We commenced discussions on the model of Islamic Philanthropy from our June 2021 edition. If you missed it, don’t worry! you can catch up here.
In continuation, we would be discussing WAQF or what is known as Islamic Trust, Islamic Endowment, or Charitable Trust.
WHAT IS A WAQF?
Waqf (Arabic for endowment) is a model of Islamic philanthropy that is instituted to endure in perpetuity i.e., It is a structure that is set up to stand the test of time. It involves donating a fixed asset that can produce a financial return or provide a benefit as long the asset(s) is in existence to certain beneficiaries. It is loosely referred to by Estate and Inheritance Practitioners as Islamic Trust. This is because the key elements to set up a trust are evident in a Waqf. These are:
a) The unambiguous intention to establish a Waqf;
b)The settlor, called the Waqif, who is the legal owner of the asset(s) and is donating or bequeathing the assets;
c)The assets being donated/bequeathed;
d)The beneficiaries for whose benefit the assets would be utilized and the proceeds thereof distributed.
In Islam, a Muslim only has the free will to determine how one-third (1/3) of his estate will be allocated, the remaining two-thirds (2/3) have been automatically distributed by Allah (SWT) by way of Faraid (the Law of Inheritance).
While the one-third (1/3) portion can be distributed by way of drafting and executing a Wasiyah (Will) which would expressly capture his desires for the distribution of his/her estate, he/she is also permitted to structure the 1/3 (in whole or in part) as a Waqf.
By this, a Muslim can either donate a monetary value (Cash) of his wealth to Charity for purposes that are in line with the Islamic faith or dedicate a fixed asset such as Land, buildings, or Vehicles for Charitable uses.
WHAT ARE THE CONDITIONS FOR A VALID WAQF?
While as a Muslim you might be able to deal with your estate by establishing a Waqf, there are certain conditions that must be fulfilled before that charitable act of yours can be deemed valid in Islam. These are;
1. Permanent dedication: The dedication of the Waqf property must be permanent. If the Waqf is made for a limited period it won’t be a valid waqf. There should also be no condition or contingency attached to the Waqf assets otherwise it will become invalid.
2. Motive for Waqf: The motive behind the Waqf must be for purposes that are recognized in Islam as Halal (Permissible). The Waqif (Testator) himself must devote such property and he cannot give it for a purpose which is considered Haram (Forbidden) such as Production of Alcohol, Promoting Adultery and Fornication, Rearing of Pigs etc.
3. Competency of the Waqif: The Waqif must be a competent person at the time of dedicating the property or assets in Waqf. To qualify as a competent Waqif, a person must possess the capacity, as well as the right to determine the distribution of the property of the Waqf. This means that the Waqif must be of sound mind as at the time of creating the Waqf and he must be the legal owner of the property that would be the subject of the Waqf. Stolen property cannot be made the subject of Waqf.
4. Right to make Waqf: A person having the capacity, but no right to the asset(s) cannot constitute a valid Waqf. The subject matter of waqf should be owned by Waqif at the time when Waqf is made. Whether a person has the right to constitute a Waqf or not depends on whether the waqf has a legal right to transfer the ownership of the property or not as the popular saying goes “You cannot give what you do not have”.
ACCEPTED AND UNACCEPTED OBJECTS OF WAQF
I had mentioned earlier that the purpose for the dedication of the Waqf property must be in line with what is acceptable in Islam. Thus, it is essential for the validity of Waqf that the dedication should be for a purpose recognized as either: religious; pious; or charitable in Islam. Certain objects which had been declared to be valid objects of waqf are: –
1. Mosque and provisions for Imams to conduct worship;
2. Reading the Koran in public places and at private houses;
3. Maintenance of poor relatives and dependents;
4. Grant to Colleges and provisions for Professors to teach in Colleges;
5. Distribution of alms to poor persons, and assistance to the poor to enable them to perform pilgrimage to Mecca;
6. Education, training and entrepreneurship development of indigent persons.
7) Subsidized Housing and rental payment for indigent Communities.
As such, it is easy to predict that based on the religion of Islam and its teachings and stipulations, the following objects will be deemed unacceptable:
1. Objects prohibited by Islam, e.g., erecting or maintaining a church or temple, production of alcohol, rearing of pigs, promotion of fornication and adultery, gambling business etc;
2. Providing for the rich exclusively;
3. Objects which are uncertain and ambiguous etc.
BENEFITS OF WAQF
Do you know that not only can Waqf be beneficial to individuals who are beneficiaries of the endowment, it can also serve as a tool in facilitating wealth distribution and enhancing the human development of your community?
Some of the roles that Waqf have played in ensuring wealth distribution and human development are:
1. Effecting the distribution of wealth, redistribution of national income and increasing employment that will ensure a stable economy for households;
2. Providing improvement of infrastructure for rapid development;
3. Improving the social structure or process of development;
4. Ensuring equal opportunity in Health and Education Sector and as such encouraging social justice i.e., advancing people according to their ability;
5. Raising the standard of life of the poor, providing social and political stability, and reinforcing the stability which is necessary for economic development.
Globally, it is agreed that a social system that institutes Waqf is the best mechanism to effect wealth distribution from the rich in society to the poor, hence minimizing social and economic inequality in the community thereby reducing social tensions and ills.
As a Philanthropic model, the establishment of Waqf helps to rid the general Society of attitudes such as greediness, jealousy, and betrayal while bringing out the sense of love and empathy towards one another in our community as well as ensuring equality among people. Muslims are strongly encouraged to establish a Waqf as part of their Estate Plan.
In conclusion, at Fiduciary Services Limited, we understand the role that Waqf plays not only for individual beneficiaries but the society at large. As Islamic Estate Advisors, we possess the technical skills needed to advise and structure the right Waqf to suit your philanthropic desires and objectives. As such, we help Muslims structure their Waqf in a way that would ensure the maximum benefit to the beneficiaries and the Society for many years after their death.
Kindly reach out to our Islamic Estate Advisors and we will get you started on a sustainable philanthropic and charitable journey.
See you next month!