Cash Waqf
Major international fatwa bodies such as the International Islamic Fiqh Academy (IIFA) of the Organisation of Islamic Cooperation (OIC) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) issued resolutions permitting cash waqf.
Resolution No. 140 (6/15) of the IIFA states:
- Creating Cash Waqf is permissible since it satisfies the Shariah objective of Waqf that is retaining the principal and offering its benefits and because units of money have no specific merits that prevent units from standing for and replacing each other.
- Money can be made principal of Waqf for extending goodly loans or for investment, either directly or through the participation of several Waqf founders in one fund. Money can also be mobilized for Waqf purposes through the issuance of Waqf shares to donors to encourage giving Waqf and to promote collective participation in it.
The concept of cash waqf is also found in many fiqhi (jurisprudence) books. Imam Malik ibn Anas and Imam Zufar of the Hanafi School were among the main proponents amongst classical jurists. The concept was thereafter revived during the Ottoman Empire (1301-1922).
Cash waqf presents an opportunity for people of all income levels to endow waqf. It is an affordable option for donors who cannot donate an asset in its entirety or other valuable assets as waqf. A cash waqf donor can endow any amount of cash to gain Allah’s (SWT) pleasure.
Under cash waqf, donors endow cash which is pooled in a cash waqf fund. The cash is designated as waqf and the funds collected are professionally managed and invested according to the principles of Shari’ah. The investments should be safe so as to protect the initial capital of the cash waqf fund. The profits on the investments are used to support charitable or social causes. Some of the profits are also reinvested to generate more returns. The objective is that the donation should grow in a sustainable manner to benefit the society in the long term and to represent a fountain of reward to donors.
The ruling on cash waqf has harnessed the potential of waqf development in numerous dimensions. It enables greater public participation in waqf. It has widened the applications that waqf funds can be put to use, besides the traditional sectors of education, health and religious activities. Waqf funds can, for instance, finance responsible and impactful small businesses as well as help revive abandoned or under-utilised waqf assets into productive properties.