a Theoretical Socio-Economic Approach

Socialenterpris

e

Socio-economic

Jean-Louis

Laville &MartheNyssens

Chapter 18of the book“Towards a

socio-economicapproach”

Notavailable

5 *

12 The Future Role of the Third Sector in Social and Economic Regeneration

Role ofthirdsector

Socio-economic

HMTreasury

Report 2007 5 *

13 Sustaining Conservation Finance: Future Directions for the BhutanTrust Fund for Environmental Conservation

Trustfund

Finance Tobgay S.Namgyal

Article –Journal of

BhutanStudies

Un-dated

3 *

14 Endowment for a Rainy Day Endowmentpresentissues

Finance Burton A.Weisbrod& EvelynD. Asch

Article –StanfordSocial

Innovation

2010 3 *

23

Review

15 Establishment of a Trust Fund for African Women’s Economic Empowerment: A Case Study of the AfricanWomen’s Development Fund and Options for the African Union

Trustfund

Womenempowermen

t

BisiAdeleye-Fayemi

Article –AfricanWomen’s

DevelopmentFund

Un-dated

3 *

24

16 Donor Logic in the Era ofGates, Buffett, and Soros

Comparative study

Fundingsources

DonorLogic

GitaSteiner-Khamsi

Journalarticle –Current

Issues inComparativeEducation

2008 3 *

17 Charitable Foundations, Tax Avoidance and Business Expediency

Legal Legal BerrienC. Eaton

Journalarticle –Virginia

Law Review

1949 4 *

18 Law Outside the Market: The Social Utility of thePrivate Foundation

Privatefoundatio

n

Socialutility

Carl J.Schramm

Journalarticle –Harvard

Journal ofLaw &PublicPolicy

2006 3 *

25

3. REVIEW OF SELECTED ARTICLES

For the purpose of this paper, only articles that are

rated 4-star and 5-star as per listed in the previous section

are reviewed. Therefore, a total of 34 articles have been

reviewed. All the waqf articles mention about the success of

the waqf institutions during the Ottoman Empire, giving

examples of waqf creations in the health and education sectors.

These articles do not end at elaborating on the success

stories of waqf but continue to also discuss about the issues

that are faced by the waqf institutions in this modern era.

According to the writers, the inefficiency in the

administration and management of waqf institutions are the main

factors that have hindered the potential growth of waqf. This,

in turn, has downplayed the significance of waqf in

contributing to the socio-economic development of the Muslim

societies.

It is interesting to note that, while the waqf articles

are still struggling at identifying structural problems that

exist in the waqf institutions, the articles written on

foundations are now discussing on how to further increase the

number of donorships and amount of grants. Most of these

17

establishments are no longer worried about the basic issues on

how their establishments should be run or how donations should

be collected. The laws and the governance of these

establishments are already in place. Although waqf laws also

exist, there remain issues on the efficiency of

administration, the professionalism in management, as well as

on the development of waqf accounting to improve accountability

that need to be resolved.

The following sub-sections will briefly look at the

administration and management, legal, finance and accounting,

and governance of the waqf institutions, and making comparisons

with what the foundations in the western countries already

have in place in relation to those areas.

18

3.1 Administration and Management

Most of the waqf made in the Muslim world are in the form

of land or buildings. Studies conducted on waqf institutions

found that, in most cases, the administration and management

of waqf are carried out by personnels who do not have the

relevant qualifications and expertise to administer and manage

properties. The foundations, on the other hand, are

administered by the board of trustees and these boards of

trustees consist of professionals from various disciplines

such as social justice, scholarships, business and finance,

law, governance, technology and non-profit management.

Additionally, the legal issues, as explained in the following

sub-section, have created problems to the waqf institutions in

managing the properties.

3.2 Legal

Waqf is a religious endowment and as such it falls under

the Islamic law and is subject to the scrutiny and

jurisdiction of the Shari’ah court. However, in Malaysia for

example, there exist problems due to the involvement of the

civil courts on disputes pertaining to waqf. There also exist

19

issues on obtaining information on waqfs that were made decades

ago because no proper records were kept on these waqfs. Legal

issues start to emerge when titles of properties are not known

and parties begin to claim rights on these properties.

The articles reviewed on foundations did not mention about

any record-keeping issues, which could result in disputes as

what is happening to waqf institutions. Rather, there is an

extensive set of laws, rules, regulations and acts that

governs the operations of foundations. It is probably because

the foundations are originally set up to professionally

administer and manage the donations made.

20

3.3 Finance and Accounting

Due to the increasing awareness on the significance of waqf

to the economic wellbeing of the society, there has been a

growing demand for specific accounting standards for waqf to be

put in place. This generally accepted accounting standards

for waqf is yet to be established. One of the reasons for the

absence of these standards is because of the failure in

agreeing on the definition of accountability among mutawallis.

This issue is nonexistent in foundations. Proper accounting

standards are already in place and the trustees are under

strict fiduciary duty to maintain proper accounting records,

which are assessible to the beneficiaries, whenever they

request to view those records.

3.4 Governance

When reviewing articles on waqf and foundations, it can be

noted that the issue of governance is mentioned more

frequently in the literature on foundations. This indicates

the high expectation of the society and the relevant

authorities on maintaining good governance for the

foundations. Due to the proper administration, management and

21

accounting of endowments under the foundations and other

charitable organizations, there exists very minimal governance

issue. The situation is unfortunately not the same for waqf

institutions. The lack of governance on waqf assets has caused

people to have very little trust in the waqf institutions.

This will only lead to people making individual waqfs. The

problem with individual waqfs is that these waqfs may not be

efficiently developed and may remain idle. Consequently,

these waqfs may not be able to assist in uplifting the socio-

economic condition of the society. The number and value of

waqf assets have been growing very significantly in recent

years due to the increase understanding on waqfs, hence, proper

governance of these assets is crucial.

4. WAQF CONTRIBUTION TO SOCIO-ECONOMIC DEVELOPMENT IN

COMPARISON WITH THE CONTRIBUTION OF FOUNDATIONS, TRUSTS

AND ENDOWMENTS

As stated earlier, the contribution of waqf is very

significant towards the socio-economic development of a

country. After the demise of the Prophet s.a.w., waqf became very

22

common. There were waqfs for mosques, universities, schools,

hospitals, orphanages, houses and food for the poor, the

blind, battered/abused women, soup kitchens, wells, aqueducts,

fountains, public baths, watchtowers, bridges, cemeteries,

salaries, pensions, guest houses, libraries, books and animal

welfare (Ali, 2009). During the Ottoman administration in the

seventeenth century, the waqf institution played a significant

role in its contribution to the central treasury. The waqf

funds were used to provide assistance to the poor and needy,

to prisoners, to travelers and also to slaves. The

contribution from waqf was so huge that towards the end of the

seventeenth century, waqf funds were even used to finance war

(Orbay, 2006).

Today, most waqf institutions are more actively involved

in the establishment of educational institutions, hospitals

and clinics, and of course, mosques and other religious

establishments. Not many waqf institutions delve in the

development of productive properties such as in the

development of agricultural land and building of commercial

complexes or residential properties. The operational issues

in waqf institutions as elaborated in the previous section have

23

hampered the progress of waqf institutions in many Muslim

countries. Hence, although waqf’s significance as a financial

instrument to uplift the socio-economic condition has been

established centuries ago, it has yet to demonstrate the same

level of significance in today’s world.

The foundations, on the contrary, are involved in various

social programmes. Some foundations are involved in

activities such as crop research and infectious disease

control. These programs have improved the lives of hundreds

of millions of people. The Ford Foundation International, for

example, has been actively involved in asset building and

community development, peace and social justice, as well as in

international fellowships. This foundation has impacted

millions of people through its programmes and has directly and

indirectly improved the socio-economic status of those people.

In the following sub-sections, we will look at three

specific contributions of both the waqf and the foundations

with respect to the socio-economic development of a country,

namely in increasing the education level of the society,

increasing the rate of employment and reducing economic

inequality and poverty.

24

4.1 Increasing the Education Level of the Society

It cannot be denied that education plays an important

role in improving the socio-economic status of a society.

According to the human capital theory, education or training

raises the knowledge and skills of the workers, making them

more productive and hence raising the workers ability to

command higher income. This will, subsequently, lead to

higher lifetime earnings (Becker, 1994).

Over the years, there have been questions on who should

be financing the costs of education. Some argue that the

government should be funding education because it is a public

good. The benefits of education are not only enjoyed by the

individuals receiving the education or training, but the

benefits extend to include the betterment of the society.

There are also those who argue that education should be a

private good. According to them, if education was a public

good, there will be few who have the incentive to spend the

time and resources to ensuring the quality and the adequacy of

someone else’s education. On the other hand, if education was

a private good, poor people will be deprived of it (Shaw,

25

2010). Therefore, it is not surprising that education has

become one of the focus areas for waqf institutions and

foundations. These voluntary institutions are not subject to

making profits. In addition to that, although the staff

strength could be small, these institutions are still able to

monitor the quality and adequacy of the education provided

because the fund recipients are filtered based on certain

eligibility criteria.

Since the Ottoman Empire era, waqf has been used to

finance the costs of education. Although in many

circumstances, waqf funds are used to finance religious

education, education in general has been the second largest

recipient of waqf revenues (Kahf, 2003). In the same article,

Kahf also mentioned about Jerusalem having 64 schools at the

beginning of the twentieth century and all these schools are

waqf supported by waqf properties in Palestine, Turkey and

Syria. Another example of a successful education institution

based on waqf, which is frequently quoted in many literatures,

is the Al-Azhar Islamic University in Egypt. In the article

written by Salarzehi, Armesh and Nikbin (2010), they stated

that in Bangladesh, there are more than 8000 education

26

institutions that are based on waqf. According to Karim (2010),

a total of 6,397 beneficiaries of waqf in Bangladesh are the

educational institutions. These educational institutions

constitute the third largest beneficiary of waqf in Bangladesh

after religious institutions and public institutions. It is

also worth to note that educational activities also take place

in mosques. As such, the actual contribution of waqf to the

education sector could be even more than what is officially

reported.

Other than the very few universities that are operating

on waqf funds and the very few educational programs run by

mosques, most of the educational activities that use waqf funds

are religious-related, whilst for foundations, the education-

related programs are skill-based or degree-based programs.

The major aim of these foundations in offering these education

programs is to enhance the knowledge and skills of the

students, allowing them to improve their skills and

competency, and subsequently, uplifting the economic status of

the society by being productive and earning higher income.

Ford Foundation, in the United States of America for example,

aims at producing scholars for academic careers. As a result,

27

the foundation has successfully produced distinguished

scholars who have transformed the higher learning institutions

that they attended by serving as faculty members and leaders.

These scholars are able to act as role models for new students

and strengthen the education of millions of students. We can

see that the benefits of the funds extend to generations and

not limited to the scholarship recipients only. Another

famous scholarship from privately financed foundation is the

Cecil Rhodes Trust in the United Kingdom, which offers

scholarship awards to students from around the world,

including from third world countries such as South Africa,

Zambia, Zimbabwe, Botswana, Lesotho, Malawi and Namibia.

4.2 Increasing the Rate of Employment

One of the missions of waqf and foundations is to uplift

the socio-economic status of the society. Through education

programs, this could be achieved by both institutions,

although as elaborated in the earlier section, the foundations

might achieve better outcomes as they do not focus primarily

on religious-related education programs. Their scholarships

are more towards enhancing the professional knowledge and

28

skills of the recipients. These recipients would, later, be

able to join the workforce and earn higher income than they

would be earning without the knowledge and skills they

received from their studies.

Unfortunately, there are no articles on waqf that provide

information on the impacts of waqf development to the rate of

employment in the economy. All the waqf articles that discuss

human resource issues will only mention about the competency

of the waqf administrators in developing waqf properties. The

possible contribution of waqf development in creating jobs is

still left to be studied. One reason for this could be

because there is no data readily available on jobs created

from waqf development and education programs. Another reason

could be because the development projects and education

programs by waqf institutions are small projects that do not

have significant impact on job creation. Formal studies must

be carried out to confirm all these assumptions.

Unlike waqf, projects involving foundations are of bigger

scales. Despite this fact, data on jobs created by

foundations is also not readily available. Similar to the

journal articles on waqf, the literature on foundations has not

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gone into detail on the effects of the projects carried out by

foundations on the employment rate. However, some developed

countries, such as the United States of America, the United

Kingdom, Canada, Australia and Singapore, do have data on the

number of volunteers. But these numbers are compiled from the

whole of voluntary sector and not specific to foundations.

Hence, similar to waqf, studies need to be conducted to confirm

the assumption that the establishment of foundations, through

its activities, could contribute to an increased rate of

employment in a country.

4.3 Reducing Poverty

Contrary to the non-existent literature on job creation

and employment rate for waqf and foundations, the main focus of

most literature on these two institutions is on alleviating

poverty. Both institutions acknowledge the main importance of

their existence is to alleviate poverty and uplift the socio-

economic status of the society.

Unfortunately, specific studies on how much poverty has

been reduced as a result of these institutions’ activities and

programs are not available. The articles reviewed, if they

30

did discuss about the socio-economic impacts, only mention in

general about the reduction of poverty without giving any

statistical data to support their claims. Some foundations

have made their annual reports accessible to the public and

information such as the total contribution by donors and to

which programs the money was invested can be found in the

reports. Similar information, however, are not available for

waqf institutions. This is probably because in the western and

developed countries, the donors have set high expectations on

how the foundations should perform and these donors expect

their donations to be utilized professionally.

5. CONCLUSION

It has been acknowledged by Muslim economists and

scholars that waqf is an integral and important part of the

Islamic socio-economic system. Hence, it is important to

rectify the dominant prevailing perception that waqf properties

are meant only for religious purposes. Waqf institutions

should emulate, wherever possible, the approach taken by the

foundations, in order to improve their operations and increase

their endowment resources. Waqf institutions should also

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consider widening the scope of their activities to include all

other programmes that have positive impacts on the livelihood

of the society, but do not go against the Shari’ah. The waqf

institutions should not limit themselves to only religious-

based programmes. These positive impacts on the society’s

livelihood will ultimately result in improved socio-economic

status of that society.

It cannot be denied that the world has become more

complex today than it was during the times of the Prophet and

his companions. Hence, it is not a surprise that waqf

flourished easily during those times. Globalization has

brought with it many issues to the Muslim society, but

globalization can also promote knowledge sharing among

countries and societies. As a result of globalization,

together with advanced technology, the transfer of knowledge

has become very rapid. Muslims should take advantage of this

globalization to enhance their understanding on waqf, on how

other Islamic countries develop their waqf properties and how

those countries solve issues pertaining to waqf. Knowledge on

how other voluntary institutions, such as foundations, trust

and endowments thrive in the western countries should also be

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obtained and, wherever possible, be emulated to enhance the

operations of the waqf institutions. From the discussion

earlier, it is obvious that the waqf institutions have a lot to

do in order to improve their operations, especially in the

administration and management of waqf, the accounting of waqf

and the governance of waqf. The legal system relating to waqf

also needs to be refined so that conflicts between different

judicial systems can be avoided. If all the weaknesses

identified in the operations of waqf are rectified, coupled

with proper understanding of waqf, the waqf institutions will,

at the very minimum, be at par with the foundations in

alleviating poverty and improving the socio-economic status of

the society.

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6. REFERENCES

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Ford Foundation. 2012 Annual Report. Retrieved on April 3, 2014,

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Islamic Relief Worldwide Waqf Programme. Examples of famous waqf.

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http://www.irwaqf.com/index.php?/waqf_in_islam/index/2

United Nations Volunteers. Assessing the contribution of volunteering to

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http://www.unv.org/fileadmin/docdb/unv/pdf/UNV

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Shaw, J.S. (2010). Education – A bad public good? Retrieved on May

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http://www.independent.org/publications/tir/article.asp?

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The Rhodes Trust. About the Rhodes Trust. Retrieved on May 9,

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