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INCEIF

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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

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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

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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”

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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.

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ii. ESSENCE OF WAQF IN AL-QURAN & HADITH

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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).

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iii. FLEXIBILITY IN DERIVING ITS LAW

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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)

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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.

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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.

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4. PARAMETERS FOR REDEVELOPING WAQF

PROPERTIES

i. Legal conditions

ii. Types of waqf

iii. Economics and investment climate

iv. Financing options

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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)

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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.

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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.

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iv. FINANCING OPTIONS

Traditional Modes of Finance

Modern Modes of Finance

Cash waqf finance

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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

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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

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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.

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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.

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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.

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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)

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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.

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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.

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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.

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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.

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KAPF - PROJECT DEVELOPMENTS .

.

Old waqf buildings

Redeveloped

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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)

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AL KHAN RESIDENTIAL BUILDING – SHARJAH, UAE

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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)

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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.

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RESIDENTIAL AND SHOPS, BANDAR ABBAS, IRAN

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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”

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6. MODERN APPLICATIONS OF

CASH -WAQF

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HOW TO CREATE CASH-WAQF

{MOVABLE WAQF}

1. Waqif/founder 1. Direct

2. Mutawalli/trustee 2. Indirect

3. Beneficiaries

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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

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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.

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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.

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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

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