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ZURRI CASH WAQF MODEL

ZURRY CASH AWQAF – OPPORTUNITIES FOR THE GENERAL UMMAH

Introduction

Literal meaning of waqf (plural awqaf) :- “detention”, “to prevent”, “to restraint”. From fiqh definition, waqf has four essential elements

(1) “waqif” – the owner of the property to be waqf;

(2)“mauquf” – the property to be waqf;

(3) “mauquf alaih” – the recipient of the income/revenue from  mauquf;

(4) “sighah” – the contract.

The administrator is called “Nazir al-waqf” or “Mutawalli”. The subject matter to be waqf can generally be categorized as “manqul” (movable) or “aqar” (immovable).

Thus, waqf is a commendable and pious act to a dedication of property[1] of any kind, permanently dedicated by a Muslim for any activities or management investment portfolios recognized by Islam, for an enduring charitable or religious object, that secure any benefit to human beings and its “ain” (material elements) remains intact. In short, waqf is a permanent, irrevocable transfer of a portion of one’s property (movable or immovable assets) to Allah for His pleasure. The said property thus becomes Allah’s property forever. Therefore, waqf is a dedicated property on condition that the land should neither be sold, nor made the subject of a gift or inheritance. The income alone should be spent on the poor, the needy, relatives and on the services rendered to travelers and on hospitality. The administrator shall have the power to take some of its income and the rest of it for feeding others, not accumulating riches thereby.

There are two types of waqf namely Waqf Am[2] and Waqf Khas[3]. Waqf Khas is further subdivided into two i.e. Waqf Ahli/zuurri[4] and Waqf Specific[5].

The Unique Nature of Waqf

  • Waqf is a commendable and pious act
  • Waqf is a form of an enduring charity
  • Waqf assets cannot be sold, given as a gift and inherited
  • Clear distinction between:
  • one who holds it in trust (administrator); and
  • one who derives benefits from it (beneficiaries).

Trustee is usually in the form of institutions. One of the most important waqf institutions is the mosque. The first waqf mosque was the Qubah mosque, built by the Prophet (s.a.w) after migration from Mecca to Medina. Later in Medina, the Prophet (s.a.w) built a second mosque known as Masjid Nabawi. In the early days of Islam, mosques used to act as the premier educational institutions. These include the Fustat Mosque, Qairawan Mosque and Azhar Mosque.

In this classical waqf, contributor is the donor, create the trust, appoint the trustee(s) and designate the beneficiary. The donor may appoint any person or institution he trusts to serve as trustee. In the contemporary waqf, the institution is a regulated body or council appointed by the federal or state government to run the waqf properties/fund.

Waqf may be in the form of grants. Grants have been awarded to students such as Baitulmaqdis or Jerusalem, between the fifth and twelfth centuries Hijrah, there were about 70 waqf schools. Libraries have also been contributed as waqf assets. The first waqf library was the House of Knowledge, established by Abu el-Qasem Ja’afar bin Muhammad al-Faqih al-Shafei’.  Waqf in the form of institution such as hospitals used to give free medication treatment. There were about 50 waqf hospitals in Spanish city of Cordova. Waqf properties in the form of public infrastructures: such as bridges, roads and public toilet. Waqf income has also been allotted to the poor, the needy and the wayfarers.

Moving forward- Cash for Waqf

Imam Zufar, Hanafi scholars is of the opinion that cash[6] can be waqf based on “urf” (customary practice). Sheikh Muhammad Syarbini Khatib is of the opinion that cash can be waqf if it serves as function of money[7]. According to the ruling, the manager can mobilize funds, in the form of cash, to be used to acquire “property with mal”. Cash in this context is only the medium used to acquire the “asset with value”[8].

Cash waqf was first introduced in Ottoman era in Egypt. Waqf fund was given as seed capital to the third party to do their investment under murabahah trading or mudharabah investment, upon maturity, the capital and the profit after less administrative charges is returned to the waqf administrator. These pools of profits derived from such activities are distributed to the general public through cash payment for services rendered or subsidized the payment of maintenance of the public properties.

Socialisation of Cash Waqf.

Professor Mannan socialized cash waqf in Bangladesh through Social Investment Bank Limited (SIBL). SIBL issues Cash Waqf Certificate to collect funds from the public and corporate sectors. The pool cash fund are diversified in SIBL’s investment portfolios and the proceeds derived from such investment are distributed to the general public.  SIBL charged administrative charges from the proceeds before the distribution. Malaysia, through Labuan IOFC has launched the Cash Waqf Certificate to finance the off-shore financing activities. Awqaf SA[9] also collect from the public who wishes to endow cash for waqf and spends only the income generated from investments to fund a variety of community development projects and programmes promoting integrated community development and self reliance.

Corporatisation and commercialisation of Waqf Model

As far as Malaysia is concerned, none has gone through the collection of cash to be contributed as waqf, pooled into the waqf account managed by the regulated institution, and this institution shall manage the administration and the investment portfolios, pool the cash waqf proceeds and distribute to the beneficiaries as prescribed in the waqf deeds, and the beneficiaries are the family members of the contributor/donor. This modus operandi is similar to the practiced of Cash Waqf Ahli or Zurry Cash Waqf or Family Cash Waqf. Shariah have approved the cash waqf ahli/Zurry, where the usufruct of the proceeds can be for two generation. Upon expiry of the second generation, the said created cash waqf shall be transformed into the waqf am or general waqf. The beauty part is ordinary people can create the waqf through annuity payment into the pool waqf account and the family member can benefit from the investment proceeds of the said account.

 

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Normally, existing Cash Waqf Ahli or Zurry Cash Waqf gives opportunity to wealthy depriving the less opportunity to do waqf. A new model open opportunity to general ummah even to less than wealthy segment society can do their part. This proposal is for a number of persons donating their small resources in the form of cash into a pool of fund, making the pool big enough to be able to acquire a worthwhile asset to become a perpetual source of income to provide for the needs of the less fortunate members of the Muslim society. Therefore, the cash must first come from the donors. Receipts, certificates and/or Cash Waqf statements have to be issued to the donors to make them feel comfortable that their donations are not wrongly used, and also to keep records of the donations. The original rule of waqf is that the waqif  manages his own waqf or the authority in society manages the waqf; as the donors are large in number and their individual donations are small, a manager[10] needs to be appointed to collect the donations, pool them into a fund, acquire assets from the fund, and manages them so as to get returns for distributions. The manager also asks for permission from the donors to manage the asset.

ZURRY CASH WQAF MODEL

 OBJECTIVES OF THE ZURRY CASH WQAF

To facilitate the establishment of a fund known as Cash Waqf Fund (CWF) and the institution or recognized body as mutawalli to manage[11] the CWF professionally.

OPERATIONALISATION OF THE ZURRY CASH WQAF

Required Approval

Upon approval by State Waqf authority

 Perceived Value

 Waqf of Cash

Contribution of cash for waqf. Essential elements of Cash Waqf:

  • Waqif : contributor/donor
  • Mauquf : subject matter – money/Nuqud
  • Mauquf a’laih: beneficiaries are the family member(s) of the contributor
  • Sighah (binding contract)

 

Contributor/Donor/Waqif

  • To give opportunity to those who do not have own property but still wish to contribute waqf in alternative form.
  • Waqif have a platform to contribute the waqf to the professional trustee/foundation.
  • Individual may be allowed to deduct monthly salary or through standing instruction.
  • Incentive may be in the form of tax rebate/exemption for individual donor.

 Administrator

  • To facilitate a mutually beneficial arrangement between donor (waqif), a foundation (Nazir al-waqf or mutawalli), and beneficiaries.
  • Nazir al-waqf or mutawalli that can benefit from the fee base transaction (management fee in managing the waqf fund)
  • Management fee can be priced according to the market practiced as it is up to the wisdom of management.

Beneficiaries

  • Beneficiaries which are the family members of the waqif can benefited from the said established institution by receiving the allocated sum amount either in the form of grant, cash or other acceptable means as per the waqf

Cash Waqf Support Islamic Financial Market

  • Cash Waqf pool funds is able to create a continuous perpetual Islamic source of fund to support domestic financial market and International Islamic financial market through utilization of Islamic financial tools.

Stages in Zurry Cash Waqf

 Creation of Cash Waqf Fund

Receive cash for waqf from contributors/donors (waqif). A foundation (Nazir al-waqf or Mutawalli) shall issue a certificate (cash waqf certificates) and/or Cash Waqf statements updated semiannually. Donor (waqif) shall receive the said certificates and/or Cash Waqf statements as evidence of contribution. The collection of the above contribution shall be pooled. The pool fund shall be called Cash Waqf Fund (CWF). There may be 3 CWF pool: Zurry Cash Waqf, Specific Cash Waqf and Cash Waqf Am, being classified according to its deed.

Zurry Cash Awqaf

Refers to cash for waqf with condition that the proceeds of the revenue generated is meant for specific beneficiaries with specified tenure. e.g. to be given to the identified beneficiaries for 2 generations. Upon expiry of the said tenure, the cash will be distributed and pooled into the Cash Waqf Am.

Cash Waqf Am

Refers to cash for waqf without condition. It is meant for general purposes but within the Shariah boundary.

Cash Waqf Specific

Refers to individual or corporation wish to give cash or asset for specific beneficiaries. e.g. money contributed by the party where the proceed of the revenue to be distributed to specific beneficiaries such as to Research and Development, foundation and institute.

Investment Avenues

Cash Waqf fund may be invested in the diversified portfolios of Shariah compliance investment avenues. Investment portfolios are diversified to spread the risks. The proceeds of the investment portfolios are for distribution to the specific beneficiaries.

In case of lost, due to normal and prudent practices, the investment portfolios account may absorb the lost.

Appointment of Professional Management Company

Shariah has laid down the responsibilities of mutawalli. Salient terms of mutawalli includes but not limited to the following:

  • Mutawalli should be capable of managing waqf fund to be productive source of capital.
  • Administrating and monitoring the collection of CWF such as opening of Cash Waqf Account for individual waqif and identifying the beneficiaries as per the Zurry Cash Awqaf
  • Administrating, managing and monitoring the pool of cash waqf funds through investment portfolios management policy and schemes that are Shariah
  • Administrating, managing and monitoring the returns of the investment in terms of profit or dividend derived from such investments
  • Administrating, managing and monitoring the distribution of the said returns to the beneficiaries accordingly.
  • Mutawalli may appoint or outsource to the third parties to manage part of the funds as part of the investment strategies
  • Mutawalli as manager is entitled to the management fee for the services rendered in managing the fund.

Pool of Profit/ revenue Generated from the Investment

Proceeds of the investment avenues in the form of rentals, profit, commission, and fee base transaction, dividend etc. shall be pooled prior to distribution to the beneficiaries.

Distribution of revenue

Revenue to be distributed according to waqf deeds.

  • Distribute to the general beneficiaries/reinvested into the pool CWF
  • Distribute to specified beneficiaries (as per the Zurry Cash Awqaf and Specific Cash Waqf deed)

Zurry Cash Waqf for specific named beneficiaries and the beneficiaries only received the proceeds up to a specific stipulated tenure. Upon expiry of the tenure, the whole proceeds shall go to general cash waqf pool.

Mutawalli only get management fee for the services rendered in managing the fund. The management company is not entitled to the distribution of the generated revenue.

CONCLUSION

We are proposing a new waqf model capable of enhancing waqf activities in the contemporary Muslim society. This is the organized voluntary waqf by creating a waqf pool fund by issuing waqf certificates and/or cash waqf statements, which is evidence of waqf contribution by potential waqifs. The pooled fund is invested according to the Shariah principles, to generate income/revenue. The income/revenue from the said diversified portfolios are pooled for distribution, according to the identified beneficiaries as per the waqf deeds.

In this sense, the role of such a waqf administration would be to develop and manage the established Cash Waqf for generating income/revenue.  Cash Waqf is a facility provided by the mutawalli, as a platform for the potential individuals as waqifs, to contribute waqf favouring the identified beneficiaries according to the waqf deeds.

[1] Property includes any movable or immovable property and any interest in any movable or immovable property, any right, interest, title, claim, chose in action, whether present or future or which otherwise of value in accordance with Hukm Shara’ (Sec 2 – Wakaf (State of Selangor) Enactment 1999 (No.7 of 1999)

[2] Waqf Am : – any waqf that is created for a general charitable purpose i.e for general public according to Hukm Shara’ or also known as the waqf khairi-an endowment for an object of a religious or public nature.

[3] Waqf Khas: – a waqf that is created for a specified charitable purpose according to Hukm Shara’

[4] Waqf Ahli/zurri: – is a waqf where the beneficiary is family members  ii.e. a family endowment

[5] Waqf Specific: – is a special waqf (Waqf Khas) where the beneficiary is named specifically e.g. for orphanage house, hospital, tahfiz school, etc.

[6] Pls see Hasyiah Rad al-Mukhtar (pg.361-363 by Ibn ‘Abidin.

[7] As medium of exchange; measure for value; standard deferred payment and store of wealth and a liquid asset.

[8] Ref: Shamsuddin Ibn Khudamah; Al-Mughni wa ya lihi al-Sharhul al-Kabir Vol 6 (pg 192). Syed Ahmad bin Omar al-Shatiri; Al-Yaqut al-Nafis fi Mazhab Ibnu Idris (pg 117).

[9] An institution in South Africa that carry a mission of development and popularization of the waqf system and mobilization of waqf funds as means of providing sustainable funding solutions. – poverty alleviation projects and programmes.

[10] Al-Sharbini in Muhtaj (pg 394) opined that the manager/management company of Waqf is allowed to seek for a fee for his management services. Managers (Nazir al-Waqf / Mutawalli) must be professional and financially strong.

[11] It refers to management of investments portfolios and distributions of revenue/profit according to waqf deeds.

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