AAOIFI Shari’ah Standard No. (60) Waqf (Revised Standard)

Statement of the Standard

1. Scope of the Standard
This standard deals with the definition of Waqf, its types, its rulings, its constituting elements, conditions of each constituting element, expenses of Waqf, means of deriving benefit from Waqf, ways of developing it, rulings related to Waqf overseership and its management, and what can be adopted by the Institution in developing the sources of Waqf and means of its investment.
This standard will deal neither with detailed rulings of dynasty Waqf nor those related to irṣād (state endowment) or financial trust, despite their semblance to Waqf in certain aspects.

2. Definition, ruling, constituting elements and conditions of Waqf
2/1. Definition of Waqf: appropriation [allocation for a particular purpose] of an asset and donating its benefit(2).
Footnote (2) Translation Note: Such that the asset is not sold, gifted, donated or encumbered to facilitate its usufruct for the named beneficiary/ies.
2/2. Types of Waqf
There are several types of Waqf based on various considerations.
2/2/1. based on the Waqf beneficiary, Waqf is divided into:
2/2/1/1. Charitable Waqf: its revenue and benefit will be for general charitable causes, like poor persons, research centres and universities.
2/2/1/2. Private or Dynasty Waqf: its revenue and benefit will be for the progeny or relatives of the Waqif or other specific persons, and this includes Self Waqf [Waqf on oneself], and in the event of the non-existence of the designated Waqf beneficiaries, then it shall turn into Charitable Waqf.
2/2/1/3. Joint Waqf: wherein the beneficiaries of the Charitable Waqf and the Private Waqf jointly share the revenue and benefit of the Waqf.
2/2/2. Based on the Waqf asset, Waqf can be divided into:
2/2/2/1. Specific Waqf Assets: are those Waqf where the Waqif’s intention aimed to appropriate specifically an asset as it is, e.g., Waqf of real estate, and this includes Waqf of usufructs and Waqf of moral rights.
2/2/2/2. Investment Waqfs: these are those Waqf where the Waqif’s intention aimed to develop by turnover and deployment based on commercial considerations, and not the appropriation of its tangible assets, rather the purpose is the sustainability of the Waqf through its assets or via their substitutes, e.g., cash Waqf and Waqf companies.
2/3. Ruling on Waqf: in principle, Waqf is a recommended act (mandūb), and it is binding upon the Waqif from the instance of the creation of Waqf, and he cannot resile from it.
2/4. Constituting elements (arkān) and conditions of Waqf: constituting elements of Waqf: (the form of creation, the Waqif, Waqf asset and Waqf beneficiaries), and each constituting element has its [specific] conditions and rulings, as follows:
2/4/1. Form of Creation (ṣīgha) of Waqf
2/4/1/1. An offer from the Waqif creates Waqf through any means which indicate the same expressed verbally, in writing, or through any other means indicating the same. It does not require acceptance of the Waqf Beneficiary, whether he was specific or not.
2/4/1/2. The form of Waqf creation must be conclusive [jāzima] as Waqf cannot be concluded with an undertaking to create Waqf.
2/4/1/3. The initial presumption is that [creation] of Waqf must come into effect immediately [nājiz]. It is also permitted for the Waqf to be contingent upon a condition, e.g., the Institution creates a Waqf over some of its assets subject to the approval of the supervisory authority, or deferred to a future date, e.g., [the Waqif] says: my shares in ABC company are [subject of] Waqf with effect from the beginning of the coming year.
2/4/1/4. If the Waqif makes Waqf contingent upon his death, then it is deemed to be a bequest, and therefore it will take effect only upon Waqif’s death; but it shall not exceed one-third of his estate. In this case [being a bequest], it is permitted for him to resile from the Waqf [bequest].
2/4/1/5. The initial presumption is that Waqf will be perpetual. However, if stipulated by the Waqif, it may be limited to a period or restricted by a certain condition. Hence, upon maturity of the term of Waqf or occurrence of the condition, the Waqf asset shall return to the [original] owner or his heirs.
2/4/1/6. An unrestricted Waqf, wherein the Waqif does not specify the beneficiary of the Waqf, is valid. In this case, it shall be made available for charitable causes as deemed fit by the overseer or the court.
2/4/1/7. It is prohibited to create Waqf for a Shari’ah non-compliant purpose. If such a Waqf is created, its purpose must be changed to a Shari’ah compliant one.
2/4/1/8. It is invalid for the debtor to create a Waqf if it should be detrimental to [his] creditors.
2/4/2. Legal Personality of Waqf
Waqf is an autonomous juridical person with an independent financial liability that allows Waqf to obligate or take obligation (to be liable). Hence, Waqf is separate and independent from the overseer and the Waqf beneficiaries.
2/4/3. Waqif
2/4/3/1. The Waqif must have the legal capacity to donate his possessions with reference to s. (2/4/5.).
2/4/3/2. If the Waqif is de jure a juridical person, then it is required that Waqf is created by a resolution from the owners or who has the authority to take such an action, provided it does not contravene the laws and regulations.
2/4/3/3. Waqf by a person interdicted for prodigal grounds is not concluded. However, a Waqf by a person interdicted for being indebted is contingent upon the authorization of the creditors. The same will be the case if the person’s debts exceed the [value] of his assets, even if the person was not subjected to a ruling of bankruptcy or interdiction.
2/4/3/4. Waqf during terminal illness is deemed to be a bequest.
2/4/3/5. Waqf by a non-Muslim is valid subject to observing rulings and conditions of Waqf.
2/4/4. Waqf Beneficiary:
2/4/4/1. A Waqf beneficiary must be a Shari’ah compliant entity (mubāḥ).
2/4/4/2. It is valid to stipulate that the Waqf beneficiary is the Waqif, e.g., to say: “I made this Waqf for myself and then for charitable causes”.
2/4/4/3. The Waqf [remains] valid if the Waqf beneficiary is discontinued. Upon discontinuation of Waqf beneficiary, it will be used for similar charitable causes.
2/4/4/4. It is not required that a Waqf beneficiary exists at the time of [creation of] Waqf.
2/4/4/5. It is permitted for the Waqif to single out some of his children as Waqf beneficiaries or to increase the shares if there is a valid reason, e.g., poor persons, divorcees, or people with special needs.
2/4/5. Waqf Asset
2/4/5/1. The following is required in the Waqf asset:
a. It should be a Shari’a-wise appraisable asset (māl mutaqawwim), and it should be known or to be known.
b. The Waqif should own the Waqf asset in full ownership, or it should be appurtenant to an asset owned by the Waqif, e.g., to create Waqf of yet-to-be-declared dividends on shares held by him.
2/4/5/2. If the Waqf was created with an option to rescind that is held by a third party, then [creation of such Waqf] will be contingent upon the authorization from the one who holds the option. If such authorization is granted, the Waqf will take effect from its creation; otherwise, Waqf will be deemed null and void from the start.
2/4/5/3. It is valid to create a Waqf which a third party may claim under the pre-emption rights. If the Waqf asset was granted to [the third party] according to pre-emption (shufꜤa) rights, then the Waqif must deploy the received consideration in a similar type of Waqf.
2/4/5/4. If the pledgor makes a Waqf over the pledge, then Waqf is valid, and its enforceability is dependent on one of the following cases:
a. The waiver by the pledgee of his rights in the pledge.
b. settlement of the debt.
c. part of the pledge remains after recovering the debt out of the pledge; Waqf will be enforced over what remains.
Whenever Waqf is enforced in any of the above cases, its enforceability shall be from the time of its creation.
2/4/6. It is permitted to create Waqf over real estate, including movable items, which are appurtenant ancillaries meant to be there permanently.
2/4/7. It is permitted to create Waqf of movable assets, such as vehicles, machinery, equipment, production tools, websites, and digital applications.
2/4/8. It is permitted to create Waqf over Shari’ah compliant moral rights, such as books’ copyrights or patents, to donate their revenues or usufruct [for Waqf beneficiaries].
2/4/9. A person who took possession of assets via prohibited means is required from him, as per Shari’ah, to forfeit such assets by disbursing them to charitable causes. It is permitted for him to create a Waqf of a such asset for general charitable causes, and it is not permitted for him to benefit from this Waqf in any manner.
2/4/10. A person who possesses assets of prohibited yield (e.g., bonds) must terminate his/such possession and disburse the proceeds in charitable causes. If he creates Waqf over these assets for general charitable causes, Waqf is valid if those assets are substituted with assets with permissible yield.
2/4/11. It is permitted to create Waqf over a common share of an asset, whether divisible or indivisible. If the common share of the asset is leased, the Waqf is entitled to receive its share of the rent. The Waqf portion may be leased through temporal or spatial usufruct sharing, and the beneficiaries will be entitled to the revenues related to the Waqf portion.
2/4/12. It is permitted to create Waqf of usufructs by the owner of the usufructs. Such a Waqf will be utilized for usage, exploitation, or leasing. If, for example, [the Waqif], being a lessee, owns the usufructs, then it is required that:
the Waqif is not prevented by the lessor from subleasing,
dan
the term of Waqf should not be longer than the lease period.
2/4/13. Cash Waqf
2/4/13/1. It is permitted to create Waqf over cash even if it is an outstanding debt, e.g., the current account balances. Benefiting from it can be either by extending a Shari’ah compliant loan or investing the amount in a Shari’ah compliant manner. This includes establishing Waqf funds which shall have the purpose of raising funds, investing them, and extending loans. Any excess cash over the Waqf amount will be the yield which shall be disbursed to the Waqf beneficiaries.
2/4/13/2. It is permitted to create Waqf over investment accounts on a perpetual or timed basis, and rulings of cash Waqf shall apply to them.
2/4/13/3. If cash Waqf is invested in buying assets, then these assets will be deemed to be something other than the Waqf asset instead of the cash. It will be permitted to sell these assets for a more beneficial investment for the Waqf. The Waqf asset shall remain the cash amount.
2/4/13/4. The nominated money at the time of Waqf creation shall constitute the Waqf asset. There is no influence of change in the purchasing power on the value of the cash Waqf assets. It is permitted for the Waqif to stipulate that part of Waqf revenues will be added to the cash Waqf asset.
2/4/13/5. Shari’ah compliant modes of hedging should be followed to protect the principal amount of the cash Waqf and to hedge against the risk of foreign currency fluctuations and change of its value, as given in the Shari’ah Standard (45): Protection of the Capital and Investment.
2/4/14. Waqf of Companies and Shares
2/4/14/1. It is permitted to create a Waqf over: companies, a portion of companies, or shares of the shareholding companies, all being Shari’ah compliant. In that case, the Waqf asset shall be those specific assets and no disposition of such assets is permitted except following the substitution conditions mentioned in s. (10/1/5). However, such companies’ asset turnover is allowed under the regulations and commercial norms, as those companies are categorized as investment Waqfs. See s. (2/2/2/2).
2/4/14/2. Increase in the [market] value of Waqf shares constitutes a capital gain on the Waqf asset and not revenue, whereas bonus shares that are sourced from earnings [of the company] represent revenue [of Waqf] unless the Waqif stipulated to add them to Waqf asset.
2/4/14/3. If the Waqf company, or a company where many shares were Waqf assets, is liquidated, then rulings of substitution will be applied as per Waqif’s stipulation and as required by the interest of the Waqf and Waqf beneficiaries.
2/4/14/4. Upon Waqf of shares, the company’s Memorandum of Association and the legal framework upon which the company was established shall be deemed as conditions of the Waqif unless [these conditions] violate the principles and rulings of Shari’ah.
2/4/15. Waqf of Investment Funds and Sukuks
2/4/15/1. It is permitted to create Waqf over investment Sukuks and Shari’ah compliant units of investment funds, whether Waqf was perpetual or temporary,
a. If Waqf of units of investment funds and Sukuks were on a perpetuity basis, then the periodic distributions shall be disbursed in the avenues of Waqf disposal. Upon cancellation [of the units of investment funds or Sukuks], their [proceeds of cancellation] shall be reinvested: in other Sukuks or units of other investment funds as applicable or any investment asset that generates revenues for Waqf as stipulated by the Waqif and required by the interest of the Waqf and Waqf beneficiaries.
b. If the Waqf of Sukuk and units of investment funds is temporary, then periodic distributions shall be disbursed in the avenues of Waqf disposal in compliance with the following:
– since Sukuk and investment funds are different in their types, revenues, periodic distributions and redemption, the basis for determining the [base Waqf] asset and profit shall be:
the type of Sukuk and investment funds, and
the terms and conditions of the offering document or prospectus,
to the extent they do not conflict with the Waqif stipulation.
– In the case of Waqf of Sukuk or units of investment funds, the initial presumption is that the Waqf asset will be those particular Sukuks and units unless the Waqif has stipulated that the Waqf is for the value [of Waqf asset].
– If Waqf is over the value [of Waqf asset], the rulings of cash Waqf shall apply. However, if Waqf is over those Sukuk and investment units in particular, then at the end of the Waqf period or upon cancellation of [Sukuk or investment units], the Shari’ah position varies based on the following:
1). If the period of Waqf is longer than the period of Sukuks or investment funds, then what is stated in s. (2/4/15/1/A) shall apply upon cancellation.
2). If the period of Waqf is shorter than the term of Sukuk or investment funds, the Waqif shall recover the [same] number of [Sukuk and investment funds] at the end of the Waqf period.
3). If the Waqf period is the same as the term of Sukuk or investment funds, then whatever amount paid at the time of cancellation shall be for the Waqif, unless the amount is paid as a return [of Sukuk and investment units], in which case it shall be treated as Waqf revenues.
2/5. Waqf Deed
2/5/1. To preserve and protect the Waqf from loss and infringement, the Waqf should be documented through officially acceptable means. Under all circumstances, the current procedures of legal authentication should be adopted to document the Waqf.
2/5/2. The Waqf Deed shall include the following:
preamble,
the purpose of creation,
name of the Waqif, along with what establishes his identity, legal competence and ownership,
specifying the subject of Waqf and describing it in such a precise manner that removes any ambiguity,
avenues of Waqf disposal,
Waqf conditions,
determining the overseer, his duties and his remuneration, concluding statement,
witnesses,
signature of the Waqif, and
date when the Waqf comes into effect.
2/6. Conditions in Waqf:
2/6/1. The Waqif may stipulate, with regard to his Waqf, any condition that is not contrary to the rulings of Shari’ah and that does not prejudice the Waqf or adversely impacts its asset. These stipulated conditions must be complied with. All such stipulated conditions of each Waqif must be read or interpreted in light of the prevailing customs in his time and place.
2/6/2. The Waqif may stipulate that:
he or his heirs will benefit from Waqf during his lifetime or for a defined period,
to spend [from Waqf revenues] on oneself or his heirs from Waqf, or
to settle his debts from there.
2/6/3. The Waqif may stipulate that the revenue of charitable Waqf will be disbursed [first] to the poor from his progeny, and then [the remaining] shall be disbursed for charitable causes.
2/6/4. A condition shall be deemed void if it:
contains what is prohibited in Shari’ah,
prejudices the Waqf,
adversely affects its asset, or
cannot be implemented.
In this case, the Waqf remains valid, while the condition shall be considered void. An example of such a condition is to stipulate the non-dismissal of the overseers under any circumstances. Similarly, a condition shall be void if it obstructs the interest of Waqf or is prejudiced in benefiting from it. An example of such a condition is to stipulate that the disbursement always begins with [the Waqf] beneficiaries, even if the Waqf requires maintenance and repair.
2/6/5. If the Waqif stipulates that the Waqf beneficiary shall benefit from the Waqf in a specific way, this condition must be complied with. It is permitted for the Waqf beneficiary to benefit [from the Waqf] personally or through a third party, even if it is through leasing it to this third party, unless the Waqif has stipulated that the benefit will be availed only personally by the Waqf beneficiary.
2/6/6. The Waqif may stipulate in the Waqf the [right to] amend the terms and conditions of the Waqf provided it does not prejudice the essence of Waqf.

3. Waqf Overseership (Naẓārah)
3/1. The Overseer (Nāẓir): is a person who takes up the duty of Waqf’s supervision and management, developing its resources, protecting its assets, disbursing its revenues in the avenues of Waqf disposal as per the stipulation of Waqif, and he is responsible for the management of the Waqf. Such a person may be an individual, a group of people, a committee, a ministry, or the like. The overseer may discharge the duty by himself or by appointing someone else. The overseer may also be referred to as mutawalī. However, this does not preclude addressing him with other titles as per prevalent norms and customs, such as alamīn (trustee) and the like.
3/2. Appointing the Overseer:
3/2/1. Waqf overseership is a right established for the interest of Waqf.
3/2/2. The initial presumption is that the appointment of the overseer is the right of the Waqif in compliance with the prevailing laws and regulations of the [relevant] country. If the Waqif has not appointed an overseer, the relevant authorities should appoint one.
3/3. Restrictions to Overseership
3/3/1. Waqf overseership is [firstly] subject to the [relevant] Shari’ah rulings, and then the conditions stipulated by the Waqif provided they are not in conflict with Shari’ah rulings nor with the interest [of Waqf] as determined by the overseer, with the prior approval of the Waqif or the relevant authorities.
3/4. Independence of Waqfs:
3/4/1. Waqfs must be independent of the public treasury funds in terms of their administration, finance and accounting. Revenues of Waqfs must be disbursed to their specified avenues of disposal under the recognized financial and accounting principles, which do not contradict Shari’ah rulings. In all cases, the state’s role in taking care of Waqfs and protecting them should be given due regard.
3/5. Eligibility criteria of the overseer: The eligibility criteria of the overseer, whether he is an individual or a member of a board of overseership, are moral probity (Ꜥadālah), sanity (Ꜥaql), discretion (rushd), and competence (kifāyah).
3/6. 3/6. Duties of the Overseer: the following are among the duties of the overseer:
3/6/1. Implementation of Waqif’s stipulated conditions.
3/6/2. Management, maintenance, development and investment of the Waqf.
3/6/3. Adopting the prevailing practices to protect Waqf assets, such as: securing insurance for the Waqf asset if its nature requires so, provided the insurance is Shari’ah compliant and under the provisions mentioned in Para No. (4) [of the Standard], and establishing a special purpose vehicle to protect Waqf [against risks which may arise] from the investment of its funds, incurring a debt against it or extending a debt on its behalf.
3/6/4. Representing Waqf, defending its rights, paying legal fees concerning the claims against Waqf and expenses of documentation of Waqf deeds.
3/6/5. To collect the Waqf revenues and disburse the same to avenues of Waqf disposal, and to settle the liabilities of Waqf and financial entitlements of relevant parties.
3/6/6. To comply with the conditions of substitution as stated in s. (10/1/5) in respect of exchange, substitution or replacement of Waqf.
3/6/7. To prepare the accounts of Waqf, separate from other accounts, under the prevailing accounting principles and bases.
3/7. Powers of the Overseer: the overseer has the following powers:
3/7/1. To lay down the framework for the management of Waqf and look after its affairs in a manner that would protect the interest of Waqf.
3/7/2. To lay down policies, procedures and manuals that secure the interest of the Waqf and to amend the same in line with the interest of the Waqf.
3/7/3. To consider the interest and assess the needs of avenues of Waqf disposal [such as the Waqf beneficiaries] without contravening the conditions of the Waqif.
3/7/4. To delegate some of his powers to someone if needed.
3/7/5. The overseer has a fiduciary capacity [while holding Waqf assets]; therefore, he shall not be held liable for other than misconduct, negligence, or breach of Waqif’s terms and conditions.
Examples of negligence are non-compliance with the principles, bases and parameters of good governance, accounting, and management in line with the prevailing practices.
3/8. Prohibited Acts of the Overseer: the overseer is barred from the following acts:
3/8/1. Non-compliance with Shari’ah rulings and conditions stipulated by the Waqif.
3/8/2. Any act of misconduct or negligence with regard to Waqf.
3/8/3. Favouritism (muḥābah) or any act raising doubt (shubha) of favouritism, such as leasing the Waqf assets to himself, to his son, who is under his guardianship, or someone whose testimony is not acceptable in his favour (e.g., one of the spouses, ancestors, decedents who are not under his guardianship), in violation of good governance principles and practises.
3/8/4. Lending the Waqf [asset for no consideration] to a party other than the Waqf beneficiary, in which case the overseer shall be liable for the fair rent.
3/8/5. Pledging the Waqf asset or availing a debt against it without compliance with provisions of Para. (5) and Para. (6).
3/9. Remuneration of the Overseer:
3/9/1. The overseer is entitled to remuneration for [discharging] his duties unless he waives [right to claim] the same. For the avoidance of any dispute, it is preferable to stipulate the remuneration of the overseer in the Waqf deed, and it shall be disbursed from the revenues of the Waqf.
3/9/2. If the Waqif specifies the remuneration of the overseer, it shall be disbursed accordingly. However, if the Waqif has not specified the remuneration, it shall be specified by the relevant authorities, if any. Otherwise, the overseer shall be entitled to receive his remuneration at the prevailing market rate.
3/9/3. The remuneration of the overseer may be a fixed lump sum or a percentage of the [Waqf] revenue.
3/9/4. The remuneration of the overseer may be reconsidered by the relevant authorities when the need arises.
3/9/5. In case the total revenue [of the Waqf] is less than the remuneration of the overseer, priority shall be given to the maintenance expenses and similar necessary expenditures to ensure the continuance of Waqf. The outstanding remuneration amount shall remain a liability against the Waqf.
3/10. Dismissal of the Overseer:
3/10/1. The overseer can dismiss himself, even if the Waqif has appointed him, and he should inform the Waqif about the same or the relevant authorities within a reasonable period.
3/10/2. The Waqif may dismiss the overseer, if:
[the Waqif] has stipulated in the Waqf deed that he may dismiss [the overseer],
the dismissal is in the interest of the Waqf, or
the overseer has committed any misconduct or negligence.
3/10/3. If the overseer has committed an act of misconduct, negligence, or breach of any conditions stipulated in the Waqf deed, the judge or the relevant authority may dismiss the overseer, whether the overseer was appointed by the Waqif, another judge or by the relevant authority.

4. Maintenance of Waqf
4/1. Maintenance or repair of the Waqf [asset] is given priority over other expenditures [of Waqf disposal], considering the interest of the Waqf in prioritizing the maintenance tasks and their execution. Maintenance and reconstruction of damaged Waqf assets are not subject to [express] stipulation from the Waqif.
4/2. It is permitted to allocate an annual amount out of Waqf revenues for maintenance and repair subject to being in line with the technical and accounting bases and standards, even if the Waqif does not stipulate [such an allocation]. Investing the allocated amount should be in modes which can be liquidated easily. The investment revenues are added to the allocated amount, and the surplus shall be returned to the Waqf beneficiaries.
4/3. If the amounts [available] for maintenance or repair are insufficient, the overseer may allow the lessee of the Waqf asset to carry out maintenance and repair under commonly accepted technical norms. In this case, the lessee will have the priority to remain as a lessee of the Waqf [asset] till he recovers the debt of Waqf that is owed to him.

5. Indebting the Waqf
There are two situations where the Waqf can incur a debt:
5/1. First Situation: indebting [the Waqf] in the case of tangible Waqf assets:
In this situation, it is permitted to incur debt [against the Waqf] through Shari’ah compliant borrowing, purchase with deferred payment, or securing Shari’ah compliant financing, provided that the profit of the financing is at a fair rate, and [the debt] is incurred [to cover necessary costs] to preserve and sustain the Waqf asset in the absence of sufficient revenues to cover those costs to ensure the continuance of the Waqf benefits and to avoid the risk of disruption of the Waqf asset.
This includes, for example:
the necessary maintenance and refurbishment of Waqf [asset],
fulfilling the financial obligations of Waqf (e.g., fees and utility bills),
payment of dues owed to those in charge of Waqf and its employees.
However, it is not permitted to incur debt against the Waqf for other than essential purposes, [even] if it may serve an interest or result in an additional benefit for the Waqf unless it is stipulated by the Waqif or with the permission of the relevant authorities. [In all cases of incurring debt], the ability of Waqf revenues to bear the burden of financing and its settlement must be taken into consideration.
5/2. Second Situation: Indebting in the case of investment Waqfs:
It is permitted to incur debt in this situation for developing Waqfs under [the prevailing] commercial practises, provided the interest of the Waqf and adequacy of their revenues to settle these obligations are taken into consideration.

6. Pledge of Waqf [Asset]
6/1. It is not permitted to pledge tangible Waqf assets even when availing a debt against the Waqf.
6/2. It is permitted to pledge the investment Waqfs whenever it is permitted to incur a debt against them as per the criteria mentioned in s. (5/2), and this includes raising a request to issue a bank guarantee or letter of credit backed by funds of investment Waqfs.

7. Lending Waqf’s funds and Guaranteeing a Third-party through Waqf
It is not permitted to lend funds of Waqf, and Waqf cannot be the guarantor of third party’s debts unless this act is stipulated by the Waqif, among the purposes of Waqf, or serves the interest of Waqf with the permission of the relevant authority, and this shall be documented with sufficient guarantees.

8. Investment of Waqf [Revenue]
8/1. If the Waqif stipulates investing part of Waqf revenue or the investment is made during the waiting period for the beneficiaries, it is permitted to invest revenue of Waqf where it does not affect its distribution to Waqf beneficiaries.
8/2. Upon investing revenue of Waqf or investment Waqfs, it is required to: take all the means that will ensure growth and protection of the Waqf and
make use of the modern and Shari’ah compliant ways for investment following its requirements,
subject to observing the Shari’ah rulings of Waqf and conditions stipulated by the Waqifs.
8/3. Assistance from experts specializing in investment (e.g., Islamic financial institutions) should be sought out.
8/4. Ijarah constitutes one of the modes of investment for the Waqfs. Hence, the Ijarah of Waqf asset is valid. The initial presumption is that the term of the Ijarah of Waqf asset should not be long as per the customary consideration unless there is an evident interest in carrying out such an act. It is preferable in the long-term Ijarah that the rent is variable linked with a disciplined and a known benchmark, and the rent should be at least the fair rate. Refer to Shari’ah Standard No. (9) on Ijarah and Ijarah Muntahia Bitamleek.
8/5. It is not permitted to lease tangible Waqf assets or usufructs for less than the fair rent unless there is a preferred interest in doing so. If the Waqf assets were leased for less than the fair rent, with no preferred interest and for a flagrantly disadvantageous rent, then the overseer will be liable to pay the difference, and he should demand termination of the contract unless the lessee accepted the increase.
8/6. Waqf lands can be developed using Shari’ah compliant modes of investment, and some of them are:
8/6/1. To apply the mode of Istisna on the Waqf land, that could be through Built-Operate-Transfer (BOT). Refer to s. (3/2/1) of Shari’ah Standard No. (11): Istisna and Parallel Istisna.
8/6/2. To apply the mode of Diminishing Mursharaka ending with the transfer of ownership to the Waqf through crowdfunding from the Waqf and on the side of financing through participation in constructing the buildings. The land of Waqf will not be the subject of Musharaka, but the buildings’ rental revenues will be shared until the Waqf takes ownership of all the buildings. Refer to s. (5/8) of Shari’ah Standard No. (12): Partnership (Musharaka) and Modern Companies.
8/6/3. To apply Ijarah Musuwfa Bi Dima (Forward Ijarah) ending with the transfer of ownership to Waqf through the financier’s leasing of specified buildings which will be constructed on the Waqf lands, and the lease will end via transfer of ownership of the buildings to the Waqf. Refer to s. (3/5): Ijarah and Ijarah Muntahia Bitamleek.
8/6/4. Applying [the structure of] Sukuk Ijarah on the Waqf land. Refer to Shari’ah Standard No. (17): Investment Sukuk.
8/7. While managing the Waqf, ensuring adherence to the best management practices and governance standards.

[Sections 9–11 of this Standard are not included in this cell because Excel limits a cell to 32,767 characters. Refer to the source document for the full text.]

12. The Date of Standard Issuance
This Standard is issued on 30th Jamādā al-Ākhirah 1440 H. corresponding to 7th March 2019.

This document belongs to Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Full access to the original source is available here: https://aaoifi.com/shariaa-standards/?lang=en