Waqf, Social Responsibility, and Real Economy

Waqf, Social Responsibility, and Real Economy

Mohammad Abdullah (Markfield Institute of Higher Education, UK)
DOI: 10.4018/978-1-7998-1245-6.ch002


The function of waqf institution is to contribute towards provision of a social security net to those falling within its vicinities. The value proposition of waqf lies in effectively cascading wealth and benefits of resources to the neglected or comparatively disadvantaged sectors of an economy. Waqf is equally envisaged to support informal economy by responding to, and patronising the un-organized sectors. It is critical to identify the existing gaps in the areas of public and private sectors' spending for waqf to effectively fulfill its socio-economic objectives. By targeting the resource-deficient pockets of the economy on priority basis, the utility of waqf-resources can be maximized, which, in turn, reinforces the building blocks of the real economy. The chapter critically analyses the moral philosophy, the value proposition, and functional mechanism of an ideal waqf followed by pinpointing some recommendations to enhance the role of waqf. The chapter is an outcome of a library-based research, and it adopts socio-legal research paradigm for the analysis of literature.
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1. Introduction

The concept of charity is central in Islamic emphasis on developing a society which is mutually cooperative, cohesive and conducive to voluntarism. The mechanism of charity provides an interface between the resourceful and resource-deficient units of the society to facilitate the transfer of monetary and non-monetary values from the former to the later on a voluntary basis (Hasan, 2006). From an Islamic perspective, the reward of charity is not confined to the material or social return only; rather it has the dimension of spiritual reward as well. In an Islamic society, it is envisaged that the spiritual element of charity is the key incentive for all charitable practices (Chapra, 2008). In the Islamic literature, the concept of sadaqah (charity) and infaq fi sabilillah (spending in the way of Allah) comprehensively cover the spiritual, material and societal aspects of a charity. Waqf which is an institution of voluntary charity represents one such example (Cizakca, 1998).

The premises of waqf lie on a set of its own underlying moral philosophy and socio-economic objectives. In theory, the belief in spiritual merits combined with the spirit of social responsibility of waqif (endower) steers the voluntary wealth redistribution through waqf (Abdullah, 2015). Conceptually, waqf has a critical role of bridging the gaps between the demand and supply of the public goods. By adopting and discharging this role of volunteer intermediary, waqf is envisaged to add original value in the economy in an effective and efficient manner.

There are vast possibilities of fine-tuning a waqf deed in accordance to the specific needs and necessities of circumstances. This provision offers a leeway for a waqif to exercise charity in a self-defined manner (Lev, 2005). Perhaps, this underlying flexible nature of waqf explains why the mechanism of waqf remained one of the most preferred formats of charity in Muslim societies (Singer, 2008).

Notwithstanding this, due to being outside of the market economy, waqf is often criticized for value-erosion or dilution of the endowment-based resources (Kuran, 2001). The basis of this criticism does not seem to be completely unfounded if deliberated keeping in view the enormous size of waqf-based resources scattered across many Muslim and non-Muslim countries compared to the real value addition which they make (Schoenblum, 1999). Thus, it is argued that the purpose, the value proposition and the moral philosophy of waqf stands defeated if the institution fails to add real value in an effective and efficient manner.

This study argues that the institution of waqf needs to adopt a bottom-up approach in its socio-economic targets in order to optimise its contribution towards real economy in a socially responsible manner. The bottom-up approach calibrated with the sense of Islamic social responsibility is based in sequencing the progression of waqf-based benefits-coverage from necessities to needs and luxuries as per the hierarchy of maqasid al-shariah oriented application. The maqasid al-shariah paradigm subtly directs allocation of awqaf benefits as per the desired objectives of the institution in shariah. This approach helps prioritise necessities over luxuries, which is critical to achieve the target of benefit-maximisation from awqaf by allocating the same in a Shariah-desired sequence. Directing allocation of awqaf to most deserving individuals, entities as well as to objectives on priority basis is key to maqasid realization. In the words of Abdullah (2015:168), “As a golden rule, a luxury must be shunned even in the matters of deen (religion) if the necessities of life are not met due to scarcity of resources.”

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