The Concept of Waqf in Islamic Finance
Dear followers of our page, starting today, we would like to introduce you to the various instruments of Islamic social finance. Previously, through our page and website, we shared a number of articles and materials about zakat and sadaqat al-fitr, which are among the primary instruments of Islamic social finance. We would now like to introduce another important Islamic social finance instrument: waqf.
Waqf: Introduction
The word "waqf" literally means "to stop," "to withhold," or "to retain." In Shariah terminology, waqf refers to preserving the corpus of an asset while dedicating its benefits or income for the sake of attaining closeness to Allah. The benefits generated from a waqf asset are spent on the Shariah-compliant purposes specified by the founder of the waqf, while the spiritual reward accrues to the donor. A waqf asset may neither be sold, gifted, nor inherited.
The following Qur'anic verse serves as evidence for the legitimacy of waqf in Islamic law: "O you who believe! Spend from the good things which you have earned and from that which We have brought forth from the earth for you." (Surah Al-Baqarah, 2:267).
One of the most well-known hadiths related to waqf is the narration reported by Abu Hurayrah (may Allah be pleased with him):
The Prophet (peace and blessings be upon him) said: "When the son of Adam dies, his deeds come to an end except for three things: a continuing charity (sadaqah jariyah), beneficial knowledge from which people continue to benefit, and a righteous child who prays for him."
This hadith was narrated by all of the major hadith compilers except Imam al-Bukhari.
Commentary: The phrase relevant to waqf in this hadith is "continuing charity" (sadaqah jariyah). A continuing charity is a charitable act whose benefit remains ongoing over time, and waqf falls within this category. When a Muslim establishes something that benefits people continuously, the reward for that act continues to reach them even after their death as long as people continue to benefit from it. For this reason, when Muslims properly understood and practiced Islamic teachings, they established numerous waqf institutions in the hope of earning perpetual rewards. Through these endowments, widows, orphans, the poor, and the needy were provided with ongoing support. (Hadith and Life, Vol. 11)
Several conditions must be met for a waqf to be valid:
- The founder of the waqf must possess legal capacity to dispose of their property; that is, they must be an adult of sound mind.
- The asset being endowed must retain its original substance while generating continuing benefits. Therefore, assets that are completely consumed through use—such as food or fuel—cannot be made into a waqf.
- The endowed asset must be specifically identified. An unspecified or ambiguous asset cannot validly be endowed. For example, if a person says, "I have endowed one of my houses," without specifying which house, the waqf would be invalid due to uncertainty.
- The waqf must be dedicated to charitable and Shariah-compliant purposes, since its objective is to seek closeness to Allah. Examples include: building mosques, constructing bridges, providing access to water, publishing educational and scholarly books, and other projects that benefit society. A waqf cannot be established for non-Shariah purposes, such as constructing places of idol worship, publishing books that promote disbelief, lighting lamps or candles at graves, or supporting individuals engaged in such activities. Such acts constitute assistance in sin, shirk (associating partners with Allah), and disbelief, and therefore cannot qualify as valid waqf purposes.
Another important rule concerning waqf is that any condition stipulated by the founder must be observed, provided it does not contradict Shariah. This is based on the statement of the Prophet (peace and blessings be upon him): "Muslims are bound by their conditions, except a condition that makes the unlawful lawful or the lawful unlawful." (Narrated by Abu Dawud and al-Tirmidhi). It is also reported that Umar ibn al-Khattab (may Allah be pleased with him), when establishing a waqf, stipulated conditions regarding his land in Samgh.
A waqf founder may impose conditions such as:
- Restricting the benefit of the waqf to a particular group (for example, specifying that only students may use a building);
- Giving one group priority over another (for example, students first, then physicians);
- Requiring beneficiaries to possess certain qualities;
- Excluding individuals possessing certain characteristics;
- Appointing a supervisor or administrator for the waqf;
- Other conditions that do not contradict Shariah.
As long as such conditions are consistent with the Qur'an and the Sunnah, they must be respected and implemented.
A waqf is a binding legal contract that becomes effective upon its establishment and may not be revoked. This ruling is based on the statement of the Prophet (peace and blessings be upon him): "Its corpus may neither be sold, gifted, nor inherited." (Narrated by al-Bukhari and Muslim from Ibn Umar). According to Imam al-Tirmidhi, the scholarly consensus in practice has been based upon this hadith: a valid waqf cannot be revoked because it constitutes a perpetual and enduring endowment. (To be continued)
Source: islommoliyasi.uz