CASH-WAQF A NEW FINANCIAL INSTRUMENT FOR FINANCING ISSUES: AN ANALYSIS OF STRUCTURE AND ISLAMIC JUSTIFICATION OF ITS COMMERCIALIZATION

Majid Khade !"h!#ei$i khademalhosseini@isu.ac.ir %S# i$ Fi$a$&e I a Sadi' U$i(e)#i*+

A,#*)a&*: Cash-Waqf means the dedication of some money from one's possessions and establishing a Waqf based on that amount and offering it to the benefit of people generally or allocating it to make use of them by some segments of the community particularly. In this meaning and from theoretical and implemented point of view, some kinds of Waqfs have caused disputes. In this study, we start with putting forward the definition and introducing different types of Waqf and then focus on Waqf''s components and sources. Then, legal status of cash Waqfs will be evaluated. Also we focus on the development of Cash-Waqf management from theoretical perspective particularly in modeling the optimal cash Waqf management. The management of Cash-Waqf has a unique characteristic that conceptually is different from the management of foundation, charities or donation fund in estern perspective, i.e. !ord, "ockefeller, #arnegie, $ritish Trust, etc. Waqf has a principle of perpetuity that makes it differ from a foundation, charity or ordinary donation fund as widely practiced in estern countries. %erpetuity principle means that the principal of Waqf should be preserved, but its benefit is available for repeating e&traction whether for religious or philanthropic and righteousness purposes. %erpetuity in Waqf means that once a property is devoted as a Waqf, it remains so that until the 'ay of (udgment and no one can change it later on. )o the property of Waqf can not be sold, transferred or liquidated. The ownership of Waqf property lies outside the Waqif *person who perform Waqf+ or Mutavalli *person who entrusted to manage+ but it belongs to Allah. )o the Waqf property should be hold, maintained, preserved and prohibited from disposing. !inally, we will peruse Islamic *Shia+ approach on models which we will depict. Ke+-!)d#: Cash-Waqf, Waqif *!ounder+, Mawquf 'alaih *$eneficiaries+, Mawquf *%roperty or #ash+, Waqf Contract * aqfieh+, Mutavalli.

I$*)!d.&*i!$: !rom historical point of view there is no precise history to identify , hat time was the emersion of Waqf e&actly-, .owever from some historical surveys we can deduce that waqf was originated at the same time of synagogues and shrines emersion which had some vows to consume in charity purposes /

and restructuring of them *e.g. shrines+. )o not only Waqf was not created by Islam presence, but also it has been a rational deed*.0shemi 1asab,/222,%./32+.)ome inductions on this claim are such as4 Imam 5homeini in his book said4 ,Waqf was common in other nations, even it probably have been common on impious nations,*5homeini 6ousavi, 7ol.8, %.9/+. 'r Abou:ohre in his book stated4 ,$efore the emersion of Islam, Waqf was prevalent in other names. As far as we concerned there were shrines, synagogue and even some mosques *e.g. Al-Aqsa mosque+ that so many lands and properties were allocated for their maintenance by beneficent people. Therefore we can't assume whose ownership was for some specific people; those lands and properties and the income which was made form them were consumed for people who worshiped in those buildings,* .0eri <a:di, =33=, %.>>+.

#onsequently, although Waqf has played a considerable role before the emersion of Islam, Islam was the first religion that developed its legal and regulated form. Islamic ?urisprudents believe that initial building which consecrated for worshiping was Ka'bah. In addition, along the history, there were so many shrines, synagogues, churches and such these buildings which consecrated for doing religious deeds and ceremonies *)0fi, =33@, %.@=+. The history of Islam shows that Quba mosque in Medina was the first foundation which was endowed by ro!het Mohammad " eace be u!on him# in @== A.#. It is stable nowadays but in e&tending structure *)hakoori, =33A, %./3 B //+. As we mentioned in the topic, this paper is intent on discussing about Cash-Waqf. )o in following the most of materials are about Cash-Waqf. %reviously, Waqf of buildings and lands were the most popular forms of Waqf. 1owadays, Cash-Waqf has become increasingly wellCknown particularly because of its fle&ibility which allows distribution of the Waqf$s potential benefit to the poor anywhere *6annan, /222, %.D+. Although, some historians believe that initial root of Cash-Waqf returns back to 9th century in Islamic era *)a0dat !ar; '0dgar, =339, %.8+ C while various questions about the usage of such Waqf were asked from ,Eafar Ibn .a:il, and he answered that those amount of money have to be accomplished by Mud%arabah ContractC others believe that after emersion of Cash-Waqf in "ome, it was firstly introduced in Fttoman era in Ggypt *'ian 6asyita, %.=+. %rofessor 6annan then sociali:ed Cash-Waqf in $angladesh through )ocial Investment $ank Himited *)I$H+. )I$H issues Cash-Waqf #ertificate to collect funds from the rich and to distribute gains of the managed funds between the poor *6annan, /229, %./3+. Hike those of $angladesh, in other Islamic countries, most of people are poor. Therefore, effectiveness of cash Waqf certificate program to help reduce poverty in $angladesh gives hope that a similar program can be successfully implemented in other countries. )o, by the time, this Waqf model has developed day to day. These days this model is e&panded through most of Islamic and even estern countries. There are two ideas in Shia school about Cash-Waqf, some ?urisprudents believe that it is not acceptable e.g. Mohaqeq &elli *6ohaqeq .elli, /29=, 7ol.8, %.>>>+, Shei'h (ousi *Tousi, 7ol.8, %.=99+ and others are in contrast e.g. Shahid S)ni *)hahid )0ni, =33/, %.D=3+ and M)maq)ni *60maq)ni, /298, %.8== B 8=8+. The believers of later idea assume that the significant conditions of Cash-Waqf accuracy are based on two components /+ to make ?uridical profit from those cash, =+ and the origin of cash must be survival perpetually. According to precede statements, firstly we focus on Waqf in general and then discuss on Cash-Waqf in details.

Ne&e##i*+ !/ Cash-Waqf 0)!je&*# C!$#*).&*i!$ a$d Waqf Institutions4 Cash-Waqf a special charitable endowment fund, is e&pected to become one of the alternative instruments for the poverty alleviation programs in worldwide particularly in Islamic countries. These programs require huge amount of fund that can not be provided thoroughly by the government. Therefore, initiation of new sources of fund for such a program is inevitable. In the Islamic socioC economic concept, there is a source of social fund that is economically and politically free of charge, namely Cash-Waqf. In this concept, Mutavalli *Cash-Waqf *und manager+ collects the fund from Waqif and invest the money in the real sector *mainly )mall B 6ediumCsi:ed 7entures+ and in any Shariah based investment opportunities. Mutavalli will then allocate all profits and returns gained from the investment to any poverty alleviation program to enhance the quality of poor peopleIs life, such as free education and health services, cheap basic food, etc. .e *Mutavalli+ is obliged to maintain the amount of fund in such a way that does not go below the initial amount. Therefore, Mutavalli not only should be highly capable but also needs a financial institution which has been proven to be e&perienced, highly capable and effective in helping )6Gs development efforts. Then such a microCfinancing program is considered as the most vital portfolio in the poverty alleviation program. Therefore, itIs necessary to design an instrument which is able to control the endowment fund management especially Cash-Waqf.

De/i$i*i!$ !/ Cash-Waqf: Waqf means appropriation of the Mawquf *property+ with its separation from private ownership and dedication of its usufruct to charitable purpose. )o Cash-Waqf according to upon definition means ,the devotion of an amount of money by a founder and the dedication of its usufruct in perpetuity to the prescript purposes, *6agda Ismail Abdel 6ohsin, =339, %.>+

T+1e# !/ Waqf: Waqf or endowment is a wellCknown issue in area of Islamic economic and finance .In general, Waqf could be categori:ed based on five aspects i.e. timing, legitimacy, $eneficiaries, usage area and ob?ect of Waqf It is generally accepted that the timing of Waqf must be ,%ermanent,. .owever some ?urisprudents believe that it could be ,Temporary, in accordance to the Waqif view, which is called &abs. In terms of the legitimacy of Waqf, it could be ,Hegitimate,Cad?usting with religious respectC or ,Illegitimate,. In terms of the beneficiar+ of Waqf, it could be divided into ,!amily, *specific purpose+, ,%ublic, *charitable purpose+ and ,6ushtarak,*consists of both purposes+. .owever, from the managerial point of view, ublic Waqf is better than the *amil+ one, since it gives more fle&ibility. In terms of the usage type of Waqf, it could be categori:ed to ,Intifa', such as establishing a school on your personal land and ,$enefit, whose purpose is making profit. In terms of the ob?ect of Waqf, generally it could be ,6oveable, or ,Immoveable,*)aiy0h, =33A, %.D B @+. This categori:ation is illustrated in figure /4

Figure1: The Waqf's Categorization in Islamic Jurisprudence

Waqf

Timing

Fb?ect

%ermanent

Temporary Hegitimacy

6oveable Ksage Type

Immoveabl e

Illegitimat e

Hegitimate

Intifa'

$enefit

$eneficiaries

6ushtarak

%ublic

!amily

In above we argue about Waqf and its different types according to Islamic ?urisprudence up to now. hereas, from historical point of view, most of Waqfs has performed on real capital, ,Cash-Waqf, donIt has played a distinguished role in Islamic economic yet. Therefore, its name didn't come in Waqf categori:ation figures .$ut basically it is placed under , Movable Waqf ,. As mentioned before, this paper focuses on Cash-Waqf and its establishment. )o we define it more e&actly by introducing different models of Cash-Waqf, their functions, Islamic restrictions, legitimacy and so on. C! 1!$e$*# !/ Waqf: Gvery Waqf has some components such as4 Waqif *!ounder+, Waqf Contract * aqfieh+, Mawquf 'alaih *$eneficiaries+, Mawquf *%roperty+ and Mutavalli *'ian 6asyiat B Grie !ebrian, =33>, %.@+ which are described in follow4 /. Waqif4 A person who endows his property or cash to charitable purposes. =. Waqf Contract4 The way in which a Waqif states hisJher asset or fund as Waqf. 8. Mawquf 'alaih4 %ersons who are or areas which are the purpose of Waqf. In other word, those people of areas entitled to benefit from return of Waqf. >. Mawquf4 Assets or fund which are endowed as Waqf in charitable purposes and so on. In this article regarding to our goal, we use ,Cash, instead of ,Mawquf, because we are going to >

apply some Cash-Waqf methods. D. Mutavalli4 A person or institution who is assigned as legal custodianship over Mawquf which is not belonging to him in order to follow endowment same as Waqf Contract.

Le2i*i a&+ !/ Cash-Waqf: Although, the term ,Waqf, doesnIt appear in the , Quran, but 6uslim ?urisprudents obviously deduced its legitimacy from some ,&adith, and ,A+eh,/ which their interpretation imply Waqf *Abidolkabisi, /29@, %9>+. $ecause of our tight opportunity and despite there are so many , &adith, on this regard; we only point to two &adith4 The first that points to Waqf generally=4 !rom ,Abi &oreireh, who quoted from %rophet 6ohammad *peace be upon him+4, hen a person dies, his deeds will separate from him e&cepting in three cases4 recurring charities, beneficial knowledge and righteous child who preys himJher, *10sif, =338, 7ol.=, %.=>8+. $ut the second that point to our goal, it signifies Cash-Waqf which was augmented under ,Waqf aldarahim B al-dananir, in Islam school. The words about this issue are in follow84 Waqf al-darahem and al-dananir *dirham and dinar endowment+ is reliable providing that we can make profit from it that is perpetual contemporary. $ut it can not be transferred, lent or mortgaged after endowing, because transferring is not possible, while it is reliable to be leased. *Lle 50shif'u AlC Mhitae', /29>, 7ol.=, %.A9+ S!.)&e# !/ Cash-Waqf: The accumulated funds for the construction of Cash-Waqf ro-ect could be reali:ed through setting up of three instruments namely; Cash and .-Waqf *und, er-square *eet /alue Certificate and the 0ssuance of Su'u' *Abbdullaah (alil B Asharaf 6ohd "amli Abdul, =339, %.8+. These instruments provide an opportunity for the donors to dedicate their wealth for Waqf purposes according to their preference as stated below4
34 Cash a$d E-Waqf Fund:

Cash and .-Waqf *und is considered as the easiest means for the public to ?oin Waqf scheme because they are only obliged to donate their money in cash or deducting from their bank account via .-Waqf facility. As shown in figure= the accumulated fund will be managed by Mutavalli who is acted as an agent on behalf of the Waqif based on Wa'alah Contract. Knder Wa'alah Contract, Mutavalli is responsible to channel the fund for pro?ect construction and the balance will be returned back to the
/

There are various Ayeh in Nuran that imply on urgency of Waqf .Among them, ,Ale GmranC2=, is the most reputed which Allah, in that, advice us to donate e&tra partial of our wealth in charitable purposes when occasion serves.

,\RcUdX eRfbdR^^[ \Z ghiQX j`U^[ kXlfm kndb4 \opo Tqr s t \`uU \QU gvwxt yfzxrS {fqS|t, 4}fn

*\R] ^ \_`U aS O`b+

OPQRS TU VWXWY OZ[ TU =

f~QYl r^ f~SWnt r ^ f~Z SWRS fu~hn^ dZ eX r TR^f~Q_U fwZ gq \` s`q \hQq f~Z fhixrS TqS S|t W_xfxdRS^ jYSldRS ncRS eX, 8 .,f~Q_U wx mcX r fu s q R|cx^ f~lfmS ^ f~lfUt eX jx.}fwixrS ^ wQ`R eX r ncRS y s

fund for future pro?ect. Wa'alah Contract is deemed more practical due to the difficulty of getting permission to the Waqif to e&change *0stibdal+ cash money into immovable property. Kpon getting the approval by Waqf ro-ect management, Mutavalli is allowed to use the fund and appoints contractor for the construction of Waqf ro-ect.
540e)-#'.a)e Fee* 6a".e Ce)*i/i&a*e:

The certificate of per square feet value for Waqf ro-ect will be offered to the public once the details of the intended pro?ect are finali:ed. The essential elements of the pro?ect such as the type of construction pro?ect, the cost of the pro?ect, the price of each certificate and the duration of the pro?ect must be disclosed in details. Any individual or institutions must pay certain amount in order to get the certificate e.g. 83 per square feet. The pool of money accumulated will be directed to our purposes 4
74The I##.a$&e !/ S.8.8:

'eveloping Waqf assets through the issuance of su'u' is another potential instrument to be applied by Waqf administrations. This instrument is still underdeveloped in Islamic countries although some countries are well known for pioneering the issuance of various su'u' at the domestic and global stages such as 6alaysia.
Figure 2: The Three Main Stages of the Cash Waqf Construction ro!ect !K1' A##K6KHATIF1 WAQ* %"F(G#T 6A1AMG6G 1T "eligious
'I)T"I$KTIF1

#ash B GCWaqf #ertificate

#harity

#ouncil

+ $eneficiaries * Income

Fther "elevant Authority

Income

Su'u'

Waqf 6anager +*1a:ir

Waqf %ro?ect B!und

6anagement *6aintenance, 6anagerial G&penses B !uture +'evelopment

#ontractor

Le2a" &!$di*i!$# /!) Cash-Waqf &)ea*i!$: In this part, all conditions that are associated with Cash-Waqf *as same as aqf+ such as4 Waqf Contract, Waqif, Mawquf, Mawquf 'alaih and Mutavalli will be provided .These conditions come as following4
34C!$di*i!$# a##!&ia*ed -i*h Waqf Contract: 3434 Ijab9E:i2e$&+; < Qaboul9A&&e1*a$&e;:

Waqf will be established by 0-ab via Waqif in any terms that directly signify on its definition and Qaboul via Mawquf 'alaih or his trustee namely Mutavalli *Allameh .elli, /223, %./@/+
3454 Ghorbat 9I$*e$*i!$;:

Kndoubtedly, in Waqf like other actions, 1i+at *Intention+ as a will of act is an essential and inevitable component. Therefore, transferring won't be accomplished and Waqf won't be valid without it *.elli, /223, 7ol.8, %./DD+
3474 Iqbaz 9Re&ei(i$2;:

The Waqf Contract will be a substantive contract while the Waqif delivers his property to Mawquf 'alaih or Mutavalli . e should consider in Cash-Waqf methods that Waqif has to deliver the cash to Waqf 0nstitution or Mutavalli in base of Wa'alah contract *6ohaqeq )ani, /292, 7ol.2, %.//+
34=4 N!* *! %e S.#1e$d:

If we suspend our Waqf on a condition*s+, it won't be valid. In loose speaking, the nature of Waqf is dependent to $eing unconditional, *6ohaqeq .elli, /22D, %.=DD+
34>4 Waqif eje&*i!$:

Waqif doesnIt have to mention himself as a Mawquf 'alaih in Waqf Contract .Ftherwise, the Waqf will be void *1a?afi, /229, 7ol.=9, %.@A+
34?4 0e)1e*.i*+:

Fne of the basic conditions in Waqf Contract is perpetuity. It means that the nature of Waqf has to ensure regular and continual support from the Waqf property or Cash-Waqf towards financing charitable areas such as mosque *.0shemi 1asab, /222, %.>2+
54 C!$di*i!$# )e"a*i$2 *! Waqif: 5434 Bulugh 9Ma*.)i*+;@ Aql 9-i#d! ; < "i,e)*+:

It is widely believed that the maturity, wisdom and liberty are the most important conditions about Waqif. 1o need to say that no person without these conditions can make decision based on productivity *1a?afi, /29/, 7ol.=9, %.=3+
5454 T! ,e !-$e):

The Mawquf *property or cash+ has to be Waqif's *Allameh .elli, /22A, 7ol.=, %.828+
5474 N!* *! ,e I$#!"(e$*:

ro!ert+. Ftherwise, it would be invalid

'ue to the fact that everyone is disregard about insane person and his actions, (urisprudents have a consensus on this condition that his actions arenIt valid *.0eri <a:di, =33=, %./=@+

74

C!$di*i!$# a##!&ia*ed -i*h Ma quf 91)!1e)*+ !) Ca#h;: 7434 0!##i,i"i*+ *! a8e 1)!/i* /)! i* a$d *! ,e 1e)1e*.a" &!$*e 1!)a)+:

In CashCWaqf, Waqif is obligated to deliver his money to the Mutavalli through Wa'alah contract *Norb0ni, /22A, %.//D+
7454 0!##i,i"i*+ !/ Qabz:

If Qab% and 0qba% aren't applicable for Mawquf, the Waqf Contract *Waqfieh+ will be invalid. In other words, it's necessary that founder has enough power to deliver his property to Mawquf 'alaih. 1otice that in Cash-Waqf, the Waqif has to deliver his cash to Mutavalli like Waqf 0nstitution *.0shemi 1asab, /222, %.D9+
7474 T! %e i$ D! i$a$&e !/ O-$e):

The property or cash doesnIt be involved in other purposes or nobody has claim on it *6ohaqeq .elli, /29=, 7ol.=, %.=/=+
=4 C!$di*i!$# a##!&ia*ed -i*h Ma quf !alaih: =434 Me)i* *! !-$ i*:

The Mawquf 'alaih *if he is a human being+ has to be Aqil *in full possession of his physical and mental faculties+, 2aligh *adult+ and &urr *a free man or women+. In loose speaking, he has to be deserved to be owner4 $ut in other cases like as Waqf 0nstitution, it has to be adapted with Islamic rules *)ahid Avval, /22A, 7ol.=, %.=2>+
=454 T! %e 0)e#e$*:

In this case, Waqif ?ust able to endow a property or Cash in charitable purpose, while Mawquf 'alaih are present .Ftherwise endowment of one for absent Mawquf 'alaih is an inoperative Waqf. In other words, the original condition on this issue is ,%resence,. *Imami, /2DA, %.A@+
=474 Waqf 0)!/i* %e "a-/." F!) hi :

In Islamic approach for Waqf, there are some restrictions that limit Waqif in practice. Fne of these for e&ample is that Mawquf 'alaih must be a person who has general authorit" o#er his or others. If no, Waqf will be void *6ohaqeq .elli, /29=, 7ol.=, %.=/>+
=4=4 T! %e S1e&i/+:

In *amil+ Waqf, e should notice that the Mawquf 'alaih has to be clear. $ut in ublic Waqf, the Waqif can endow his property or cash to vast group *Imam 5homeini, =33=, 7ol.8, %.8/o+
>4C!$di*i!$# a##!&ia*ed -i*h Muta"alli: >434 %e A'i"@ %a"i2h@ Ra#hid < T).#*+ :

The first three conditions mean Mutavalli must be able to manage all cash B properties without enormous loss. $ut the last means Mutavalli mustn't be traitorous and all revenue that acquired from #ash *or properties+ must be used in fields that mentioned in Waqf Contract *"yi0hi, =333, %.2A+
>454 %e Ri2h*e!.#:

(urisprudents have different ideas either it is irresolvable component or not in this condition. )ome of them like ,)hahid )ani, *)ahid )ani, /29=, %./AA+ believed at first that mean Mutavalli has to be righteous; and others like ,Imam 5homeini, believe on second *Imam 5omeini, /22A, %.8=D+

C.))e$* A11"i&a*i!$ !/ Cash-Waqf:

The witnesses of =/st century signify the revival of Waqf 0nstitution in many 6uslim countries and the creation of Movable Waqf especially Cash-Waqf in large e&tent. In this section, some models for the creation of Cash-Waqf which have been practiced in 6uslim countries will be presented. They are known as Waqf )hares 6odel, #orporate CashCWaqf 6odel, 'eposit %roduct 6odel, #ooperative 6odel, Waqf 6utual !und 6odel and Wa'alah with waqf fund 6odel.
I; Waqf Sha)e# M!de":

This model is a ublic Waqf which has been practiced in 6alaysia, Indonesia, )udan, 5uwait and K5. The procedure of this plan, in detail, is as follows *6agda Ismail Abdel 6ohsin, =339, %.2+4 *ounders will buy Waqf shares from specified religious institution with prices ranging between /to /33 according to each country. *ounders will receive Cash-Waqf certificates as evidence that they purchase Waqf shares with a specific amount. These Waqf shares will then be endowed to the issuing institution that will act as a Mutawalli to manage the collected fund. The collected fund will then be distributed to charitable purposes as specified by the institution itself e.g. building mosques, schools, training center, etc.

This model can be clearly seen in following figure4

;Fi2.)e 7: Waqf Sha)e# M!de" 9#ublic Waqf

)hareholdersJWaqifJ*ounders buy Waqf share*s+ from specified religious institution

The purchased Waqf share*s+ isJare endowed as Waqf to the religious institution

The religious institution manages the funds collocated *Mutavalli+

The fundsJrevenue generated are used for charitable purposes

II; C!)1!)a*e Cash-Waqf M!de":

This model is a public Waqf which has been practiced in 6alaysia specifically in 5umpulan Waqf anC 1ur /229, Turkey in )abanci !oundation /2A>, %akistan in .amdard !oundation /2D8 and )outh Africa in the 1ational Awaqaf !oundation =333. The !ounder in this model might be either an individual or a corporation. The procedure of this plan, in detail, is as follows *6agda Ismail Abdel 6ohsin, =339, %./>+4 'ividends earned for e&ample by individuals, corporations will convey to an Associated Waqf Institution as Cash-Waqf. The Associated Waqf Institution will act as a Mutawalli where manages and invests the accumulated Cash-Waqf. The revenue earned will then be directed to charitable pro?ects after operational e&penses have been deducted.

This model can be clearly seen in following figure4

Fi2.)e =: C!)1!)a*e Cash-Waqf M!de" 9#ublic Waqf;

#orporation

Associated Waqf Institution established by the mother corporation

CashCWaqf )cheme

Associated Waqf Institution

#orporate Waqf )cheme

#ontributions *#ash, (eweler, "eal Gstate, etc+ from individuals and other corporations are channeled to4 'educt operational e&penses

The 'ividends earned by units of shares are channeled as cash waqf to4

Investment Garnings

#harity %ro?ects

III; De1!#i* 0)!d.&* M!de":

This model is a ublic Waqf which has been practiced in $angladesh in two banks, the )ocial Investment $ank Himited *)I$H+ and the Islamic $ank $angladesh Himited+ I$$H+. The procedure of this plan, in detail, is as follows *6agda Ismail Abdel 6ohsin, =339, %./> B /D+4 The founder deposits money into Cash-Waqf based account in the bank. hile depositing the money, the founder will be given a list of the 2eneficiaries whereby he

/3

can chose or specify hisJher 2eneficiaries. The bank will act as a Mutawalli and will invest the capital through Mud%arabah Contract. The revenue generated will be channeled to charitable purposes or purposes specified by the founder.

This model can be clearly seen in following figure4

Fi2.)e>: De1!#i* 0)!d.&* M!de" 90.,"i& Wa'/;

'epositor
/CThe *ounder deposits money into CashCWaqf based account

$ank
=CThe bank manages the capital on behalf of the Waqif *Mutavalli+

#apital
8CThe capital is invested

Investment Garnings
>CThe Cash-Waqf account earns profit through a 6udarabah #ontract

Cash-Waqf Account
DCThe proceeds will be used for charitable purposes or purposes specified by the Waqif

#harity %ro?ects

It has been reali:ed as a good model where Mud%arabah mode has been practice and at the same time the *ounder has the right to choose hisJher own 2eneficiaries.
I6; Waqf M.*.a" F.$d M!de":

This model is a combined Waqf which has been practiced in Indonesia in the 'ompet 'huafa $atasa. This mutual fund is managed by the $atasa #apital Asset 6anagement. The procedure of this plan, in detail, is as follows *6agda Ismail Abdel 6ohsin, =339, %./@ B /A+4

//

The *ounder will contribute to the mutual fund, and at the same time heJshe can contribute to the Waqf fund. In this case the *ounder will specify for e&ample A3 of his investment earnings return to the mutual fund i.e. his personal account and the remaining 83 will be appropriated to the Waqf fund. The Waqf institution will act as the Mutawalli to manage and invest the capital. The investment earnings will then be distributed according to the *ounder condition where A3 will go for his mutual fund and 83 will go to Waqf fund and distributed to charity pro?ects, as highlighted below.

This model can be clearly seen in following figure4

Fi2.)e ?: Waqf M.*.a" F.$d M!de"

Waqif
The *under contributes e.g. D333 and specifies that A3 of the investment earnings returns will be allocated to the mutual fund *his personal account+ and the remaining 83 is appropriated to the Waqf fund. 9Waqf Mushtara$;

Institution of #apital Asset 6anagement

Institution *#apital Asset 6anagement+ invests the capital in a portfolio of lowCrisk financial institution

Investment Garning A3 6utual !und 83 Waqf !und

#harity %ro?ect

!rom the above model it may be seen that it is Waqf Mushtara', but in this case the capital of the A3 and the revenue generated from investing this portion will go back entirely to the *ounder leaving the 83 as Cash-Waqf.
6; Wa$alah -i*h Waqf F.$d:

This model is a ublic Waqf which has been practiced in %akistan and 6alaysia. The procedure of this plan, in detail, is as follows *Abdul "ahim Abdul ahab, =33@, %.//+

/=

The )hareholders would initially make a donation to establish the Waqf fund. The donation can be of any reasonable amount *)hariah scholars may specify such an amount+. After the creation of the Waqf fund the )hareholders would lose their ownership rights on the Waqf fund and would become the property of the Waqf fund. .owever, they will have the right to administer and develop rules and regulations of the fund. The original donation of the Waqf fund needs to be invested in a very safe Shariah compliant investment and its returns would be used for the benefit of the participants. The idea being that the Waqf fund should remain intact with high likelihood. #ompany would take this donation on behalf of the Waqf fund as administrator of the fund and deposit this in the fund. The donations received from the participants, seeking (a'aful protection, would also be a part of this fund and the combined amount will be used for investment and the profits earned would again be deposited into the same fund. As per Waqf principles, a member *donor+ can also benefit from the Waqf fund.

This model can be clearly seen in following figure4

Fi2.)e A: Wa$alah M!de"

#ompany

Initial 'onation $y )hareholders To #reate Waqf !und

Takaful Fperator !ees !or Administration G&penses =D To 83

)hare Ff %rofit !or The #ompany >3

%rofit or 6anagement G&penses Ff #ompany Hoss Attributable To )hareholders

Waqf

Investment $y !und

%rofit !rom Investment @3

%rofit )haring Fn Mud%arabah $ases

%articipant

'onation %aid $y %articipant

Waqf !und AD to A3

Waqf !und

Fperation al cost of (a'aful

)urplus )urplus

)hare of )urplus !or The %articipant /33

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E#*a,"i#h e$* !/ a Cash-Waqf Fi$a$&ia" I$#*i*.*i!$ 9CWFI;:

Inasmuch as the above models are ?ust associated with some instrument to simplify poverty alleviation, one or several persons can not implement them in real. )o we require to some institutions or corporations that have high capability, skill and enough e&periences to implementing our goal *%overty alleviating via Cash-Waqf models+. Cash-Waqf management institution should manage the accumulated Cash-Waqf created by the different *ounders in such a way that the collected fund becomes more and more productive. The more the Waqf investment return, the more Mawquf alaih benefit from Waqf fund. Fnly gains of the invested Waqf fund will be delivered to Mauquf 'alaih and the principal of fund keep being invested in potential investment opportunities.
I#"a i& 9Shia; #&h!!"B# a11)!a&h !$ *he#e !de"#:

ith reference to all models that are presented, we consider the Islamic approach about them in order to state which of them is acceptable. Although, in regards with Islam )chool's approach, , Waqf )hares 6odel, #orporate CashCWaqf 6odel, Waqf 6utual !und 6odel and #ooperative 6odel, are admissible, but Wa'alah 6odel is not admissible. In follow we will concern to each model for stating more points about them.
Waqf Sha)e# M!de"@ Waqf M.*.a" F.$d M!de" < C!!1e)a*i(e M!de":

.owever, for these models, two important things are not clearly highlighted for the creation of CashCWaqf4 /. The *ounder of the Waqf has no choice in specifying hisJher 2eneficiaries as this might discourage more *ounder to create Cash-Waqf. =. It is very difficult to ensure the element of perpetuity of the Cash-Waqf as it is not clear how the Cash-Waqf is invested and how to ensure the capital is intact.
C!)1!)a*e Cash-Waqf M!de"4

According to this model, Associated Waqf Institution that established by the mother corporation, channel accumulated #ash to investment after deducting operational e&penses. If Waqif mentions this condition in Waqf Contract, it will be valid. Ftherwise it will be void and Associated Waqf Institution wonIt be allowable to deduct operational e&penses from earned revenues.

$eposit roduct Model:

In this model we should consider that the *ounder mustn't be allowable to withdrawal his contributions from deposit account after some times. $ecause one of most important conditions on Waqf Contract is ,The Mawquf *i.e. cash+ should be
/>

perpetual,. This model will be admissible, if *ounders follow this way.

Wa%alah Model:

Fne of most important conditions on Waqf Contract is ,The *ounder mustn't allocate any
part of revenue from CashCWaqf toward himself ,. $ut in this model, as appeared, this condition isnIt followed. )o, according to Islam ?urisprudence, it will be void

C!$&".#i!$:

$ased on historical literature, the Waqf plays an important role in socioeconomic life of 6uslim societies. "ecently, one of the types of Waqf is Cash-Waqf. $ased on our study, we conclude following points4 /. Cash-Waqf is a type of Waqf that revived in recently century. =. This paper reviewed the Cash-Waqf history and then its necessity to poverty alleviation. 8. Cash-Waqf is ?ustified with Islamic ?urisprudence providing that while it is making profit and earning income, it remains perpetual. >. This article surveyed validity conditions of Waqif *!ounder+, Mawquf 3alaih *$eneficiaries+, Mawquf *#ash as property+, Mutavalli and Waqf contract. Then, this study introduced some contemporary practical models in Cash-Waqf and analy:ed their validity according to )hiaI ?urisprudence. $ased on this study, Waqf )hares 6odel, Waqf 6utual !und 6odel and #ooperative 6odel are acceptable for running but establishing #orporate Waqf 6odel is conditional. Fn the other hand, 'eposit %roduct 6odel and Wa'alah 6odel can not ?ustify with Islamic principal.
Re/e)e$&e#:

/+ .0shemi 1asab, )eyyed 6ohammad 6ahdi, Thesis %resented !or 'egree Ff 6aster Ff Art In 6anagement4,(o .4amine (he ossibilit+ 5f 0ncreasing (he 0nterests Which Can 5btained *rom .ndowed ossession 2+ Considering *inancial Knowledge ,, Imam )adiq Kniversity, /222.
=+ 5homeini 6ousavi, "ooholl0h6 Ketab$u al-ba+e', Nom, 6atbou0ti Gsm0eilian %ress Institution.

8+ .0eri <a:di, 'r 6ohammad, .ndowment 0n 0slamic 7uris!rudence And 0t's role in .fflorescence of 0slamic .conomic, /th Gdition, 6ashhad, Lst0n Nodse "a:avi %ress Institution, =33=. >+ )0fi, 6ohammad "e:a, (he 8eviewing 5f Waqf's Condition in 0slamic World , (avidan4 A cultural, )ocial B .istorical Nuarterly, 1om.D8, /> th<ear, =33@. aqf 6ir0thCeC

D+ )hakoori, )0ber, Thesis %resented !or 'egree Ff 6aster Ff Art In 6anagement4, .ndowment 5f Stoc' 0n 7uris!rudence and A *inancial Model,, Imam )adiq Kniversity, =33A. /D

@+ 6annan, 6.A.Abdul, Cash Waqf Certificate- An 0nnovation 0n 0slamic *inancial 0nstrument9 :lobal 5!!ortunities *or ;evelo!ing Social Ca!ital Mar'et 0n (he <=st Centur+ /oluntr+ Sector 2an'ing, %resentation at the Third .arvard Kniversity !orum on Islamic !inance, Fctober /, /222. A+ )a0dat !ar, (av0d; '0dgar, 'r <adoll0h, (o .4amine (he Cash-Waqf "1ew 0nstrument 0n ;evelo!ing .conomical >iterature And Activities# , Gconomical "esearch Nuarterly, 1om./, Ath <ear, =33A.
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ortfolio 0nvestment Management 5f (he 0slamic .ndowment *unds ?sing S+stem ;+namics Methodolog+, In http4JJpustaka.unpad.ac.idJarchivesJ/=88 website.

2+ 6annan, 6.A.Abdul, Cash Waqf@ .nrichment 5f *amil+ &eritage :eneration (o :eneration , )ocial Investment $ank %ress, /st edition, /229. /3+ 6ohaqeq .elli, (a'far Ibn AlC.asan, Shar)ie'u Al-0slam *i Al-&alal AAl-&aram, 8th Gdition, Tehran, Isteqlql %ress, /29=. //+ Tousi, 6ohammad Ibn AHC.asan, Al-Mabsoot, AlC6aktabat'e AlC6orta:aviah %ress. /=+ )hahid )0ni, Eeinoddin, &)shie Shar)ie'u Al-0slam, /th Gdition, Nom, AlCT0be' Hemaktab'e AlCAe'l0m'e AlCIslami %ress #enter, =33/. /8+ 60maq0ni, Abdullah6 Man)he-'u Al-Mottaqin, Nom, Llolbeit %ress Institution, /298. />+ 6agda Ismail Abdel 6ohsin6 Cash Waqf A 1ew *inancial roduct Model As!ects 5f Shariah rinci!les 5n 0(S Commerciali%ation, This paper is presented at Islamic $anking, Accounting and !inance #onference *i$A! =339+, organi:ed by !aculty of Gconomics and 6uamalat, Kniversiti )ains Islam 6alaysia, =9C=2 (uly =339 at The Hegend .otel, 5uala Humpur =339. /D+ )ayi0h, )a??0d, ro!osal 5f Waqf 0nstitution's .stablishment As a 0slamic *inancial 0nstitution, submitted to International #onference Fn Islamic !inanc e, Frgani:ed by Islamic "esearch B Teaching Institute and #enter Ff Technology )tudies; )harif Kniversity Ff Technology, ==C=> Fctober =33A. /@+ 'ian 6asyiat B Grie !ebrian, (he 8ole 5f 280 0n (he 0ndonesian Cash-Waqf &ouse's S+stem, )ubmitted to $"I International )eminar on 'eveloping 6icrobanking4 #reating Fpportunities for the %oor through Innovation in 'enpasar, $ali, Indonesia on the /C= 'ecember =33>.
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Gdition, 60:andar0n, , Meneral Fffice of .a??, Awaqf B #harity Ff 60:andar0n %rovince %ress, /29@. /9+ 10sif, 6ansoor Ali, Al-()--'u Al-7)me'u Al-5soul, 8th Gdition, Ggypt, AlC6aktabat'u AlC Islamieh %ress, 7ol.=, =338. /2+ Lle 50shif'u AlCMhitae', 6ohammad .osein, (ahir'u Al-Ma-allah, 1a?af, 6aktabat'u AlC 6orta:avieh %ress, 7ol.=, /29>.

/@

=3+ Abbdullaah (alil B Asharaf 6ohd "amli Abdull,Waqf 0nstruments *or Construction Contract9 Anal+sis 5f Structure, (his !a!er is submitted at 0slamic 2an'ing , Accounting and !inance #onference *i$A! =339+, organi:ed by !aculty of Gconomics and 6uamalat, Kniversiti )ains Islam 6alaysia, =9C=2 (uly =339 at The Hegend .otel, 5uala Humpur =339.

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=>+ 6ohaqeq .elli, (a'far Ibn AlC.asan, Al-Mo'htasar'u Al-1)fe', =th Gdition, AlC$e'seh %ress Institution, /22D.

=D+ 1a?afi, 6ohammad .asan, 7av)hir'u Al-Kal)m, Tehran, '0rolket0b'u AlCIslamieh %ress, /229.

=@+ 1a?afi, 6ohammad .asan, 7av)hir'u Al-Kal)m *i Sharhe Shar)ie'u Al-0slam , Ath Gdition, $eirut, '0r'u Ghia'e AlCTor0s'e AlCArabi,/29/.

=A+ Allameh .elli, .asan Ibn <ousof, Qav)ed'u Al-Ah')m, /th Gdition, Nom, Islamic %ress, /22A.

=9+ Norb0ni, !ara?ollah, Civil-*undamental >aw, Tehran, 'aneshvar %ress, /22A.

=2+ 6ohaqea .elli, (a'far Ibn AlC.asan, Shar)ie'u Al-0slam, $eirut, '0r'u AlCA:vae' %ress, /29=.

83+ )ahid Avval, 6ohammad Ibn 6akki, 'oroos'u AlC)hare'iiah, 6ashhad, Lstan Nods "a:avi Islamic "esearches %ress Institution, /22A.

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/A

8=+ Imam 5homeini, (ahrir'u Al-/asileh, 6ousavi, )eyyed 6ohammad $0qer, >th Gdition, Nom, '0rolelm %ress Institution, =33=.

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8>+ )ahid )ani, Eeinodin, 8o%at'u Al-2ahiiah, $eirut, Ghi0e'u AlCTor0s'e AlCArabi %ress, /29=.
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8@+ Hankar0ni, M.A. !0:el, 8esalah of (awdhih-al-Masael of :.A.*a%el >an'arani , Dth Gdition, Nom, Amir'u AlCGlm %ress, =33@.

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