Creating a Waqf-Based Economy: The Inter-Mosque Money Market

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Imagine the impact of a network of a thousand mosques, each of which had one million pounds in assets under management, giving a combined market value of one billion pounds! Further, the funds are not owned by shareholders and there is no pressing need to maximise profits for shareholders, rather the funds are in the perpetual ownership of Allah and the strategy for the funds is to maximise welfare, equitable distribution, resourcing the community, and the sustainable development of everyone. Imagine how this can support spiritual upliftment, social mobility, economic growth, small-to-medium enterprises, mosque infrastructure and facilities, education, healthcare, welfare, and better faith representation.

For some time, we at Amanah Advisors have been pondering on how we can bring Islamic Finance to every person irrespective of their creditworthiness, have an impact at a grassroots level, connect people together, empower Mosques and communities, mobilise funds, create sustainable and responsible outcomes in all aspects of life. In the quest for something which connects all these dots, we dwelled upon several ideas, structures, and mechanics, until something finally clicked! We have developed a blueprint of a network powered by multiple Waqf funds; a network at a macro level, and multiple Waqfs at a micro level. We call this network the Inter-Mosque Money Market!

 

The Idea

The idea is simple. We want participation, we need capital and most importantly, there has to be trust, transparency, and good governance. To get participation, we need communities. Communities pivot and are connected via their local mosques. Every person has a natural affinity and stakeholding in their local mosque, which they typically trust and support. Therefore, each mosque can simply establish a waqf fund; for the mosque, this would be a far more sustainable way of fundraising and a chance to have a larger footprint in civil society; for locals, this would be something far more exciting as their donations would be Sadaqa Jariya (perpetual charity), and they would continuously reap the rewards; for the community, this would be potential funding opportunities and access to capital for local developments. This Waqf fund would then keep growing its assets and investing in Shariah compliant investments. The returns would then be channelled to projects of the mosque and local community. This would create a circular economy where funds are continuously cycled through individuals, mosques, businesses and Shariah compliant investments.

At the heart of it, every Mosque should have a Waqf fund. Mosques are typically charitable trusts and charitable foundations, so they can operate the Waqf under the same regulation. Further, charities can invest as per the Charity Commission guidance. The mosques will be somewhat of a waqf bank with social objectives. But these Awqaf will be embedded in the communities and societies, which gives enough KYC assurance, and a natural trust and familiarity with who, what, and why.

 

What is the Product?

To operationalise this, we would create a Cash Waqf. A Cash Waqf gives sufficient flexibility in managing Waqf assets and investing in a diversified portfolio of Shariah compliant assets and investments. The returns are then used for the Waqf objectives.

The word ‘Waqf’ literally means ‘to stop’ and the verbal form of Waqf’ which is ‘waqafa’, means to stop or halt. It can even be described “to hold”, “to confine” or “to prohibit”. From an Islamic perspective, Waqf means to ringfence an asset or property; to hold it, to confine and to prohibit it from being the property of any other person for eternity. In essence, it is surrendered as a property for God and for the benefit of the creation of God.

In practice, Waqf is the dedication of buildings, lands, cash, or other assets for the use or benefit of the people. In Islam, property from a waqif (donor) will be endowed from the beginning to the end, in the name of God. This will be a means of perpetual benefit for the beneficiaries and perpetual reward for the waqif. Such property is perpetually reserved for the stated objectives and cannot be alienated by inheritance, sale, gift, or otherwise.

 

What is the Network?

Just like banks are part of the interbank money market, where banks lend and borrow among each other, manage their surplus and deficits, and manage their own prudential requirements, the inter-mosque money market will create a network of multiple mosques where they invest in each other, financially support one another and potentially syndicate new opportunities and projects. If we create multiple Waqf funds, this creates a network and the ability to invest, finance and support each other. It creates an economy between these institutions, allowing for the movement of capital, goods, services and humans. This will give greater access to opportunities, lower barriers to entry, facilitate spiritual and socio-economic development, and a powerful, positive society. This network will be powered by individual Waqfs operating from mosques, embedded in communities, appealing to the heart and mind of every local mosque attendee.

 

How do we Action This?

We have designed the first Waqf Fund of this network for a mosque in Leicester. We already have three other organisations willing to sign-up. All we need is more awareness, more mosques, charities, and institutions coming forward to be part of this great waqf-based economy! Feel free to reach out with your Islamic institution and organisation to set up your Waqf fund!