A History of Philanthropic Foundations: The Islamic World From the Seventh Century to the Present

By Murat Cizakca, 2000, Istanbul, Bogacizi University Press


Outlined the economic dimension of the awqaf during the Ottoman empire and the historical evolution of the same. After coming to the conclusion that the awqaf system had been eroded and emasculated by 2 major reforms – 1. State control of the awqaf and 2. Destruction of family waqf.

These 2 major reforms in Ottoman Turkey right through its reinvention as a republic in the 1920s were due to three main reasons . Firstly, misuse of powers of istibdal by trustees, secondly, family awqaf and questions relating to circumvention of Islamic inheritance laws and colonial perception that family awqaf cannot be considered as charitable and finally, non-availability of land held under private ownership of waqf to be taxed by the state.

In respect of other Muslim countries which were colonized by Western nations, the influence on land and administrative laws by the Western powers hastened the emasculation of the waqf and diminished its public role.

Revival and modernization of waqf in Turkey

However, developments in the second half of the 20th century in Turkey had restored the waqf somewhoat. Ironically, this was in part due to Turkey looking at the lessons of the great American foundations and trusts which were at the time actively involved in business simultaneously with the provision of public benefit..

The factors for the revival and modernization of the waqf in Turkey are:-
a. weakening of Kemalist Jacobinism and rise of democracy
b. capitalist accumulation

Both of these led to changes in the law:-
1. Law No 903 of 13th July 1967
a. The will described in the foundation documents is not changeable
b. The civil tribunal is authorized to register the waqf and to give it judicial personality
c. The word “establishment” tesis, used exclusively in the Turkish Civil Code is replaced by the word “vakif”
d. No waqf can be created that opposed the law or national interests, support current politics, a certain rae or community;
e. Vakifs can be tax exempt provided 80% of vakif revenues are to be reserved for public purposes. Tax exemption to be granted only by council of Miinisters
f. Control of vakifs is directly vested with the General Directorate of waqfs
g. Annual profit of a waqf is to be added to the original capital of the waqf stated in the waqf deed and is reported at the beginning of each calendar year to the inspetors
h. A multitude of persons, associations and even the state can create a waqf;
i. A waqf is now allowed to establish a company and allocate the latter’s total profits, or a share thereof, to its own specific purpose (including returning dividends to the waqf)
j. Establishment of a waqf has been simplifie
k. Istibdal has been reintroduced and is applied subject to decision of the court
2. Elimination of ambiguities regarding taxability of companies established by waqfs ie not tax exempt – Minitry of Finance Offiial Gazette dated 28 July 1994
3. Corporation Tax Law No 199 – limited donations to the tax-exempt waqfs by outside companies to 5% of the latters profit. (cf US position which allows max 10% of a corporation’s pre-tax net income, and 50% of individual income.

The result is that:
a. a tax exempt waqf can own a business if they are units internal to the waqf – they are exempt even though they are profitable eg Diyanet Vakfi
b. a waqf that is not tax exempt are considered as businesses
c. companies can establish their own waqf (see Article 137 of Turkish Trade Law eg Vehbi Koc foundation
d. waqf can purchase shares of a company which are not traded on the stock exchange – decision of General Directorate of Wqf on 6th August 1999.


Result:
GDW managed waqf properties inherited from the Ottoman era are 37,917 properties
between republic in 1923 to 1967 – only 73 new waqfs were established.
Between 1967 to 1985 alone, 1877 new waqfs had been formed.

GDW takes 5% of net income of all awqaf as supervision and auditing fees

Turkey also has a “Thirrd Sector Foundation” which is a waqf representing 700 other waqfs

on waqf model

by Murat Cizakca
2002

How awqaf became undermined – politics, State, colonization and Western influence
• Suggestions: Legal -
• Incorporation, limited liability, mutawalli as mudarib
• Public benefit criterion
• Conditions for recognition
• Capital
• Registration
• Tax treatment
• Business activities
Looking into the current developments in the West and the growth of the non-profit sector

Joint Venture Modes in the Development of Waqf Properties

by Mohammad Tahir Sabit Mohammad
2007 Universiti Teknologi Malaysia, EPrints

Financing of waqf lands development
• Joint ventures – mudarabah or musharakah mutanaqisah
• Issues of ownership of waqf land post development, as opposed to ownership of building
Legal impediments
• Malaysia – non transferability of waqf lands under the respective State Islamic Administration Enactments
• NLC – Torrens system – buildings on land recognized as part of land
Solutions
• Setting up of a Waqf Holdings Corporation as a body corporate to carry out the transactions
• Licence of land coupled with equity in building

Sustaining the Means of Sustainability: The Need for Accepting Wakaf (Waqf) Assets in Malaysian Property Market

byMohammad Tahir Sabit Mohammad
2007 University Teknologi Malaysia, EPrints

Present legal framework excludes wakaf lands from the land markets and access to credit market
• Land registration
• Title security
• Trading
• Marketability
• Equal market value
• Collateralization
Solutions for legal framework - a uniform and comprehensive code of wakaf law and amendments to the various state legistations, NLC, Land Acquisition Act-
• Wakaf as a body corporate capable of holding land
• Classification of wakaf land as prime, secondary
• Registration of wakaf lands as wakaf titles
• Transferability of secondary wakaf lands
• Leasing of prime wakaf lands
• Wakaf lands cf leasehold titles – perpetuity?
• Enforcement of long term leases of wakaf lands – wakaf leases
• Suitability for collateralization
• Recognition of these wakaf leases in terms of their value, transferability and collateralization
• Valuation of various types of wakaf lands

Waqf-Based Microfinance: Realizing the Social Role of Islamic Finance

by Habib Ahmed
2007, Islamic Research and Training Institute. Paper written for the Internations Seminar on Intergrating Awqaf in the Islamic Finacial Sector in Singapore March 6-7, 2007

Waqf based poverty focused microfinance institution
Sustainability and Operational issues of a waqf-based MFI-
• Mitigating Credit Risk
• Resolving Moral Hazard Problem
• Economic viability
• Operational and Risk Management issues
Financing of activities
• From waqf funds (these can be used for qard)
• From deposits (these can be used for qard and loans??)
Asses, Liability and Risk Management issues
• Different reserves – takaful, profit equalization, capital reserves
• Depositors and withdrawal risks
Maaging risks and returns – risk of decay of the endowment must be eliminated – choosing a proportion of low-risk assets in such a way that the returns on theses assets can cover the expected loss from microfinancing activities

Waqf Management in Malaysia

by Syed Othman al-Habshi
Chapter 6 in The Islamic Voluntary Sector in Southeast Asia, 1991
editor Mohamed Ariff
publisher Institute of Southeast Asian Studies, Singapore

Administration of waqf lands in Malaysia-
• Administrative set up of the relevant dept within each State’s Relgious Council requires drastic review in terms of size structure and personnel
• No complete listing of waqf properties made
Observations
• All Muslim cemeteries considered as waqf lands as then exempt from quit rent
• Mosques, suraus and religious schools usually arise from specific wakaf – under Shafie cannot change the purpose of the lands
• Waqf for specific purposes form the largest proportion of waqf lands, particularly for cemeteries
• Concludes that therefore only 10% is available for income generating purposes
• But not all wakaf land has been traced and transferred to the religious departments. Some still in original trustees hands eg mosque committees
• Many of these rented out long term and below market rental
• Many are under Rent Control
• Most are in towns, a few in the rural areas
• Lands transferred subject to quit rent except for cemeteries or if transferred to the President State Religious Dept thereby making it government property – therefore no incentive to transfer the lands – costs money for the religious dept to upkeep the wakaf lands
Development of wakaf properties
• Not well developed. Mostly just rented out
• Melaka and Penang have made some progress at developing wakaf lands. Also Perak and Terengganu
• Many lands are uneconomical in size and shape and sporadically situated
Generally, shortage in personnel, funds and expertise

Waqf, perpetual charity and poverty alleviation

by AbulHasan M Sadeq
International Journal of Social Economics 29,1/2 http://www.emeraldinsight.com/0306-8293.htm

2 issues in waqf-
• Creation of endowment
• Administration
A waqf body can raise cash waqf to finance development activities on landed waqf properties such as commercial buildings to generate further income.
This income is used to further the primary purpose of the waqf.
Waqf institution to provide educational, medical facilities and infrastructure
Waqf as poverty alleviation tool