Islamic Economics Institute

Wednesday Academic Dialogue (16-1439)

Do We Need to Review our Starting ?

Trust and its contemporary Waqf applications:

Discussions and explorations

Full Text

Dr. Faddad

Islamic Development Bank (IRTI)

Jeddah, Saudi Arabia

Wednesday 20-12-2017 (02-04-1439H)

Abstract

This paper aims to develop modes and mechanisms that can be used for investment in the philanthropy sector to achieve sustainable development. The mode that is discussed in this paper is the ‘irṣād’. This is an innovative mode discussed by the later jurists of each school according to the established principles of each perspective school. The paper reviews a number of classical and contemporary modes. The contemporary as well as history literatures are examples of the practice and use of ‘irṣād’. The majority of scholars hold the opinion that ‘irṣād’ is permissible for general welfare and charitable purposes should the ruler deems it beneficial for the society. If Shariah principles are observed in tis establishment, ‘irṣād’ is perpetual in nature and once established cannot be rejected. The researcher answers an important question in his paper: Is ‘irṣād’ a waqf? Broadly speaking, the scholars have two different opinions regarding this question. The Maalikis and Shaafi’is considered the ‘irṣād’ to be a waqf, as all the conditions of a waqf are met. The second view is the opinion of the Hanafis and Hanbalis who do not consider the ‘irṣād’ to be a waqf. This is because an ‘irṣād’ from a ruler can never be considered to be waqf as the ruler has no right of ownership over it. One of the advantages of ‘irṣād’ is its flexibility as the ‘irṣād’ is not a waqf. Hence, it is possible to modify its conditions in accordance with the interest of a society. It is unlike a waqf which cannot be modified except in very special cases relating to ‘istibdāl’. Flexibility in ‘irṣād’ does not mean that, the person making the ‘irṣād’ or those who come after him can reject it, which cannot be done. The researcher then asks: can ‘irṣād’ be made by someone other than the ruler? He mentions that as far as his knowledge goes he did not find any express statement from the fuqaha’ that ‘irṣād’ can be made by anyone other than the ruler.Regarding the issue of which the other modes can be derived from the concept of ‘irṣād’, the paper mentions that ‘irṣād’ is close to the concept of ‘trust’. There are three types of trusts in contemporary western economic applications. These are: the investment trust, the charitable trust, and the hybrid trust. The researcher concludes his paper by elaborating different contemporary ways of implementing the concept of ‘irṣād’ for waqf. (a) The establishment from the public treasury of charitable governmental funds that are perpetual by way of ‘irṣād’. In other words, these are government investment funds whose proceeds are distributed to specific segments and under special conditions and regulations. Although similar practices are present what is added by the use of ‘irṣād’ is that it remains permanent and cannot be canceled, while its conditions may change. (b) Investment funds can be established using ‘irṣād’ for those amounts of money that are disowned and have been transferred to the public treasury such as orphans’ money, anonymous minors’ money, and pensions for which they are no known claimants. The proceeds of the fund can be distributed to these categories. (c) Some scholars have suggested the waqf of the Takaful life insurance policy where the regulations allow compensation for a person after his death and the regulations allows him to benefit from insurance. This is an example of ‘irṣād’ where a person does not have full ownership of the money during his life. (d) Waqf of dormant accounts, “charity accounts” in Islamic banks, by way of ‘irṣād’ of those amounts to general charitable purposes and the establishment of investment funds from those amounts. The proceeds should be spent on research and training, support of Islamic economics and its implementation, relief activities, education, health, financing small enterprises and vocational projects to contribute to poverty alleviation.


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