The Rulings of Endowment in Islam

One of the most rewarded and righteous deeds is waqf (Islamic endowment), which means to endow a specific property for the sake of Almighty Allah. It is considered an ongoing and perpetual charity concerning which the Prophet (peace and blessings be upon him) said, “When a person dies, his works cease except three: An ongoing charity he has set up or endowed, beneficial knowledge he has imparted, or a righteous offspring who prays for him.” (Muslim)

It is also narrated that `Umar ibn Al-Khattab (may Allah be pleased with him) said: “O Messenger of Allah, I have got wealth from Khaybar and I have nothing that is more precious to me than it. What do you command me to do with it?” He said, “If you wish, you can put it aside and give in charity from it (from what it produces), but the original property should not be sold, given away or inherited.” So `Umar gave it in charity to the poor and to relatives, used it to set slaves free, gave it for the sake of Allah, helped wayfarers and honored his guests. (Al-Bukhari and Muslim)

Putting shares, deeds, moral rights and utilities as endowments is also recommended especially in our times, since the texts about endowment are general, including the permanent and the temporary, the divided and the common, lodgings, utilities and money, real estate and movable items, lawful corporate shares, deeds and investment units.

Regarding this issue, the International Islamic Fiqh Academy, an offshoot of the Organization of the Islamic Conference, held its 19th session in Ash-Shariqah Emirate (UAE) from Jumadah Al-Awwal 1 – 5, 1430 A.H., corresponding to April 26 – 30, 2009 A.C. Having reviewed the presented research papers on setting shares, deeds, moral rights and utilities as endowments, and having listened to the discussions held on this matter, the academy issued the following resolution:

First: Endowment is among the broadest questions of fiqh that rely on ijtihad. It is an act that is reasonable in meaning and related to the objectives of Shari`ah. It is aimed at achieving the benefits of endowment for both the one who creates it and those for whom it is created.

Second: Endowing shares, deeds, moral rights, utilities and units of investment funds:

1- The shar`i texts that speak about endowment are general and encompass the permanent and the temporary, the divided and the common, lodgings, utilities and money, as well as real estate and movable items. In fact, all of these are acts of donation that are encouraged.

2- It is permissible to put corporate shares, which are religiously lawful to be held, deeds, moral rights, utilities, and investment units as endowments, for these are all considered legal money under the Shari`ah.

3- There are some rulings that apply as a consequence of endowing shares, deeds, moral rights, utilities, and so on. Significant among them are the following:

(a) The fundamental rule as far as endowed shares are concerned is that they should be kept and their revenues are to be used for the purposes established in the endowment, not to be traded in financial markets. The endowment trustee has no right to dispose of them except for a highly- likely benefit or in accordance with the conditions set by the person who made the endowment. They are subject to the known shar`i rules for exchange.

(b) If the company is dissolved or the value of deeds is paid, they (the endowed shares) may be exchanged for other assets, such as real estate or other shares and deeds, in conformity with the conditions set by the person who made the endowment or for highly-likely benefit of the endowment.

(c) If the endowment is temporary, as willed by its founder, it shall be dissolved according to his conditions.

(d) If the endowed cash money is invested in buying shares, deeds, and so on, these shares and deeds shall not be deemed in themselves an endowment instead of the money, unless so stipulated by the person who made the endowment. They may also be sold for the purpose of investment that brings about more benefit for the endowment. In that case, the original cash amount is to be regarded as the entailed endowment.

(e) It is permissible to endow utilities, money and services, such as the services of hospitals, universities and academic institutes, the services of telephone and electricity, and the facilities of houses, bridges and roads.

(f) Endowing something for a specific period of time does not affect the owner’s freedom to dispose of his property, for he has every right to dispose of his property in a lawful manner, as long as he maintains the endowment’s right to the benefit.

(g) The endowment of moral rights comes to an end with the lapse of the legal term set for them.

(h) What is meant by timing is that the endowment lasts for a specific duration of time by whose end it shall be terminated. It is allowable for the donor to specify durations for all kinds of endowments.

(i) A person possessing suspicious or ill-gotten money whose owners are unknown to him, may absolve himself and get rid of this impure money by donating it for general charitable purposes except for worship-related ones, such as the building mosques and printing copies of the Qur’an. Moreover, he has to observe the prohibition of holding shares in (usurious) traditional banks and traditional insurance companies.

(j) A person possessing money that has brought unlawful returns may place the original amount as endowment but the returns are to be put as funds for it and are subject to the same rules that apply to charitable endowments. That is because such returns and money are to be dedicated to the poor and indigent and general charitable activities when it is not possible to return them to their owners. The endowment trustee should act as quickly as possible to replace such money with what is regarded as lawful under the Shari`ah, even if doing so violates the conditions set by the donor. If it contradicts the legislation laid down by Almighty Allah, the condition of a donor is deemed invalid.

The academy issues the following recommendations:

(a) Governments and legislative councils in Muslim countries are called upon to amend the laws and systems of endowment in a way that is compatible with the resolutions of the International Islamic Fiqh Academy.

(b) The ministries of education and universities in Muslim countries are called upon to set specific curricula for the study of endowment in a scientific and objective manner.

(c) The academy shall study, at the following sessions, the issue of endowment administration, its principles, organization and regulations, and the criteria used for selecting the administration and maintaining its continuation. The academy shall pay special attention to this subject, since it is the basis of success and progress for endowment and its investments.