Islamic endowments and trusts (awqaf) are increasing exponentially across the Gulf Region and continue to play a significant role in the sustainable development of regional societies— both human and economic. It is estimated by the World Bank that globally, the value of assets held in and deployed through waqf structures range from USD 100 billion to USD 1 trillion.
While the institution of waqf offers a powerful mechanism to generate sustainable resources, financial sustainability has become one of the greatest challenges faced by waqf institutions regionally. Waqf institutions have the capacity to play a far greater role in the progression of social and economic development with education, health care, social welfare and other community-based programs. In order to make such contributions, there is a need to pay attention to the development of existing waqf assets to revitalise their purpose and capability to deliver these essential services both in the present and the future.
The proper management, governance, and deployment of waqf assets is imperative to achieving sustainable development by ensuring that the income generation of these awqaf are maximised and reach their full potential while ensuring their sustainability.
Led by David Russell QC, this webinar highlighted how to maximise social investment through awqaf, and underline international best practices in establishing, managing, sustaining and investing in awqaf.
What we learnt:
- There is a body of law and principles which is applicable to the mangment of waqf. Although the British concept of a trust was derived and devleoped from the idea of awqaf, they differ in various ways. An awqaf does not function as an individual entity as a company does, nor is it a contract or an agency.
- Challenges arise when addressing the extent to which one can make a charitable gift to one’s family or to what extent the gift is limited to third parties. There are new laws in waqf management in the UAE that address this issue. However, in countries that are non-trust jurisdicitions, this challenge is amplified as the terms of a waqf is at risk of being breached as there are no laws to protect it.
- A waqf is treated as irrecovable and remains in detention and is seperated from the asset owner. It is treated as a gift for charitable purposes. A mutawalli (or wealth manager) would be expected to preserve the property by protecting the terms of agreement, including what to do with any additional income derived from the property.
- Whilst traditionally, the wealth is seen as exclusively for charitable purposes, some Islamic laws believe that family support counts as the same. This is indeed how it is viewed as per UAE and Bahrani law, and is gradually becoming more formalised elsewhere as well. KSA is increasingly investing in the regulatory frameworks of awqaf as well.
- One might prefer to use awqaf structures instead of a foundation or family business, as the latter tends to be complicated to set up. Additionally, proper planning in accordance to inheritence laws would have to be looked over, as any kin may be left with fragmented power and shareholdes have to be taken into consideration as well. Corporate structures are also inherently inflexible in comparision to a waqf and do not always guarantee a stable platform for next generation leadership.