Cash Waqf & Its Promising Prospects


Dr. Mohammad Mahbubi Ali & Shabana Hasan [1]


Waqf has a long history in Islam, initiated during the era of Prophet Muhammad (pbuh) in Medina. Thus far, it has played, and, in many cases, continues to play an essential and effective role towards the overall socio-economic development of the Muslim community. This has been proven from the phenomenal architectural relics and public infrastructures founded upon waqf worldwide. For example, the waqf of Al-Azhar University in Cairo was famous as an archetype of the Islamic philanthropic institution, as well as a milestone for Islamic studies[2]. Through its waqf foundation, both students and alumni of the university have generously benefitted from its waqf scholarships to study and live in Cairo fully-funded[3]. Apart from Al-Azhar University, there are several other examples of universities worldwide that benefitted from the waqf foundation, such as University of Al Qurawiyin in Fez, Morocco; the University of Cordova, Spain, the King Abdul Aziz University, UAE; the Islamic University of Indonesia (UII) etc. Moving to the healthcare sector, Al-Noori Hospital in Damascus, Syria and Nur clinics (Klinik Nur)in Malaysia were also founded and maintained using waqf funds, to name a few. It is noteworthy to further highlight that some waqf institutions have successfully survived for more than a millennium.

Unfortunately, despite its bright and promising outlook, the management of waqf experienced several setbacks. For example, due to poor management of waqf, vast waqf lands and properties throughout the centuries have remained idle and stagnant. This is largely stem from the peoples’ lack of understanding on the dynamic aspects of waqf and commonly perceived waqf to be associated mostly with immovable properties and lands for religious and education purposes only. However due to this misconception, it positively led to the introduction of a new, innovative waqf model that has been identified as one of the major tools towards solving the above issues, identified as cash waqf. Cash waqf in simple terms is identified as a special type of waqf which its main point of departure from the traditional form of waqf in that its original capital, or, corpus, consisted purely or partially, of cash. The earliest origin of the cash waqf in the Islamic world may be traced back to the 15th century Ottoman Empire, which then expanded to the European provinces of the Empire as well as over Anatolia. Over time, with the establishment and utilisation of cash waqf, it helps to address the misconceptions of waqf, and has positively evolved into a pivotal engine of economic growth and poverty eradication for the overall society.

Cash waqf has been widely propagated and implemented in several key Islamic finance jurisdictions. For example in Malaysia, cash waqf has been introduced since 1957 by Perak Islamic State Religious Council under rules 18(2) Waqf Regulation Control 1959. The collection, management and distribution of cash waqf are essentially supervised by the State Religious Council (MAIN) of each state. The Jabatan Waqaf, Zakat & Haji (JAWHAR) and Yayasan Wakaf Malaysia (YWM) both play the role as coordinators for the cash waqf-based project initiatives since waqf is a matter within the states’ power. Each of them has their own set of laws governing the subject matter. Through such coordination, few significant projects such as the construction of several waqf hotels, i.e. Grand Puteri Hotel in Kuala Terengganu, the Regency Seri Warisan Hotels in Taiping and Pantai Puteri Hotel in Tanjung Keling were successfully materialised. Some corporate entities have also actively engaged in cash waqf initiatives. For example, the Johor Corporation, through its arm, the Waqf An-Nur Corporation Berhad, has developed several public services using cash waqf, including Waqf An-Nur Hospital (HWAN) and Waqf An-Nur Clinics. Moving to Indonesia, the development of cash waqf model was pioneered by a non-profit organisation, Dompet Dhuafa Republika. Through its dedicated waqf body known as Tabung Waqf Indonesia (Indonesian Waqf Box), the cash waqf proceeds are successfully used for various initiatives, including poverty alleviation programmes, free medical services, educational and entrepreneurship development programmes. In the Middle East, cash waqf model was also used to fund the development of tourism infrastructure such as the building of the Zam Zam Tower, next to the Masjidil Haram in Saudi Arabia. It is noteworthy to point out that cash waqf is also effectively used in non-key Islamic finance jurisdiction such as Singapore. In Singapore, Majlis Ugama Islam Singapura (Islamic Religious Council of Singapore) has initiated a monthly salary deduction scheme for waqf fund and managed to collect an approximate SGD130 million, which was used to construct 22 mosques in the country.

Evident from the above, it is clear that cash waqf offers great potential serving as a catalyst in socio-economic development agendas such as employment creation, poverty elimination, microfinance empowerment and infrastructure development. Besides, it also offers additional advantage as compared to the traditional form of waqf – (1) it offers flexibility and simplicity in waqf management as it does not require a substantial amount of wealth and space and (2) it may easily solve the problem of unproductive and immobilised waqf properties.

In the case of Malaysia, realising the huge potential and flexibility of cash waqf concept, the federal government and state authorities in Malaysia should assume a central role in providing a level playing field for the overall development of cash waqf. It is a settled law that waqf is a matter administered exclusively by the states as specified in Item 1 of State List and Item 15(c) of the Ninth Schedule of the Malaysian Federal Constitution. Fundamentally, federal government shall not interfere in its administration. Although such power is to be exercised by the state independently, it only has power over its Muslim subjects. Inopportunely, placing waqf solely within the states’ power would limit the movement and exploration of waqf asset and enjoyment of this noble concept by the non-Muslim. Hence, the current position of waqf needs to be revisited so that the concept can be extended to non-Muslims too. In addition, the regulation to recognise cash waqf as tax deductible, like zakat, will most likely encourage people to participate actively in cash waqf. The regulation to allow Islamic banks to offer cash waqf deposits will also assist potential benefactors easily to place their waqf, be it for charitable or developmental objectives, into designated waqf fund.

Continued effective campaigns on cash waqf are also necessary and integral to increase public awareness and understanding on the dynamic aspects of waqf. Apart from effective campaigning methods, to further ensure the successful implementation and utilisation of cash waqf, it is also important to implement customer-friendly technological tools in using cash waqf. Finally as delineated above, cash waqf helps to address many of the setbacks found in traditional waqf and over time with its continued usage, it will successfully bring the overall waqf industry to the next level by reviving the golden age of Muslim civilisation.


Disclaimer: The article is a revised version of the original article titled “Unleashing the Potential of Cash Waqf” which was published in New Straits Times online on June 9, 2017.


[1] Mohammad Mahbubi Ali is a research fellow at the International Institute of Advanced Islamic Studies (IAIS) Malaysia. He can be contacted at [email protected]. Shabana Hasan is a freelance Islamic banking and finance writer. She can be contacted at [email protected].


[3] Ibid


( No comment has been added. )