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Waqaf in Education Funding: The Experience of International Islamic University Malaysia

in Managing Endowment (Waqaf) Fund

Dr. Mohamad Akram Laldin

Brief Introduction to the Science of Waqaf

Islam was revealed more that one thousand and four hundred years ago as a complete

system of life that is compatible for human being of all ages. The revelation from Allah and the

teachings of Prophet Muhammad s.a.w. is not confined to the believe and moral systems, but it

includes the law that is suitable to be implemented on mankind. The Qur’an has emphasis the

completeness of its teaching in several verses among others in the verse which was said to be the

last revelation of the Qur’an as follows:

This day, I have perfected your religion for you, completed My Favour upon you, and have chosen

for you Islam as your religion (Al-Ma’idah: 3)

Yet in another verse the Qur’an mentioned:

We have neglected nothing in the Book (Al-An’am :38)

One of the important aspects in human life is the management of finance and Islam has

design various institutions and means in order to deal with this issue. Among these institutions

are the institution of zakah, the system of mirath (distribution of inheritance), different kinds of

taxation including jizyah, al-fay’, al-kharaj and others. In addition, one important institution

which can enhance the sosio-economic element is the institution of waqaf that allows the

Muslims to contribute for the well beings of the Muslim country and their Muslims brethren as

well as for the benefit of the non Muslims.

The writer is an Assistant Professor at the Department of Fiqh and Usul al-Fiqh, International Islamic

University Malaysia and is currently the Head of the Department of Fiqh and Usul al-Fiqh, Kulliyyah of

Islamic Revealed Knowledge and Human Sciences, International Islamic University Malaysia.

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This institution was developed throughout the Islamic history since its inception during

the time of Prophet Muhammad s.a.w. till today. The first Islamic waqaf is the Masjid of Quba' in

al-Madinah al-Munawwarah, a city 400 kilometer north of Makkah, which was built upon the

arrival of the Prophet Muhammad to this town in 622. It stands now on the same lot with a new

and enlarged structure. Six months later, Quba' was followed by the Masjid of the Prophet (Peace

Be Upon Him) in the center of al-Madinah to be the important representation of Islamic waqaf.

This was followed by many other waqaf activities during the time of the Prophet (Peace Be Upon

Him) and was further developed during the reign of the Khulafa’ al-Rashidin and subsequence

period of Islamic rulings. The above kind of waqaf is normally referred as the religious waqaf and

there are other kinds of waqaf such as philanthropic waqaf which also include the waqaf for

educational purpose and posterity or family waqaf.

The International Islamic University of Malaysia (IIUM)

as one of the outstanding

institution to revive and promote Islamic systems has taken the step to generate and benefit from

the waqaf institution and has established a department in order to generate income and use them

for the benefit of the Institution and to help the international students. This fund was named IIUM

Endowment Fund (IEF). The discussions in this paper will focus on the experience of

International Islamic University Malaysia in managing its waqaf fund. The paper shall start by

highlighting a brief introduction of waqaf by explaining the definition of waqaf and the basis of

waqaf contract. It will then discuss the background of IEF and elaborate the different waqaf

product and activities carried out by IIUM Endowment fund and its future planning. Finally the

paper will highlight the challenges and obstacles in the management of waqaf.

Definition of Waqaf

Wuquf' and 'awqaf' are the plurals of 'waqaf' and its verb is 'waqafa and the word 'waqaf'

literally means 'to detain' and 'to prevent'.1 As a technical term various definitions was given by

the scholars and the majority (jumhur) of scholars agree that waqaf means a form of gift in which

the corpus is detained and the usufruct is set free for the confined benefit of certain philanthropy

for the sake of Allah.2 Detention of the corpus implies preventing it from being inherited, sold,

Please be informed that this paper will use the abbreviation IIUM to refer to International Islamic

University Malaysia in the subsequent discussion.

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gifted, mortgaged, rented, lent, etc. 3 The utilization of waqaf property shall also comply with the

purpose mentioned by the waqif (donor) and without any pecuniary return.

The above definition indicates two conditions which have to be met in any waqaf property. The

first condition is to dedicate one‟s property rights to any public service and prevention of its re-

ownership by others. This means that a portion of a person‟s property is alienated from

him/her and transferred to Allah. Ownership thus passes from the waqif (person making the

waqaf) to Allah.4 The second condition is the perpetuity of this dedication meaning that when a

property has been given as waqaf, it will remain as it is forever.

Basis of Waqaf

Al-Qur’an and Sunnah have provided some indication and encouragement for the

Muslims to participate in giving away their property as waqaf. There are several verses in the

Qur’an which encourages the believers to give some portion of their property for charity purpose.

Indeed, these verses are normally quoted by the scholars to support waqaf. One of the verse is in

surah al-Muzammil which says:

“…and perform As-Salat (Iqamat-as-Salat) and give Zakat, and lend to Allah a goodly loan, and

whatever good you send before you for yourselves, (i.e. Nawafil non-obligatory acts of worship:

prayers, charity, fasting, Hajj and Umrah, etc.), you will certainly find it with Allah, better and

greater in reward…” (Al-Muzzamil: 20)

In the above verse, Allah is giving a command to the believers to establish three specific

institutions: salah, zakah and qard al-hasan to Allah which is recognized as the charity for the

sake of Allah5 which includes waqaf . A loan is generally capital in nature and repayable some

time in the future. In this case the loan is to Allah and He will repay it in due course to the lender,

as the Prophet said “with great profit and reward”. 3)

The cue is that the loan remains capital in

nature and it is used in a way that will be beneficial to Allah‟s cause. While salah and zakah are

regarded as fundamental pillars and compulsory in Shari’ah, waqaf is considered voluntary but

highly desirable. In addition, while zakah has fixed percentages and earmarked usage, waqaf is

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flexible and open ended. Both zakah and waqaf are important pillars in the funding of Islamic

causes and both are needed to empower the Muslim ummah.

The following verse of the Qur’an also encourages the believers to spend for charity:

O you who believe! Spend of the good things which you have (legally) earned, and of that which

We have produced from the earth for you…” (Al-Baqarah: 267)

Allocating part of the wealth of a person for charity or waqaf surely falls under the general

provision of this verse. Therefore, this verse also provides a general indication about the

application of waqaf in Islam.

Another verse which indicates the validity of waqaf is the verse which says:

By no means shall you attain Al-Birr (piety, righteousness, etc), unless you spend (in Allahs

Cause) of that which you love" (‘Ali ‘Imran : 92(

When this verse was revealed, one of the companion of the Prophet (s.a.w.), Abu Talhah (r.a)

wanted to give away some of his property for charity (waqaf). He approach the Prophet (s.a.w.) as

narrated by al-Bukhari,

“Abu Talhah had the greatest wealth of date-palms amongst the Ansar in al-Madinah, and he

prized above all his wealth (his garden) Bairaha', which was situated opposite the Mosque (of the

Prophet s.a.w.). The Prophet used to enter it and drink from its fresh water. When the following

divine verse came:

""By no means shall you attain Al-Birr (piety, righteousness, etc), unless you spend (in Allahs

Cause) of that which you love "

Abu Talhah got up saying. "O Allah's Apostle! Allah says, 'You will not attain piety until you

spend of what you love,' and I prize above all my wealth, Bairaha' which I want to give in charity

for Allah's Sake, hoping for its reward from Allah. So you can use it as Allah directs you." On

that the Prophet said, "Bravo! It is a profitable (or perishable) property. I have heard what you

have said, and I recommend that you distribute this amongst your relatives." On that Abu Talha

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said, "O Allah's Apostle! I will do (as you have suggested)." So, Abu Talha distributed that

garden amongst his relatives and cousins.6

Evidences of waqaf also come from the Sunnah of the Prophet s.a.w. One of the obvious

proof of waqaf is reported in the following Hadith when the Prophet s.a.w. advised Umar ibn Al-

Khattab (r.a.) to give his most valuable land in Khaibar as waqaf.

“Narated By Ibn 'Umar : Umar bin Khattab got some land in Khaibar and he went to the Prophet

s.a.w. to consult him about it saying, "O Allah' Apostle I obtained some land in Khaibar better

than which I have ever had, what do you suggest that I do with it?" The Prophet said, "If you like

you can give the land as endowment and give its fruits in charity." So Umar gave it in charity as

an endowment on the condition that it will not be sold nor given to anybody as a present and not

to be inherited, but its yield would be given in charity to the poor people, to the kith and kin, for

freeing slaves, for Allah's Cause, to the travelers and guests; and that there would be no harm if

the guardian of the endowment ate from it according to his need with good intention, and fed

others without storing it for the future."7

The above narrations indicate clearly the suggestion of the Prophet s.a.w. to Umar r.a. to

dedicate his property in Khaibar as waqaf. One interesting point to be noted in the above Hadith

is the various conditions that were attached to the waqaf. It is not a general waqaf in which the

property can be spend in any way, however, Umar has specified the group of people who are

eligible to benefit from the waqaf property. These conditions were endorsed by the Prophet s.a.w.

by virtue of his silence when Umar declared them.

Another example of waqaf among the companion can be observed in the waqaf made by

„Uthman during the time of the Prophet s.a.w. Motivated by the Prophet‟s call for buying the well

of Ruma and making it a waqaf for drinking, „Uthman was able to buy one half of that well as the

former owner did not accept to sell it all together. In a short while, the former owner accepted an

offer from „Uthman to buy the other half, which he did and added to the previous waqaf of one

half of the well.8

Since waqaf is considered as a form of charity, it certainly falls under the general

injunctions mentioned in several ahadith encouraging the believers to embark on charity deeds.

The Prophet s.a.w. was reported to have said in one Hadith: “When a person dies, his/her acts

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come to an end, except three: sadaqah jariah (recurring or ongoing charity), useful/beneficial

knowledge, or a pious child who prays for the deceased”.9 The rewards for these good actions are

continuous even after one passes away and waqaf is one of it.

Apart from the waqaf activities carried out by the companions of the Prophet s.a.w. this

practice has been further exercised by the following generations until now.

Waqaf Management in IIUM

Background

Waqaf in education is not a new development in Islam. Looking at the history, it can be

observed that since the beginning of Islam, in the early seventh century, many educational

activities were financed by waqaf and voluntary contributions. It is a historical fact that the

Muslim society depended considerably on awqaf for the funding of education at all levels. For

instance, it is reported that the Island of Sicily, under the Islamic rule had 300 elementary

schools. All of them are built by awqaf; and all of them are provided with waqaf revenues for

payment of teachers and school supplies.10

The number of high schools and universities in each of

the major Islamic cities, such as Al Quds, Damascus, Baghdad, Cairo and Nisapur was in the

tenth and hundreds. There were universities specialized in different areas of sciences, such as

medicine, chemistry and Islamic studies. These included universities like Al Qurawiyin in Fez, Al

Azhar in Cairo, Al Nizamiyah in Al Mustansiriya, Baghdad.11

The awqaf estates used to provide

these universities with building in addition to teaching materials, scientific books, salaries for

teachers and financial assistance for students. Some universities even have student‟s dormitories

for both single and married students.12

All the above educational activities are founded by waqaf

fund generated from different sources.

In fact, the provision of awqaf for education is probably responsible for the usually common

independence mentality noted in scholars that kept them away from being influenced and

manipulated by certain quarters. This have contributed to enhance the integrity of the scholars

and academia as a whole particularly in airing their independent views and opinions in matters

considered to be in the interest of the Muslim ummah. In addition, it also contributed to reducing

the socioeconomic differences by offering education to those who can take it on merit basis rather

than on ability to pay for educational services. Therefore, the economically poor people in the

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society will have equal educational opportunities that will assist them to climb faster on the

socioeconomic ladder.

Based on the above facts and with the hope to advance in the educational field and revive

the glory of the Muslim ummah , the International Islamic University Malaysia has established

the IIUM Endowment Fund (IEF).13

IEF was established on 15th March 1999 as a division of

International Islamic University Malaysia as endorsed by the IIUM Majlis in its 48th meeting.

This division is managed by its own management team which consists of general manager

assisted by finance and investment manager, project manager, administration manager and

training manager. The highest body that oversees the policy and procedure of the fund is IEF

Executive Board chaired by the Rector of International Islamic University Malaysia. The vision

and mission of IEF are as follows:

Vision "Creating the Global Ummatic Network"

Mission "Reinforcing the International character of IIUM" Through;

Strengthening the Muslim brotherhood

Building international networking

Fulfilling the needs of students of IIUM through financial support

Realizing the mission of IIUM as "Islamization, Internationalization, Integration, and

Comprehensive Excellence" (Triple-ICE) education centre

Objectives of IEF

The IIUM Endowment Fund has underlined several objectives to be as a guiding

principle in the operation of this department. The objectives are as follows:

• to solicit and receive waqaf in the form of movable and immovable properties,

cash, shares, negotiable instruments etc. from benefactors both Malaysian and

internationally, for the purpose of education and research,

• to provide scholarships, loans and assistance to the needy students of IIUM;

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• to promote and develop academic activities in the IIUM, including research and

publications,

• to fulfill specific wishes of a donor in so far as they relate to a particular

objective within the parameters of IIUM; and;

• to invest in investment avenues permitted by the Shari’ah

In order to achieve the above objectives, IEF has undertaken several projects to acquire

waqaf properties and managed them accordingly. The following discussion will be

focused in discussing the various products which has been developed by IEF for the said

purpose.

Waqaf Activities Undertaken by IEF

The scholars of Shari’ah did not put any limit as to the method of acquiring

waqaf fund as long as it is within the scope of activities permitted by the Shari’ah. In the

past, the normal procedures is that the people will take their own initiative in order to

reserve part of their wealth to be given as waqaf for they were aware of the importance

and the rewards for those who embark on this charity act. As time pass by, the awareness

of the importance of this institution has become less and less among the people. The same

situation applies in Malaysia as not many people are aware about the existence of waqaf

institution in Islam and how waqaf can assist in generating and enhancing the

socioeconomic status of the Muslim ummah. Therefore, the past conventional expectation

towards waqaf has to be changed and steps need to be taken in order to create awareness

among the Muslims to contribute towards enhancing the waqaf institution. This can be

done by being creative in inventing different product to generate the waqaf fund.

IEF as a body that is given the responsibility to generate and manage waqaf funds

has embarked on several project and developed some product for this purpose. The

activities carried out by IEF can be categorized as follows:

1. Fund Raising Activities

2. Kafalah Programme

3. Assisting Students To Earn

4. Management and investment of real-estate and waqaf properties

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The following discussion will concentrate in explaining the above activities and products.

1. Fund Raising Activities

There are various means and ways developed by IEF in order to raise fund among

individual and organization. Mainly there are four kinds of activities undertaken for this purpose

and they are as follows:

A. Mail solicitation

B. Specific fund raising activities

C. Creation of legacy

D. Special activities

The modus operandi of the above activities are elaborated in the following discussion:

A. Mail Solicitation

Mail solicitation is the main source of IEF fund-raising effort. Letters requesting

contribution are sent to potential donors who are identified among friendly individuals, corporate

and institution. IEF is also targeting international friends. Promotional teams lead by IIUM top

management officers concentrate efforts among the following five regions: ASEAN, Gulf States,

United States, Europe and African countries. One unique features of this programme is that the

contact with the persons or organization is constant and IEF constantly organize visit as well as

some intellectual programme, which can be benefited by the donor. Each year an annual

appreciation session is held in order to keep in contact and build relationship with the donor.

The following chart illustrates the standard procedures followed by IEF in mail

solicitation:

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B. Specific Fund Raising Activities

Fund raising activities are another income generating activity organized by IEF. These

activity concentrates in establishing certain fund which normally able to get donors to contribute

to this fund. It usually uses the influence of well-known figure (with their consent) to attract

donors. Among the funds established under this scheme are:

1. Sultan Ahmad Shah Fund (SASF).

His Highness Sultan Haji Ahmad Shah is the ruler of the State of Pahang (one of the

State in Malaysia) and the Chancellor of International Islamic University Malaysia. This

fund was established with the purpose to build an endowment to be used for activities in

pursuit of scholarship in IIUM. The launching of the fund was made in conjunction with

the naming of a prominent building in IIUM after the name of His Highness. It was done

in collaboration with the state government of Pahang and the Alumni of IIUM.

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2. Tan Sri Ahmad Ibrahim Fund (TSAIF).

This is a permanent fund established in commemoration of Almarhum Tan Sri

Ahmad Ibrahim's great contribution to IIUM, the nation and the ummah. The project

was jointly organized with the Ahmad Ibrahim Kulliyyah of Laws (IIUM). This fund

was launch in conjunction with naming the Kulliyyah of Laws' building after the late

Tan Sri Ahmad Ibrahim. Friends and students of the late Tan Sri were approached to

help raise contributions for the fund.

C. Creation of Legacy

This is normally done through the naming of building or sectors in IIUM after donors

who intend to leave a legacy in the University. As an example the Management Center of IIUM

was named with CELCOM Building, after the name of the well-known telecommunication

company in Malaysia. Through such arrangement, the company agrees to provide sponsorship to

maintain the building and to provide assistance to IIUM student.

In addition to the above activity, the creation of legacy was also done through the

conferment of Honorary Doctorate by IIUM to prominent figure in the Muslim world and those

who have always been supportive to assist the Muslims throughout the world. IEF will propose to

the University to award special honorary doctorates in the name of the University to individuals

who have contributed significantly to IEF. The award is meant to show recognition/appreciation

for their contribution to IEF and to develop future contribution opportunities. Among those who

were conferred such recognition is His Highness Sheikh Dr. Sultan Bin Mohammed Al-Qassimi,

Ruler of the Emirate of Sharjah, His Highness Sultan Hassanal Bolkiah, the Sultan of Brunei and

Tun Mahatir Mohamad, the former Prime Minister of Malaysia.

E. SPECIAL ACTIVITIES

There are some other special activities carried out by IEF in order to raise money for its

waqaf fund. Among these activities are:

1. RM 1 Campaign

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The campaign was targeted to collect contribution of RM 1 per month

from individuals. Initially it was carried out among the IIUM staff and students.

The campaign then proceeds to the government and private sector by placing

donation box at the respective places.

2. Waqaf Certificate

This is a fund raising campaign by issuing waqaf receipts to the public.

Receipts valued at RM 5 RM 10 and RM 50 are available. This method is

commonly being used by charity organization to collect donation or zakah.

3. Cultural Show & Exhibition

This activity concentrates on organizing exhibitions and shows. As an

example theatre show which were organized throughout the year. Satire and

humor depicting the rise, fall and resurgence of Islam are among the theme of the

show. In addition, cultural shows, which are prominent in the Malay society, are

also incorporated apart from the nashid performance. Apart from raising funds,

this effort will help to introduce cultural shows reflecting the rich and diversified

international culture within IIUM.

4. Educational Programs

Education programmes in the form of seminars, training or motivation

courses are organized drawing from expertise available in IIUM. The profit from

such activities is channeled to IIUM waqaf fund.

5. Dinner Show

This programme is an annual affair and is organized in conjunction with

IIUM's gala appreciation night, the Alumni annual gathering or a special event in

itself. During dinner, guests will be entertained by show such as cultural

presentations and the proceeds from this dinner will be channeled to IEF.

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Apart from the above activities carried out to raise fund, IEF also appoint

agents to act on their behalf in collecting donations and embarking in other

activities. In return of their effort, IEF will pay commission based on the income

they bring to IEF.

2. Kafalah Programme (Foster Parents)

Kafalah (Foster Parents program) is one of the main projects of IEF. Kafalah is initiated

to help the University to provide financial assistance to about 900 international students from all

over the world. This program is a joint program undertaken by IEF and Bank Islam Malaysia

Berhad (BIMB). Its main purpose is to reach the kind hearted individuals of the society who

would be willing to become the caretakers of the students and sponsor their cost of living. IIUM

Endowment Fund still takes care of the cost of education and accommodation of most of the

students. The caretaker, in this program, is known as kafeel.

The Functions of the Kafeel

The kafeel (Foster Parent) may opt to know the student personally and have him/her as a

foster son/ daughter. Or he / she may wish to be unknown to the student being sponsored. It is

expected that the student's cost of living is borne by the kafeel. One of the main objectives of this

project is to promote cross cultural appreciation and learning. This project carries none of

administrative or financial burden since tax benefit will be given to those who participate in this

programme.

Modus Operandi

This programme is undertaken in such a way that every sponsored student will have one

kafeel or a number of partial kafeels who will bear the cost of living which amounted to about

RM350 of the student. The payment be made to the IIUM Endowment Fund and students will be

paid through the finance division of the University. Receipts for tax exemption will be given to

the kafeels/sponsors upon request.

A kafeel may opt to be a permanent kafeel sponsoring one student and continue sponsoring

another after the sponsored student graduates or alternatively be the kafeel of one student for the

duration of his study, or for part of the duration, which may be for 3 years, 2 years, or one year.

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With an initial gift of at least RM350, donor will be able to foster an international student

studying in International Islamic University Malaysia. IEF act as the intermediary between the

students and kafeels and manage the administrative matters in order to allow donors to

concentrate on choosing foster student according to their preferences and disbursing the amount

allocated to the respective students. IEF also organize meetings and encourages constant

communication between the parties involve in this programme.

Methods of Contribution

There are different options given to the kafeel based on their financial ability. The kafeel

(foster parent) may opt to be a full sponsor to a student or combination of partial kafeel of two,

three, four or five. The payment can be made on monthly, half yearly and yearly basis. Below is

the projected scale gift from kafeel for a single student:

Number of Kafeel/s Payment Per Month

1 RM 350

2 RM 175

3 RM 117

4 RM 88

5 RM 70

The kafalah standard procedures are illustrated in the following chart:

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3. Assisting Students to Earn

Islam encourages its followers to strive in order to survive. Based on this concept, IEF

not only provide monetary assistance to the students, they also try to help the students to strive in

order to earn for their living. This will assist the students while they are still studying and after

their graduation. Among the scheme established by IEF for the said purpose are:

1. Student Working On/Outside Campus (SWOC)

Through this project, IEF attempts to explore the possibility of encouraging students

particularly those who are the recipients of IIUM financial assistance to work as supporting staff

on campus. This involve in placing them as support administrative staff, library assistants,

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canteen workers, etc. The objective of this project is to alleviate some of the financial burden of

the university and provide alternative solution to finance the students. Various divisions on

campus have employed students as assistant. In addition, the following places are among the

areas where students are employed, i.e. fast food restaurant, tuition center, supermarket or mini

market, pharmacy, cyber cafés, bookstore and photocopy center. The procedures for the above

scheme are illustrated in the following chart:

2. Business on Campus

This is a project where IEF assists students to generate their own income by carrying out

business activities. The assistance provided is capital, operation room, and training. Among the

business activities are network marketing, drinking bottled water, VCN phone card and

development of web site. Among core activities of student working on/outside campus are:

IIUM Pasar Ramadhan (Ramadhan Market)

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This project is organized in conjunction with the month of Ramadhan in line with the

holy month spirit whereby sadaqah (charity) is encouraged. IEF are responsible to provide stalls

for the students to do their business and was able to generate income from the rental of stalls. The

students, on the other hand, rented the stall and will benefit from the profit obtained from their

business activities. Pasar Ramadhan is designed for the convenience of the students and staffs to

buy food easily during the month of Ramadhan for iftar.

IIUM Café Nescafe

IIUM Café Nescafe is Campus café kiosk that serves only Nescafe branded beverages as

well as Milo and Nestea. Light snack are also served. This project in fact, is a "revitalizing"

meeting place for the students as well as faculty members to relax both physically and mentally.

The kiosk is fully managed by the students themselves with IEF overseeing, providing support as

well as guidance and training to the students.

CD Selling

IEF through its marketing planning also gives the opportunity to the students to embark

on CD business activities. Among the title launch by the project is the selling of the Multimedia

Cd-Rom "Between Two Rivers" to the public. The Cd-Rom is an edutainment program, which

brings the viewer to a journey of the past Islamic History and Civilization. The CD has also been

provided in the Malay version known as "Jejak Rasul". The proceeds from the business will go to

the students as well as IEF which is being done through the mudharabah (profit and loss sharing)

concept.

3. Management and Investment of Waqaf Properties and Real-Estate

The tradition of waqaf in Islamic history mostly concentrates on acquiring and managing

immovable properties. IEF has tried to vary the fund raising activities by involving itself in both

managing and acquiring immovable properties and other activities as highlighted earlier. At

present, IEF is also involved in the management of waqaf properties and real estate. The focus of

this project is in acquiring waqaf properties from individuals, however, there are some legal

hitches need to be overcome by IEF. This is because under the Malaysian Constitutions, the

matter related to Islam including the management of waqaf properties is under the jurisdiction of

the State Government. No other parties are allowed to engage in such activities except with the

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approval of the State Government.14

IEF is trying to negotiate with the State government in order

to get permission for the acquisition and management of waqaf property.

In the management of waqaf property, IEF will acquire them and subsequently engage in

investment activities by embarking in projects which can help to increase its cash income flow.

IEF will seek the most highly profit yielding projects within the Islamically acceptable projects.

Projects' feasibility studies will be carried out to determine the appropriate projects to be taken

and the best method for its implementation. For the purpose of financing, IEF will secure

shari’ah based loan. In addition, development of waqaf property will be done on joint venture

with institutions of similar objective. The first waqaf established was the waqaf from the Saudi

Arabia government amounting to US$ 3 million. IEF shall determine the appropriate properties to

be purchased and managed by itself. Apart from the above, several individual has given their

property as waqaf to be managed by IEF.

Real estate is another property management related activities carried out by IEF. The reason

to go into this business activity is its long-term benefits. In the long-run, the value of the property

will keep increasing. This provides a guarantee income in the future. There are different type of

property and building developed by IEF. One of the planned project which will be carried out

with some private company is the development of housing and apartments. IEF will rent out the

houses and apartments in order to generate a fairly steady income.15

IEF Income Achievement for 2000 – Aug. 2004

IEF has been aggressive in trying to obtain as much as they can in generating fund and

putting them under the endowment scheme at IIUM. However, there are certain external factors

that affect the performance of IEF. Among the major factors are Malaysian economy

development and the event taking place at the University. For instance in the year 2001 the

income of IEF is high due to the officiating of the University by the then Prime Minister of

Malaysia Dr. Mahathir Mohamad which has attracted many parties to donate to IEF. In the

following years, the trend is declining due to the economic situation and the aftermath effect of

9/11 happening. The following charts illustrate the performance of IEF from the year 2000 till

August 2004.

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Future Planning of IEF

IEF has planned to embark in several projects in order to generate revenue and it will be

partially done through the mutual cooperation with some government agencies. Among the

programs are:

A. Revenue Generating Program

This program will concentrate on several focal areas as follows:

Incubator Program

Exploring the Agricultural Sector

Equity Participation

Other projects

0.00

1,000,000.00

2,000,000.00

3,000,000.00

4,000,000.00

5,000,000.00

6,000,000.00

7,000,000.00

8,000,000.00

9,000,000.00

To

tal

RM

General Donation (RM)

Category of Income

2000

2001

2002

2003

2004

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

To

tal R

M

RM 1 Campaign (RM) Kaafalah Income (RM) Income Through Business

Activities (RM)

Catogery of Income

2000

2001

2002

2003

2004

YearGeneral

Donation (RM)RM 1 Campaign (RM) Kaafalah Income (RM)

Income Through

Business Activities

(RM)

2000 4,674,344.33 13,046.72 - 17,489.40

2001 8,514,685.76 16,811.62 31,500.00 3,723.40

2002 1,700,371.79 38,625.70 53,500.00 66,968.22

2003 1,513,829.80 16,085.48 41,547.00 36,602.04

As of Aug. 2004 1,226,209.52 10,347.02 30,593.00 31,552.55

Total 17,629,441.20 94,916.54 157,140.00 156,335.61

21

Incubator Program

In this program, IEF will form cooperation with Yayasan Keusahawanan Islam Malaysia or

YAKIM (Malaysian Muslims Entrepreneur Foundation) with the objective to produce successful

start-up business ventures that are financially viable and free-standing within 2 to 3 years.

YAKIM is a foundation, which assist new firm, with an aim to produce competent Muslim

Entrepreneurs. With government support, the incubator program will nurse and help firms to

survive and grow during the start-up period. Among the assistance provided are in the following

areas:

Product Development

Market Development

Training

Finance and Accounting

Marketing

Legal Services

IEF will benefit from the business of these firms and the income from such activities

will be a good income source for IEF.

Exploring the Agricultural Sector

This project is parallel to the Malaysian Government objective in promoting and supporting

the development of agro-based industry. The government plans to accelerate and transform the

agriculture sector into a highly modernized, commercialized and sustainable sector. The project

under the plan will focus on the processing and manufacturing industries for both food and non-

food agriculture products. Initially, four sectors have been identified to be put under this project:

Cattle farming

Palm oil estate

Cultivation of fresh-water fish

Herbal farm

21

Equity Participation

The aim of this project is to enable IEF to invest funds by sharing equity in a company(s)

based on smart partnership or joint venture concept. These partnerships and ventures will enable

IEF and its partner to pool and share resources, skills and expertise. The profit will be divided

according to the profit sharing ratio agreed.

Other Projects

1. Share of New Public Listing Company

This is an initiative to invest part of the income of IEF by buying the

shares of new public listed companies in the Malaysia bourse. With the

government support, IEF hope to benefit from this investment project.

2. Provision of Services to IIUM

Under this proposal, IEF plans to request company(s), which have obtain

service contract from IIUM to allocate or contribute a percentage of the contract

value to IEF.

Obstacles and Challenges in the Management of Waqaf

Waqaf in general is a challenging area that needs attention from the scholars as well as

the Muslim ummah. There are several obstacles and challenges need to be improved and

examined in this area. Perhaps these challenges are also faced by IEF in managing the waqaf for

educational purpose.Among the important areas including the following:

1. Educating the mass on the importance of waqaf.

Waqaf is another instrument apart from zakah and saqadah than can be utilized by

the Muslims in providing assistance to the needy and to the Muslim ummah as a whole.

22

However, not many Muslims are aware of the existence of this instrument particularly in

the countries where waqaf is not widely being practice by the Muslim community. In

addition hand, some might have very narrow interpretation of waqaf in the sense that it is

only limited to land that is donated for the purpose of building masjid and sites for

graveyard. This and other interpretation and understanding of waqaf need to be corrected

so as to enlarge the scope of the contribution of waqaf. A typical example of the wider

understanding of waqaf can be observed in the case of „Uthman buying the well of Ruma

and giving it away as waqaf for the ummah. Therefore, there exist needs in the modern

society to expand the meaning of waqaf to include immovable properties as applied in the

case of the opinion of some scholars allowing the waqaf of books even though it is not

considered as immovable properties.

The Muslims need to be told of the importance of diversifying their contribution

under waqaf as the scope of the usage of waqaf property are wider compared to zakah

and sadaqah which are applicable to the needy and poor in most cases. A concerted effort

need to be done by the scholars to inform the mass of the importance in allocating part of

their wealth for the purpose of waqaf. One important encouraging recent development in

this field is the inclusion of waqaf as an integral part of Islamic Financial Planning which

is offered by a number of consultant agencies in Malaysia. It is hoped that more

awareness programme will be organize in order to create awareness among the people of

the wider meaning of waqaf and its importance.

2. Resolving the Fiqh issues related to waqaf.

Rediscovering awqaf and attempting to enhance their role in social and economic

development requires that we should pay attention to a few important issues in the Fiqh

of waqaf. Among a few important issues are:

I. The Principle of Perpetuity Versus Temporality in Waqaf

Perpetuity in waqaf means that once a property is dedicated as a waqaf it remains so until

the Day of Judgment, and no one can change it later on. In contrast with perpetuity some

kinds of waqaf are also recognized as temporal. The importance of the principle of perpetuity

and temporal in waqaf should be looked at in the light of the need, in all societies, to establish

23

revenues/services generating permanent assets devoted to social objectives. Perhaps, a

concrete fiqhi solution is needed in this area in order to expand the utilization of waqaf

property.

II. Waqaf of Usufruct and Financial Rights

Waqaf of usufruct is known in the Maliki School while the other schools of fiqh do not

consider it. Contemporary life has many forms of usufructs that can be made into waqaf such

as driving a car on a toll way or passing through a tunnel or bridge that has fees on it. Similar

to that is the use of a parking lot given as waqaf. These kinds of waqaf need to be recognized

by the contemporary Fiqh as well as by the laws of awqaf in the Muslim countries and

communities.

Financial rights are also not usually recognized in waqaf by jurists and laws. Modern life

has many kinds of these rights, some of them were known in the past but were not of much

financial value. For instance, although authorship rights are non-transferable (because

transferring them makes a lie) the right to publish and financially exploit the product of an

author has become an important business in our days. The same was not known in the past.

Patents and other rights related to the product of talents is also an important new dimension in

contemporary life. These rights are not dealt with in our classical Fiqh, so is the waqaf of

objects that have a repetitive character such as newspapers, magazines, and other periodicals.

Similarly are the products of film companies, educational software programs, and many other

intangible properties. All such rights and objects must be covered in the awqaf principle.

III. The Ownership of Awqaf and its Legal Entity

The differences of opinions among Muslim scholars on who owns awqaf property are

well known. Some said that a waqaf remains on the ownership of the founder and is inherited

from her/him by legal heirs, others said that a waqaf becomes owned by the beneficiaries and

the third view is that waqaf is owned by Allah, the Almighty. These differences reveal an

interesting fact, that is: ownership of awqaf was really puzzling Muslim scholars at a time

when the concept of legal entity or legal personality, outside natural persons, was not yet

developed. Contemporary awqaf laws in Muslim countries and communities quickly assign a

legal personality to awqaf and consider awqaf properties owned by that legal entity.

24

In fact, there are many awqaf-type properties that fall outside the awqaf laws in all

Muslim countries, simply because they come under the acts of non-profit organizations,

be they educational, charitable, social, or otherwise. The laws of organizations in Muslim

countries assign to an organization a legal entity that allows it to own both mobile and

immobile properties. Many of these properties are certainly given to the organization on

the basis of forming permanent capital to be used for servicing the objective of the

organization, say a school building or land, or as a permanent source of income to the

organization, as investments that generate revenues. These properties are not other than

awqaf. On the other hand, the managers of awqaf which does not fall under the category

of organization are thus not similar to the managers of corporations or organizations in

the scope of their authority. The dilemma, referred to above, of awqaf properties under

the authority of judiciary entities that take the names of non-profit organizations, is

exemplary. Awqaf under non-profit organizations can be liquidated, sold, and disposed of

by actions within the scope of the proper authority of the management of these

organizations. However, the same authority are not held by the awqaf managers, and they

have very limited power in managing and developing waqaf properties. Therefore, it is

important for the fuqaha’ to resolve the issue of ownership and legal entity of waqaf

property.

3. Quality management of waqaf properties.

Management of waqaf properties has always been an issue that need attention in many

Muslim countries. There are two aspect of this issue that need to be improved. Firstly is the

development of waqaf properties and secondly the utilization or disbursement of these

properties. Indeed, if one examine through the classical works on Fiqh of waqaf, one may

easily notice that what was occupying the minds of fuqaha is the issue of exploitation of

waqaf properties, i.e., putting them to proper use as they were left and/or prescribed by the

founder. It is commonly expected that a founder would leave waqaf property in a productive

state, capable of producing a flow of services or net revenues for which it was established.

The idea of increasing the waqaf principal and enlarging its productive capacity was a remote

idea, especially, that it does not usually fall within the framework put forward by the waqaf

25

founder. Consequently, there are discussions on financing needs of waqaf in case of its decay,

demolition or idleness and it include a discussion of substituting it for a new property in case

its location ceases to be suitable for producing the intended services. This is emphasized by

the fiqhi discussion of the „end‟ of a waqaf without thinking of any effort to renew or replace

it, especially, in case of waqaf of mobile things, such as horses, livestock and books. In other

words, the idea of putting aside certain proportion of the waqaf revenues for reconstructing a

mobile waqaf or for expanding the capital of a fixed asset waqaf was not discussed in the

classical Fiqh.

This is indeed one of the areas which need to be improved in the management of waqaf.

Waqaf properties need to be generated so as it will not be idle and will continuously benefit

the ummah. It can be done through several modes of financing in developing waqaf properties.

Among the models that can be used is the murabahah mode of financing16

, the istisna’

mode17

, ownership sharing mode18

, output sharing mode19

and long lease and hukr mode20

.

The second area need the attention is the utilization and disbursement of waqaf properties.

Often it is heard that there are misuse and mishandling as well as injustice in the

disbursement of waqaf property. It is suggested that the authority shall set up a professional

entity with qualified personnel to manage the waqaf property from all aspect. The

management that is needed for awqaf is one which is similar to that of economic corporations

by having elected management board of directors that relates to the beneficiaries and locality

of the awqaf property. This entity shall be responsible in all aspect of the management of

waqaf and is accountable for all its decision and actions. With this, it is hoped that awqaf can

be managed as it is suppose to be managed.

Conclusion

Waqaf is an important instrument in enhancing the socioeconomic well being of the

Muslim ummah. One of the important area need to be concentrated in the development of waqaf,

is utilizing them as a source for educational funding. This is because education is a central issue

in Islam and of fundamental important particularly in the modern world. IIUM has tried to utilize

waqaf and has diversified the areas for the maximum benefit of the students. In this regard, waqaf

institution shall not be perceived as an idle institution in Islam. It is indeed an active and

26

innovative institution, which can benefit the Muslim ummah. The different products developed

by IEF at IIUM are but a few innovative moves in order to expand the role of this institution. The

Muslim ummah and its scholars, in particular, have to be creative in utilizing this institution for

the benefit of mankind as a whole. In fact, the role of awqaf shall be understood in the light of the

theory of maqasid al-shariah in Islam as to regain the dynamicity of this institution. It is hoped

that this paper has given a light as to the greater role of awqaf that can be benefited particularly in

the educational field.

Endnotes

1 See Ibrahim, A-Mu’jam al-Wasit, vol. 2, p. 10512

2 See Zuhaili, Al-Fiqh al-Islami wa Adillatuhu, vol8, p. 154-5

3 See Al-Jurjani, Al-Ta’rifat, p. 328

4 There are differences of opinion among the scholars regarding the ownership of waqaf property whether

the ownership is transferred to Allah or it remain to the founder of waqaf or it is transferred to the

beneficiaries after the contract of waqaf is concluded. 5 This meaning is the meaning of qard al-hasan as interpreted by „Umar al-Khattab r.a. See, Al-Qurtubi,

Al-Jami’ li Ahkam al-Qur’an, vol. 19, p. 58 6 Al-Bukhari, Kitab al-Wasaya

7 Al-Bukhari, Kitab al-WaÎaya

8 Narrated by al-Bukhari and al-Nasa‟i

9 Tirmidzi said: This Hadith is hasan sahih

10 Abdul Malik Ahmed Sayed, Role of Awqaf in Islamic History, in Hassan Abdullah Al Amin ed., Idarat

Wa Tathmir Mumtalakat Al Awqaf, p. 231. 11

Ibid p.238-40 12

Ibid p.238-40 13

One of the important reasons why the word waqaf is not being used to describe about this fund is because

of the legal implications in the management of waqaf fund in Malaysia. Under the Malaysian constitution,

the jurisdiction pertaining to waqaf and other Islamic affair is under the state Government, therefore no

other parties are allowed to accept or manage waqaf properties except with the permission of the state

Government. 14

Malaysia has 14 states which has its own States Legislative Council (except for Wilayah Persekutuan,

Kuala Lumpur and Labuan managed by the Federal Government) empowered to pass certain bills which

falls under the jurisdiction of the State Government. One of the matters under the State jurisdiction is

matters pertaining to Islam. 15

The waqaf property and real estate area has just been embarked by IEF recently. 16

The murabahah financing has become well known in the literature. Its application on awqaf requires the

waqaf manager to take the functions of an entrepreneur who manages the investment process and buys

necessary equipment and materials through a murabahah contract to the purchase orderer, while the

provision of financing comes from an Islamic bank. The management of waqaf becomes a debtor to the

banking institution for the cost of the material purchased plus the financing markup which represents the

price of the second sale contract in the murabahah to the purchase orderer. This debt will be paid from the

returns of the expanded awqaf property. 17

This mode of financing allows the management of waqaf to order the required expansion in the waqaf

property (e.g. construction) from the financing institution by means of an istisna’ contract. The bank then

enters into another contract with a contractor to provide the same to the order of the bank that will be

delivered on the bank‟s behalf to the awqaf management. Istisna’ mode of financing also creates a debt on

the waqaf management that should be settled from the returns of the expanded waqaf property and the

financier will not have a right to interfere in the management of the property.

27

18

Ownership mode of financing may be utilized when two parties happen to independently and

individually own two things related to each other such as if each one of them owns one half of a lot of

agricultural land without having a formal partnership agreement. In Fiqh it is called Sharikat Al Milk and it

can be done as follows: The manager of waqaf property permits the financing institution to construct a

building on the waqaf land (or to dig an oil well and install extraction equipment). Each party owns

independently and separately its own property and they agree on dividing the output between themselves.

This kind of contract implies that each party is responsible for managing its own property. Therefore, the

manager and the financing institution may agree on sharing the management or assigning it to either party.

Obviously, in determining the ratio of distributing the output, the managing party may be assigned extra

percentage points as a compensation for its effort. In addition, in this mode of financing, the management

compensation may be set of a given amount of cash or as a proportion of the output, and the owners may

also agree on dividing gross or net income between themselves in proportion to their ownership.

Furthermore, since the financing institution usually desires to get out of its ownership at a certain future

point of time, the parties may agree on selling the financier‟s property to the waqaf and utilizing part of the

waqaf share of the output as payments for its price. 19

Output sharing mode is a contract that allows one party to provide fixed asset, such as land to the other

and divide the gross return (output) between the two parties on the basis of an agreed upon ratio. This mode

of financing is based on al-muzara’ah financing in which the landlord provides the land (and may be

machinery) to the farmer. In output sharing, land and management cannot be provided by the same party. In

output sharing mode of finance, the waqaf provides the land and other fixed assets if they are owned by the

waqaf, and the financing institution provides operational expenses and management. The financing

institution may also provide part or all of the machinery as long as the land is provided by the non-

managing party in accordance with the conditions of muzara’ah. This mode is thus suitable for financing

institutions that desire to take charge of the projects management, while the waqaf manager takes a position

of a dormant partner. 20

This mode of financing is one in which the management of the property is kept in the hands of the

financing institution that leases the waqaf property for a long period of time. The financier takes charge of

construction and management and pays periodical rent to the waqaf manager. In the hukr sub-mode, a

provision would be added in the contract according to which the financing institution gives a cash lump

sum payment in addition to periodical rents. However, under fair market conditions, the total present value

of the return to the waqaf in hukr and in long lease should be approximately same.

28

List of References:

Abu Dawud, Sulaiman ibn As‟aath al-Sijistani al-Azdi. Sunan Abu Dawud. Ed. Muhammad

Muhyiddin Abdul Hamid. Dar Ihya‟ al-Sunnah al-Nabawiyyah, n.d., n.p.

Al Amin, Hassan Abdullah, ed., Idarat Wa Tathmir Mumtalakat Al Awqaf, [Management and

Investment of Awqaf Properties], IRTI, Jeddah, 1989

Annual Report of IIUM Endowment Fund, 2000-2003, International Islamic University Malaysia,

Kuala Lumpur, Malaysia

Al-„Asqalan, Ahmad bin „Ali bin Hajar. Fath al-Bari Sharh Sahih al-Bukhari. Ed. Muhibbuddin al-

Khatib. Cairo: Dar al-Rayyan, 1987/1407.

Ibn Majah, Abu Abdullah Muhammad b. Yazid Al-Qazwini. Sunan Ibn Majah. Ed. Muhammad

Fu‟ad Abdul Baqi. Cairo: Maktabah „Isa al-Babi al-Halabi, n.d.

Ibrahim Anis, „Abd Al-Halim Muntasir, Attiyah al-Suwalihi and Muhammad Khalaf Allah

Ahmad, Al-Mu’jam al-Wasit, Beirut, Dar al-Turath al-„Arabi. n.d.

Al-Jurjani, „Ali bin Muhammad bin „Ali, Al-Ta’rifat. Beirut, Dar al-Kitab al-„Arabi, 1405

Al-Nawawi, Muhyiddin Abu Zakariyya Yahya b. Sharaf al-Din. Sharh Sahih Muslim. Beirut: Dar al-

Kitab al-„Arabi, 1987/1407.

Al-Qurtubi, Abu „Abd Allah Muhammad al-Ansari, Al-Jami’ li Ahkam al-Qur’an, n.p., n.d.

Al-Zuhaili, Wahbah. Al-Fiqh al-Islami wa Adillatuhu. Damascus: Dar al-Fikr, 1984

29

Leaflets and information from IIUM Endowment Fund, International Islamic University Malaysia,

Kuala Lumpur

31

Abstract

Waqaf in Education Funding: The Experience of International Islamic University

Malaysia in Managing Endowment (Waqaf) Fund

By: Dr. Mohamad Akram Laldin

This paper generally share the experience of International Islamic University in

managing its own waqaf fund. It begins by highlighting a brief introduction of waqaf by

explaining the definition of waqaf and the basis of waqaf contract. It then discuss the

background of International Islamic University Malaysia Endowment Fund by explaining

its formation, vision and mission and objectives. The following discussion concentrated

on elaborating the different waqaf product and activities carried out by IIUM Endowment

fund which includes fund raising activities, kafalah program, assisting students to earn

and management and investment of real-estate and waqaf properties. The following

discussion focused on the future planning of International Islamic University Malaysia

Endowment Fund which explain several activities planned to be executed in the near

future including incubator program, exploring the agricultural sector, equity participation

and other projects. Finally, the paper highlight the challenges and obstacles in the

management of waqaf which focused on educating the mass on the importance of waqaf,

resolving the Fiqh issues related to waqaf and quality management of waqaf properties

31