This research explores the potential of cash waqf in generating capital revenue in carrying out social-based investment through social enterprises. Looking closely into two different concepts (i.e., social enterprises and waqf), this research appreciates the understanding on the modern business model of social enterprise and the innovative version of religious social finance (i.e., cash waqf). Depending on qualitative methodology and analytical review, the discussion of this research is developed. These approaches are considered suitable and pragmatic for the suggested business model of social enterprise. Here, an innovative business model with a combination of social enterprise operation and cash waqf is introduced. It has the potential to stimulate further research to innovate religious social finance instruments to current and modern business models. This research proposes a business model of social enterprise that combines cash waqf in its operation for sake of generating capital revenue. Simultaneously, such a business model has the potential to expand the cash waqf in meeting social objectives of the social enterprise. As research findings, it is found that even though waqf is derived from a religious traditional philanthropic instrument, its innovative version of cash waqf can be utilised in generating capital revenue for social enterprises. As long as the required principles of cash waqf as provided under Islamic law is fulfilled, a combination of cash waqf in the operation of social enterprise can be carried out.
TopIntroduction
Social enterprises are known as business enterprises that stand with social missions which carry out business activities in sustaining their operations either through sales of products or services. It is a business-minded entrepreneurship which aims to obtain economic benefits and at the same time to achieve social objectives. These two objectives are in a parallel position when they come to the operation of the social enterprise. However, there are some experts believed that the social objective must be placed higher in the social enterprise in comparison to its economic objective (Stansfield & Auckland, 2020; Spear, 2006; Reis, 1999). In comparison to small and medium enterprises (SMEs), social enterprises are more difficult to be managed and operated. When SMEs are focused solely in generating profits, social enterprises have to achieve both of economic and social objectives.
In generating capital revenue to carry out their social-oriented business, many social enterprises face challenging issues, especially when it is relating to the accessibility to financial facilities. Without any strong asset or property that can be used as a security for financial facilities, it is almost impossible for social enterprises to obtain their start-up capitals in doing their business. Such situation happens mainly attributed to: (i) the high risk in generating profit; (ii) problems of governance model; and (iii) lacks of performance measurement valuations (especially when it comes to measuring social value). Shariah offers a new outlook from its traditional concept of Waqf with an orientation of Shariah-compliant, responsible finance and investment. The simple understanding on Waqf is explained in the words of Çizakça (2000: 8) as he said:
“Philanthropic foundations are known in the Islamic world as Waqf or habs. Whereas the latter term is used primarily in North Africa, the former is known, with slight variations, in the rest of the Islamic world. The word Waqf and its plural form awqaf are derived from the Arabic root verb waqafa, which means to cause a thing to stop and stand still. A second meaning is simply philanthropic foundations. … All over the vast Islamic world, from the Atlantic to the Pacific, magnificent works of architecture as well as a wealth of services vitally important to the society have been financed and maintained for centuries through this system. It has even been argued that many Waqfs had survived for considerably longer than half a millennium and some even for more than a millennium (Crecelius, 1995: 260). Despite these overwhelming achievements, the history of Waqfs is a turbulent one. For centuries the fate of these institutions was closely linked to the fates of the states under which they functioned” (Çizakça, 2000: 8).
With all those dramatic ups and down, it does not discourage the process of revival of Waqf across continents. Moreover, with the globalization of business world, Waqf has reach a new success where it is used across cultures and generates various charitable activities. There is an absence of a complete data relating to the total value of Waqf globally. Based on a research done in 2014, it is recorded that the Waqf properties are estimated to reach US$100 billion to US$1 trillion (IDB, 2014; The World Bank-INCEIF-ISRA, 2019). Reaching towards 2021, it is believed that the current value of Waqf properties is much higher, with the majority of Waqf properties throughout countries are consist of arable lands. Moreover, it is estimated that the value of cash Waqf is reaching up to US$35 billion (The World Bank-INCEIF-ISRA, 2019).
While Waqf is proven to be a successful religious social finance instrument globally, it opens a new dimension with its innovative form which is famously known as cash Waqf. Cash Waqf is a charitable Waqf in the form of cash capital. It is a type of Waqf that involves movable Waqf that may be specifically related to valuable currencies. It is also capable in creating economic stimulus, and beneficial for a welfare fund. Such welfare funds can be used to sponsor educational, social, health and other projects in the society. Apparently, there is a scarce discussion relating to the utilization of cash Waqf in generating capital revenues for social enterprises. As believed by the researchers, such situation happens due to unresolved issues relating to cash Waqf from Shariah perspective.