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2/5/2014
INCEIF
1
CONTENTS
1. Flexible Shariah Aspect of waqf
2. Main objectives of creating waqf
3. Current situation of waqf properties
4. Parameters for redeveloping the waqf properties
5. Innovation and creativity in redeveloping old waqf
properties (current cases)
6. Modern applications of cash –waqf
7. Proposal for CWFI as a fund raising scheme
2/5/2014 INCEIF 2
1. FLEXIBLE SHARIAH ASPECT OF WAQF
i. Definition of Waqf
ii. Essence of Waqf in Al-Quran & Hadith
iii. Flexibility in deriving its law
iv. Activating the ten stipulations to meet the
current needs
2/5/2014 INCEIF 3
i. DEFINITION OF WAQF
The terms, waqf, habs, tasbil all mean ‘to stop, to restrain’ i.e. devoting in the way of Allah
“The confinement of an asset, movable or
immovable, by a founder and the dedication of its
usufruct in perpetuity to the beneficiaries”
2/5/2014 INCEIF 4
به عليم ا تحبون وما تنفقوا من شيء فإن للا لن تنالوا البر حتى تنفقوا مم
By no means shall ye attain righteousness unless ye give (freely) of that which ye love; and whatever ye give, of a truth God knoweth it well.
(Surat al-‘Imran, 3:92)
صدقة جارية إذا مات االنسان انقطع عمله إال من ثالث؛
وعلم ينتفع به وولد صالح يدعو له
The Prophet (s) said: When a man dies his acts come to an end, except
three things, recurring charity, knowledge (by which people benefit),
and pious offspring, who pray for him.
5
ii. ESSENCE OF WAQF IN AL-QURAN & HADITH
2/5/2014 INCEIF
No clear reference to the word waqf in the Qur’an,
Early Muslim jurists relied on the Sunnah of the Prophet (pbuh)
and the practices of his companions to derive its laws.
Being a deduced law, this allows the different schools of fiqh
a certain measure of flexibility in deriving its law, based on
the following Qur’anic verse;
بكم اليسر وال يريد بكم العسر يريد للاه
God intends every facility for you; He does not want to put you in difficulties (Surat al-Baqarah, 2:185).
6
iii. FLEXIBILITY IN DERIVING ITS LAW
2/5/2014 INCEIF
iv. ACTIVATING THE TEN STIPULATIONS
(Give flexibility according to current needs)
1. Ziyadah (Increase) and Nuqsan (Decrease)
2. Idkal (Addition) and Ikhraj (Removal)
3. I‘ta’ (Granting) and Hirman (Dispossession)
4. Taghyir (Replacement) and Tabdil (Conversion)
5. Istibdal (Substitution) and Ibdal (Exchange)
7 INCEIF 2/5/2014
Beneficiaries
Waqf Assets
2. MAIN OBJECTIVES OF CREATING WAQF
Avenue for founders to get continuous rewards.
Fulfill the needs of beneficiaries according to the different
societies and the different needs.
Opening jobs for the majority of people.
Ensuring the perpetuity of the waqf property.
2/5/2014 INCEIF 8
3. SITUATION Of WAQF PROPERTIES WITHIN THE PAST DECADES
Huge number of old waqf properties are undeveloped.
Founders’ condition are not fulfilled for many years.
Rights of the beneficiaries are not met.
Many unresolved court cases between trustees and family
members.
Role of waqf becomes idle, unproductive, and a burden to the
different governments.
The recent revival of this institution in Muslim and Muslim
minority countries shows an optimism approached in galvanizing its role again.
2/5/2014 INCEIF 9
4. PARAMETERS FOR REDEVELOPING WAQF
PROPERTIES
i. Legal conditions
ii. Types of waqf
iii. Economics and investment climate
iv. Financing options
2/5/2014 INCEIF 10
i. LEGAL CONDITIONS
WAQF DEED/WAQFIAH
Land title – registered as waqf (masjid, religious school, hospital,
agricultural land, etc.)
Founder’s condition (has to be respected)
Beneficiaries (rights have to be met)
Perpetuity of the waqf (has to be ensured)
11 2/5/2014 INCEIF
ii. TYPES OF WAQF
Religious waqf: Mosques, Islamic school, cemeteries,
shrines, etc.
Investment waqf: Residential, commercial agricultural,
industrial, cash.
Social waqf: Schools, universities, hospitals, clinics,
orphanages, elderly homes, etc.
2/5/2014 INCEIF 12
iii. ECONOMIC AND INVESTMENT CLIMATE
Legal feasibility: Legal requirements – fatwa/permits
Market and sector study: which project to selected, and how to
be implement it without violating founder’s condition
Project description: Location environemtn / religious, investment
or social.
Total cost: Budgeting of waqf project and which mode of finance to
select.
13 2/5/2014 INCEIF
iv. FINANCING OPTIONS
Traditional Modes of Finance
Modern Modes of Finance
Cash waqf finance
2/5/2014 INCEIF 14
5. INNOVATION AND CREATIVITY IN REDEVELOPING
OLD WAQF PROPERTIES
1. Rumah well waqf in Madinah
2. Waqf al-Baghdadi in Sudan
3. Al-Awqaf al-Sinnariah of Sudan in Makkah
4. Mosque in Bencoolen in Singapore
5. Mujama‘ al-Zahab al-Tijari in Sudan
6. Redeveloping old waqf buildings in Kuwait
7. Al-Khan Residential Building in Sharjah
8. Bandar Abbas in Iran
2/5/2014 INCEIF 15
CASE 1: RUMAH WELL WAQF/MADINAH
• Founder: S. Uthman Ibn Afan (during the 1st century of
Hijrah he bought the well from a Jewish for 20 thousand
Dirham and donate it as waqf
to benefit the community
• Waqf property: Rumah well
• Beneficiaries: Muslims and
Non-Muslims to drink water
2/5/2014 INCEIF 16
Cont… As time past and during the Ottoman, the
trustees realized that the surrounding area
is a fertile land to grow date palm tree.
This act was continued and more trees were
planted during the current Saudi Regime
until 1550 date palm trees were grown.
Through selling the dates, half its revenue
is spend on poor and orphanage and the
other half was saved in the bank.
Objectives met: Continuous rewards to the founder.
Feeding beneficiaries rather than providing
water to drink
Open jobs for farmers and traders.
Saved money as a source of capital to finance
other projects according to community’s need. 2/5/2014 INCEIF 17
Cont… Recently the amount saved in the bank
was used to buy a land near al-Haram
and build 5 stars hotel.
Again objectives met:
- Continuous rewards to the founder
from other channel.
- Open more jobs for contractor,
workers and hotel staff. (initial stage)
- Shelter for visitor from the different
countries
The revenue generated from this hotel
half of it for the poor and orphanage
and the other half will be saved again in
a bank under the name of S. Uthman for
new productive project in the future.
2/5/2014 INCEIF 18
CASE 2: WAQF AL-BAGHDADI/SUDAN
Waqf Property : Waqf al-Baghdadi, a waqf land established in 1930.
Trustees: Islamic Endowment Corporation IEC
Beneficiaries: Part for the medical students of Khartoum University,
part for the maintenance of the medical faculty, and part to create
new waqfs.
Finance: The IEC entered with the Islamic bank through traditional
mode, long lease contract to redeveloped this idle waqf property into
8 story commercial building for 99 years. To ensure its perpetuity:
Renting contract follows ijrat al-mithl /market price.
IEC put a signboard on this property declaring it ‘Waqf Property’. Note: objectives of waqf has been met.
2/5/2014 INCEIF 19
CASE 3: AL-AWQAF AL-SINNARIAH SUDANESS WAQF IN MAKKAH
Founder: Sultan of Sinar created a waqf in Makkah in 1880s
Trustees: Islamic Endowment Corporation
Beneficiaries: Sudanese pilgrims
Mode of investment traditional: al-istibdal /substitution
(since extension is needed for al-Haram in Saudi Arabia, the
trustee agreed to this mode - general Maslahah).
The Saudi government replaced the Sudanese waqf, with
another property in Makkah for the same beneficiaries.
Note: objectives of waqf has been met.
2/5/2014 INCEIF 20
CASE 4: MOSQUE IN BENCOOLEN/SINGAPORE
Waqf property: Mosque in Bencoolen
Founder: Syed Omar Ali Aljunied in 1845
(simple structure)
Trustee: In 1906 Rajab Ally bin Kassim
Jeammedah requested that the mosque to
be used as a place of worship and to receive
rent and profit for the maintenance and
payment of salaries to the khatib, Imam and
Bilal. (inclusion of beneficiaries)
(In 2000 the government wanted to make
istibdal to this mosques in order to build a
huge commercial building)
2/5/2014 INCEIF 21
Cont…
Trustees: MUIS
Provider of funds: Baitualmal/Muslim treasure
Mode of Finance: The project was financed through Musharakah Sukuk ($35million Musharakah sukuk was issued for the development of a mixed-use property)
Warees : Provide the management expertise.
In 2001 the mosque was redeveloped as part of a mixed development comprising of a commercial block and a 12-storey residential complex which was operated in May 2004.
The mosque accommodate about 1,100 Muslims.
2/5/2014 INCEIF 22
INNOVATION/CREATIVITY IN DEVELOPMENT Objectives of waqf has been met. Met government demand.
Condition of the founder
respected
Right of beneficiaries were
met.
Open jobs for a number of
sellers, and provide goods
and services to a number of
customers.
Provide accommodation for
many people.
2/5/2014 INCEIF 23
CASE 5: MUJAMA‘ AL-ZAHAB AL-TIJARI /SUDAN
Waqf property: Waqf land left idle for almost a century, situated in
the capital city of Kharotum
Founder: unknown
Beneficiaries: unknown
Trustees: The Islamic Endowment Corporation
Financer: The IEC entered with an Islamic bank through Musharakah Mutanaqisah/Decrease Sharing to redevelop the old waqf property
into Gold Commercial Center which is situated in a good location.
New Beneficiaries: Gold trader, sellers, works, customers,
besides part of the rent is channeled to the poor and needy.
2/5/2014 INCEIF 24
CASE 6: REDEVELOPING OLD WAQF BUILDINGS/KUWAIT
2004-2009
Waqf properties: idle waqf buildings (in total generated KD
511,968 only)
Trustees: Kuwait Awqaf Public Foundation KAPF
Financer: Islamic bank through Murabahah managed to
reconstruct 38 old waqf buildings into new residential towers
generating KD2,563,560 (5 times the previous amount)
Beneficiaries: Accommodation for many families in Kuwait
and a channel for poor and needy people in other countries.
2/5/2014 INCEIF 25
KAPF - PROJECT DEVELOPMENTS .
.
Old waqf buildings
Redeveloped
2/5/2014 INCEIF 26
Case 7: AL-KHAN RESIDENTIAL BUILDING/SHARJAH UAE
• Founder: Ruler of Sharjah
• Trustees: Sharjah Awqaf Trust.
• Financier: IDB finance the construction of 12-storey residential building under ijara//lease finance worth $3.22 million.
• Beneficiaries: Poor and needy children of Comoros Islands, (situated off the south-east coast of Africa, to the east of Mozambique and north-west of Madagascar)
2/5/2014 INCEIF 27
AL KHAN RESIDENTIAL BUILDING – SHARJAH, UAE
28
Objectives of waqf has been met. Founder conditions has been
fulfilled.
Open jobs for contractors and workers to build it (initial stage)
Accommodation for 48 families in Sharjah (i.e. 48 apartments).
Open job for grocery shop/supermarket to service these area.
Beneficiary are poor and needy people in other country (Comoros Islands)
2/5/2014 INCEIF
CASE 8: BANDAR ABBAS, IRAN
• Trustees: Iran Endowment Fund.
• Financier: IDB finance the project worth $8.04 million
under Build-Lease-Transfer BLT for the construction of a
residential and commercial complex.
• Beneficiary: 300 medium cost housing units.
2/5/2014 INCEIF 29
RESIDENTIAL AND SHOPS, BANDAR ABBAS, IRAN
30 2/5/2014 INCEIF
The last two decades witness the revival of the institution of
waqf and the creation of movable waqf i.e. cash waqf in
almost all Muslim and Muslim minority countries.
Definition: “The confinement of an amount of money by a
founder(s) and the dedication of its usufruct in perpetuity
to the welfare of society”
31
6. MODERN APPLICATIONS OF
CASH -WAQF
2/5/2014 INCEIF
HOW TO CREATE CASH-WAQF
{MOVABLE WAQF}
1. Waqif/founder 1. Direct
2. Mutawalli/trustee 2. Indirect
3. Beneficiaries
2/5/2014 INCEIF 32
THREE PARTIES TWO KINDS
DIRECT CASH-WAQF
Waqf school,
college/university
Waqf hospital, clinic,
Old
Waqf properties
Individuals
Organizations
Institutions
accumulated
amount
INSTITUTION/ORGANI
ZATION/
NGO
======
Accumulated cash-
waqf
To ensure the perpetuity of direct cash-waqf the accumulated funds must be channeled
directly to re-develop waqf buildings.
cash-waqf
80%
20%
1. Waqif/founder 2. Mutawalli/Trustee
3. Beneficiaries
INDIRECT CASH-WAQF
2/5/2014 34
School/college/
University
Hospital/clinic
Any specified
property
Individuals
Organizations
Institutions
evenue
INSTITUTION/ORGANI
ZATION/
NGO
======
Accumulated cash-
waqf
To ensure the perpetuity of indirect cash waqf the accumulated funds must be invested in any halal project and only the
revenue generated can be channeled to the beneficiaries, the management expenses and to add to the capital as a Self-
Finance Device (SFD).
cash-waqf
Invested according
to shariah
10% management
70% Beneficiaries
20% SFD
1. Waqif/founder 2. Mutawalli/Trustee
3. Beneficiaries
CASE 1: WAQF SHARES/SUDAN • Waqf property: Idle waqf land located in the capital city (Abu-
Jinzir)
• Founder: Unknown
• Beneficiary: unknown
• Trustees: Islamic Endowment Corporation
• Financier: self funding through waqf shares, the IEC issued waqf shares for an amount of SP 90 million the cost of building 10-storey shopping complex (i.e. 88 shops).
• Beneficiaries: open jobs for trader, sellers and services for customers, besides allocating part of the rent to the poor and needy.
2/5/2014 INCEIF 35
CASE 2: COMPULSORY CASH-WAQF MODEL/SINGAPORE
• Trustees: MUIS
• Founders: - Semi-compulsory monthly contributions are made by
Muslim employees in Singapore depending on their monthly gross
income through an automatic check-off system.
• The amount deducted from the salaries is channelled through the
Central Provident Fund CPF, to Singapore Islamic Council (MUIS) who
acts as the trustee.
• Beneficiaries: The collected amount is channelled to finance charitable
purposes such as building mosques, educational programs dau‘a centre, building old waqf buildings, etc.
2/5/2014 INCEIF 36
7. PROPOSAL FOR CWFI AS A FUND RAISING SCHEME
Trustees: Islamic religious councils
Founders: individuals, institutions, organizations, companies,
banks etc.
Fundrasing: cash waqf through salary dedication scheme
similar to zakah
Beneficiaries: redeveloping the old waqf buildings to regain
their role in fulfilling the condition of the founders and in
meeting the beneficiaries rights.
PAYMENT OF ZAKAT THROUGH TAX REBATE Monthly income
RM
Income tax payment RM
Zakat Payment RM
Taxed amount RM
Cash waqf
Considered 1 wife & 1 child
Considered 1 wife & 1 child
2,500 Nil 30.42 --
3,000 0 41.92 --
4,000 130 64.92 65.08
5,000 250 87.92 162.08 100
6,000 424 110.92 322.08
7,000 620 133.92 486.08
8,000 860 156.92 703.08
9,000 1100 179.92 920.08
10,000 1352 202.92 1149.08 500
11,000 1612 225.92 1386.08
12,000 1872 248.92 1623.08
13,000 2132 271.92 1860.08
14,000 2392 294.92 2097.08
15,000 2652 317.92 2334.08 1000
16,000 2899 340.92 2558.08
17,000 3172 363.92 2808.08
18,000 3432 386.92 3045.08
19,000 3692 409.92 3282.08
20,000 3952 432.92 3519.08 1500
21,000 5460 455.92 5004.08
22,000 5720 478.92 5241.08
23,000 5790 501.92 5288.08
24,000 5980 524.92 5455.08
25,000 6500 547.92 5952.08 3000
ENCOURAGING PEOPLE TO CREATE CASH WAQF THROUGH
TAX REBATE
If we assume 10 million person would like to create cash waqf
through tax rebate paying RM100/mth on average:
10,000,000.00 x RM100= RM 1Billion
RM 12 Billion/year i.e. $3billion/year
This amount can be doubled and multiplied if all organizations
are called to participate in CSR through this CWFI for few years
(2-3 years) for the development of all waqf properties.
.ri
Individuals
Banks
Institutions
Organization
s
Companies
Islamic Religious
Councils as a
Trustees
to manage
the
Accumulated
cash waqf e.g.
RM 1 billion
and to direct it to
redevelop the old
waqf buildings
List of old
Waqf properties
ESTABLISHMENT OF CASH WAQF FINANCIAL INSTITUTION
CWFI
2/5/2014 INCEIF 41