A waqf is an endowment through which an owner permanently dedicates an asset, such as land, a building or a sum of money, so that its income serves designated beneficiaries or a charitable cause indefinitely, the capital itself never being sold or given away.
Capital frozen, fruits distributed
The principle comes from a saying attributed to the Prophet about land at Khaybar: tie up the property and give away its yield. The founder gives up ownership; the asset can no longer be inherited or sold, and only its rents, harvests or profits are distributed.
Charitable waqf or family waqf?
A waqf khayri serves a public cause from the start: a mosque, school, clinic or the upkeep of a fountain. A waqf ahli first benefits the founder's descendants, with the charitable cause taking over only once the line dies out. Several countries restrict it.
Conditions the founder sets in the deed
The founding deed, the waqfiyya, specifies the asset, the beneficiaries, the manager and the order in which income is shared. Jurists compare these clauses to legal texts in binding force: the manager may depart from them only if they become impossible to carry out.
Can an unproductive waqf asset be replaced?
Istibdal allows a damaged or unproductive asset to be exchanged for another of at least equal value. The schools differ on its scope, the Hanafis being the most flexible; a judge or awqaf authority usually authorises the swap to prevent misappropriation.
The mutawalli, guardian and manager of the endowment
The manager, called mutawalli or nazir, leases the assets, collects income, pays for maintenance and pays the beneficiaries. He acts as a trustee: he is liable for losses caused by his negligence and may neither mortgage the asset nor use it personally.
Awqaf administrations and state oversight
In many countries a ministry or public awqaf authority registers endowments and supervises managers. In Malaysia, each state's Islamic religious council is the sole trustee of waqf; in Singapore, the Majlis Ugama Islam Singapura plays that role.
What AAOIFI's Sharia standard on waqf covers
AAOIFI's standard on waqf deals with which assets may be endowed, the powers of the nazir, investment of the assets and distribution of income. It notably accepts endowments of cash, shares and other rights that carry a recognised value.
Paying the manager without eroding the income
The nazir may receive a fee set by the founder or, failing that, by a judge, usually a percentage of annual income. It is deducted before distribution and after maintenance costs, so the asset keeps producing for future generations.
From property endowments to cash waqf
Under the Ottoman Empire, cash waqfs already lent out their funds, which sparked debate among jurists. Today a cash waqf is placed in compliant deposits or sukuk; only the return is spent, and the original amount stays intact to keep the endowment perpetual.
Investing a cash waqf without touching the capital
If 1 million euros is given to a waqf and invested at 4% a year, 40,000 euros fund scholarships or healthcare annually. The manager must avoid speculative investments, build a maintenance reserve and reinvest part of the income to offset inflation.
Waqf-backed sukuk and development projects
Urban waqf land, often left idle, can be developed through sukuk: investors fund construction, are paid from the rents, and the property then reverts fully to the waqf. Indonesia has also issued sovereign sukuk linked to cash waqf.
Digital platforms and pooled waqf
Platforms now let people contribute a few euros to a pooled waqf, for example to drill a well or equip a school. Before giving, donors should check the organisation's registration, the fund's governance and the regular publication of income distributed.
Specialist external source
AAOIFI lists its published standards there, including the Sharia standard on waqf that covers how an endowment is created, managed, invested and how its income is distributed.