This is my 2016 presentation on waqf (wakaf in BM) and endowment for higher education based on my involvement as practitioner of waqf and endowment at Islamic university.

1. EFFECTIVE MODEL
FOR MALAYSIAN HIGHER
EDUCATION
FAHMI SHEIKH OMAR
DIRECTOR OF DEVELOPMENT & SPECIAL TASKS
UNIVERSITI ISLAM MALAYSIA, CYBERJAYA
WAQF

2. “But seek, through that which Allah has given you, the home of the Hereafter; and [yet], do
not forget your share of the world. And do good as Allah has done good to you. And desire not
corruption in the land. Indeed, Allah does not like corrupters” (QS Qasas 26:77)
MAIN OBJECTIVE OF WAQF
Definition of Waqf has been covered many a time elsewhere, so I
am not going to elaborate on that.
To me, Waqf is an Islamic endowment which serves…. as a bridge
between the benefactors and the beneficiaries
to provide solutions & bring to both success
in this world and in the hereafter.

3. WAQF IS THE ISLAMIC EQUIVALENT OF BENEFICIAL ENDOWMENT
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4. WAQF’S MOTIVATION IS THE HEREAFTER
➤ The greatest motivation to Waqf donors is that
their donation - whatever the amount may be -
will provide them with heavenly rewards on a
perpetual basis, ie. even after their deaths until
Judgment Day.
➤ Based on that, all Waqf funds strictly adheres
to the principle of Perpetuity.
➤ Organisations managing waqf donation must
always ensure:
➤ the original sum or value grow or at
least retained.
➤ the donation be acted upon and benefited
at the soonest.
➤ The two most practical applications of waqf
management to adhere to the principle of
Perpetuity are low-risk investment and
property acquisition/ development.
➤ In Malaysia, to avoid from going into the hands
of questionable parties, all Waqf donations are
centrally coordinated by the Ruler of every
Malaysian state, and administered under the
respective states’ Islamic Religious Councils.
images courtesy UIM
‫َا‬‫م‬َ‫و‬ ۚ َ‫ن‬‫ُّو‬‫ب‬ِ‫ُح‬‫ت‬ ‫ا‬َّ‫م‬ِ‫م‬ ‫وا‬ُ‫ق‬ِ‫ُنف‬‫ت‬ ٰ‫ى‬َّ‫ت‬َ‫ح‬ َّ‫ر‬ِ‫ب‬ْ‫ل‬‫ا‬ ‫وا‬ُ‫ل‬‫ا‬َ‫ن‬َ‫ت‬ ‫ن‬َ‫ل‬
ٌ‫م‬‫ي‬ِ‫َل‬‫ع‬ ِ‫ه‬ِ‫ب‬ ََّ‫هلل‬‫ا‬ َّ‫ن‬ِ‫إ‬َ‫ف‬ ٍ‫ْء‬‫ي‬ َ‫ش‬ ‫ن‬ِ‫م‬ ‫وا‬ُ‫ق‬ِ‫ُنف‬‫ت‬
Never will you attain the good
[reward] until you spend [in the way
of Allah ] from that which you love.
And whatever you spend - indeed,
Allah is Knowing of it.
(QS Ali Imran 3:92)

5. APPLICATIONS OF ISLAMIC ENDOWMENT (WAQF)
healthcarereligious community careeducation
➤ Generally speaking, endowment is an economic preposition to shift the burden of financing from
public coffers, as well as to avoid high cost of for-profit initiatives. At the same time, endowment
helps to lower direct costs to beneficiaries.
➤ According to Hamid (2015)1
, Waqf is not limited to religious purposes only and historically it has
been utilised to cover different needs such as education, healthcare, national security, commercial and
business activities, transportation facilities, shelter and food for the needy and poor. The list goes on.
➤ However, more structured applications of Waqf can historically be seen in education, religious,
healthcare and community care.

6. EDUCATION WAQF
➤ In the educational sphere, Islamic
endowment funds or Waqf are normally
put in investments and their returns
widely used for operational, academic,
research as well as developmental support
in:
➤ pre-schools, primary schools and
secondary schools
➤ religious/ tahfiz schools
➤ universities (colleges, university-
colleges, universities, post-graduate
universities)
➤ Most waqf initiatives are undertaken
by non-governmental organisations
(NGOs) and individuals. However, any
initiatives with Waqf branding
attached to it are closely monitored by
the religious councils of their
particular states.
images courtesy Google

7. HIGHER EDUCATION ENDOWMENT
➤ In several countries, endowment contributes
significantly by playing a micro-economic role for
certain higher learning institutions (or universities).
➤ Several universities in the United Kingdom, United
States, the Arab world, Turkey and South-East Asia -
especially not-for-profit establishments - depend on
endowment funds on top of tuition fees and business
unit revenues for sustainability.
➤ In MALAYSIA especially starting in the 2000s,
endowment is considered more and more strategic for
many public & private universities, in their quest
towards reducing financial dependencies on public
fund and capital injection.
➤ The first fully endowment-based universities in
Malaysia is an Islamic education outfit called the
Muslim College of Malaya (trans. Kolej Islam Malaya
or KIM), established in 1955 in Klang, Selangor. KIM
is now rejuvenated and endorsed by the Council of
Malay Rulers as Universiti Islam Malaysia (UIM) in
2010. Its present campus is in Cyberjaya.
➤ Before we talk more about Waqf in Malaysia’s higher
education, let’s first look at the rest of the world.
images courtesy UIM

8. UNITED KINGDOM
➤ Endowment is not a culture in the rest
of European higher learning
institutions, but in the UK it is widely
practiced.
➤ Private universities with large
endowments (more than £100m)
include Cambridge, U of Glasgow, U of
Liverpool, Imperial College London,
London School of Economics and Univ
College London.
➤ Public universities with large
endowments (more than £100m)
include Oxford, U of Edinburgh, U of
Manchester and King’s College London
➤ We have no data for not-for-profit
institutions which depend largely or
solely on endowment in the U.K.
images courtesy Wikipedia

9. UNITED STATES
➤ Endowment is much bigger and
more widely practiced in the US by
both private and public universities
compared to the rest of the world.
➤ Private universities with large
endowments (more than
USD10Bil) include Harvard, Yale,
Princeton, Stanford, MIT,
Northwestern, Univ of
Pennsylvania.
➤ Public universities with large
endowments (more than USD8Bil)
include Univ of Texas System (14
U’s), Texas A&M System (8 U’s),
Univ of Michigan, Univ of
California System.images courtesy Wikipedia

10. ➤ Al-Azhar University is arguably the oldest Waqf establishment in the world since
the year 972.
➤ Its total waqaf fund status is unknown, but estimated to be in access of USD10
billion at any given time. Alumni and governments continue to support the fund.
➤ Free education has been offered to all its local and international students,
including provision for accommodation, stipends, allowances and salaries for the
lecturers and staff. Malaysian students have also been given a free air ticket to
return to Malaysia on completion of their studies there.
➤ The tremendous impact of waqf education at the Al-Azhar University was clearly
proven when the Egyptian Government became completely reliant on its waqfs as
a macro-credit support in times of need for the survival of the State in previous
years.
➤ Besides al-Azhar, there are many other examples of universities in other countries
that benefit from the waqf assets, such as the University of Al-Qurawiyin in Fez,
Morocco; the University of Al-Muntasiriyyah, Iraq; the University of Cordova,
Spain; the King Abdul Aziz University, UAE; and the Islamic University of
Indonesia (UII).
EGYPT

11. ➤ In Turkey only two categories of universities exist:
➤ Public Unviersities
➤ Private and non-profit Universities (termed as ‘Vakif Universitesi’
or Foundation)
➤ There are about 68 Vakif universitesi and the number continues to
increase. Waqf funds are used to subsidise scholarships for the
students, and also for capital investment, staff salaries and the
operational costs of the University. There is also a small needs-based
scholarship programme; however, the benefits are largely for academic
merit (Mahamood, 2015).
➤ According to Othman (2016), Turkish model of waqf universities is
productive, accumulative, self-sufficient and sustainable due to its
strong support from its foundation and shareholders.
TURKEY

12. ➤ In Malaysia there are two types of universities.
➤ Public Universities (Universiti Awam or UA). UA are fully owned and run by
the Ministry of Higher Education.
➤ Private Universities (Institusi Pengajian Tinggi Swasta or IPTS). IPTS ownership
include state governments, state and federal authorities, corporate foundations,
public trustees, public-listed companies, and private companies or individuals.
➤ Both UAs and IPTSes can run their own endowment funds, but they need the state
religious authorities approval to run a Waqf fund.
➤ In Budget 2016, the Ministry of Finance (MOF) announced a deep budget allocation
cut (between 5 to 20%) for public universities, prompting the MOHE to come up
with innovative solutions on how UAs can generate income through other revenue
streams such as Waqf.
➤ In Malaysia all matters and types of Waqf are centralised at and coordinated by the
relevant state religious councils:
➤ land
➤ cash
MALAYSIA

13. ➤ Each state religious councils has different approaches to Waqf, but some
common denominators are:
➤ perpetuity principle
➤ non-transferablity
➤ original conditions set by the waqf contributor must be honoured (if any)
➤ cash waqf is only for low-risk investment and direct use for buying other
landbanks to be designated as waqf land, and for waqf land’s property
development only.
➤ Several state religious councils are beginning to be innovative so that waqf
landbanks which traditionally were endowed for religious purposes like
mosques, graveyards and the likes, can now be developed with commercial
and more ‘universal’ social activities like education and healthcare
(Integrated Development).

14. Under this model, a university that has been awarded the
administrator(mutawalli) status sets up a unit or
department under the management of the university itself .
University Waqf Committee is put under the University
Board of Directors as one of the Board’s committees. All
decision on waqf programs and activities are conducted upon
approval by the university management. All accounts and
financial management of waqf are under jurisdiction of the
university management.
Under this model, a university sets up a waqf office under the
University Board of Trustees. The University Waqf Fund is put
under the Board of Trustees as a project under the University
Foundation (Yayasan) having a separate account and financial
management.
PUBLIC UNIVERSITIES ARE MOVING INTO WAQF4
There are three possible GOVERNANCE MODELS to be adopted by public universities
in managing waqf. The universities can select any of these models depending on the
level of readiness of the universities and the state religious council. The most ideal
model is that of an independent Waqf Board structure as presented in Model 3.

15. In Model 3, University Waqf Board (UWB) is
established as a separate and independent entity
from the University. Collaboration and
coordination, as well as roles and responsibilities
of the UWB are spelled out in a written agreement
or Waqf Deeds. UWB members comprise of
representatives from both the University and SRIC.

16. PRIVATE UNIVERSITIES ARE ALSO INTO WAQF
There are few examples of private universities in Malaysia going into waqf but the model
used is unclear or different depending on their separate governances. Several state-based
colleges (Universiti Sultan Azlan Shah in Perak), foundation-based colleges (eg.
International Al-Bukhari University in Kedah) and NGO-based colleges are encouraging
Waqf from many benefactors such as alumni, philantrophists and the government.
➤ Private universities can be successful in Waqf endeavours provided:
➤ their operations are not or not significantly funded by federal or state government
budget.
➤ they are preferably not owned by individuals or corporations which may abuse
waqf contributions for own benefits.
➤ they are seen to be not-for-profit universities.
➤ If these universities are owned and are meant for-profit, a mechanism to separate
the governance of waqf and endowment must be implemented to ensure the main
principle of perpetuity, non-transferability and others remain.

17. 4 CHARACTERISTICS
OF A SUSTAINABLE
UNIVERSITY WAQF
FUND IN THE
MALAYSIAN
CONTEXT

18. 1. OPEN BOOK REPORTING
ON WAQF INFLOW AND
OUTFLOW
➤ Waqf for higher education is rather
new in Malaysia. Many
philantrophists has yet to buy-in into
this alternative. Many expect higher
education to be optional compared to
school-level or religious education
and therefore may priotise islamic
donation to higher education as
remote.
➤ To increase buy-in from benefactors
and to avoid mistrust, transparency
by the fund manager is required.
➤ There should be clearer separation of
accounting - Waqf, Endowment,
Contribution, Operational Revenues,
etc.
➤ Regular updates and reporting enable
CONTINUOUS ENGAGEMENT
with donors and philantrophists.

19. 2. SUSTAINABLE DEVELOPMENT
OF WAQF PROPERTIES
➤ Waqf landbanks should be developed
soonest to realise the benefits for the
donors.
➤ Development of a waqf campus must
have multiple purposes, one of which
should be economic viability.
➤ For higher education, governments
and individuals can offer a non-profit
university landbanks for campus
development and allow those
landbanks to be turned into
commercially viable projects as well as
for the original intention which is
higher education.

20. 3. TRUST AND RELATIONSHIP
WITH STATE RELIGIOUS
COUNCILS
➤ In Malaysia, all waqf matters
(landbanks and cash) are coordinated
by the state religious authorities.
➤ For a university to be waqf-based, it
must be appointed as the mutawalli
(representative). All waqf lands must
be entrusted to the council. All
properties built on waqf land are
considered waqf in itself and thus, be
part of the council’s jurisdiction.
➤ It must report all waqf activities. It
must have clear accounting. It must
be willing to let all waqf benefits to
be shared with the general ummah.
➤ Such free-flowing relationship is key
to ensure success.

21. 4. INVEST! INVEST!
➤ According to Mahamood (2015), in Turkey, waqf
universities are not permitted to engage in
investment as their establishment was based on a
foundation of non-profit institution. The income
of the university should be used solely to improve
the university in terms of scholarships, research
and any capital investment required.
➤ Such model may be suitable in Turkey but not
sustainable in Malaysia as cash waqf must remain
perpetual and only its benefits can be used for
scholarship, research even operations. Hence,
cash waqf investment is necessary.
➤ Waqf investment in bourses and equity markets
must be partaken in low-risk portfolios.
Investment in properties should preferably be
prioritised firstly towards an expansion to the
university’s core business, then in high-potential
commercial and residential areas, or in plantation
projects with reasonable turnover. All these steps
are necessary to maximise benefits without
compromising values.
➤ The role of Chief Financial Officers or Bursars in
universities becomes more challenging due to the
need to invest, divest and re-invest waqf fund
effectively.

22. WAQF
MODELS FOR
HIGHER
EDUCATION

23. WHY THE NEED FOR A MODEL?
➤ Waqf/ endowment models or structures are necessary to
provide contributors with the birds-eye view of how waqf/
endowment is being governed and managed for a university.
➤ Waqf models also serve as the guiding framework to
improvise the university’s waqf policies and procedures as
time goes by.
➤ There are limited types of beneficial waqf / endowment hence
the practicality of such models can be easily understood.
➤ There are primarily two types of models: governance model
and business/ management model.

24. TYPES OF WAQF/ ENDOWMENT SUITABLE FOR A UNIVERSITY
Monetary Books
Unit
Trusts
Building/ Property
Land (vacant/
agro)
Others

25. WAQF GOVERNANCE MODEL FOR HIGHER EDUCATION
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26. UNIVERSITY WAQF/ ENDOWMENT MANAGEMENT (BUSINESS) MODEL
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27. CONCLUSION: FUTURE OF WAQF IN MALAYSIA’S HIGHER EDUCATION
➤ Waqf has potential for exponential growth in Malaysia due to a number of reasons:
➤ clearer understanding assisted by deeper research and findings by the academia
community on waqf and endowment.
➤ renewed interests by many quarters in the potential of waqf as an alternative
Islamic economic tool.
➤ government’s commitment to make higher education available to all and
therefore the need to contain the costs towards getting a degree.
➤ rigorous promotion and waqf fund-raising activities by waqf authorities and
representatives (mutawalli).
➤ Waqf and endowment success in the future depend greatly on the continuous trust
by the beneficiaries towards the universities handling the funds. Regular reporting
➤ The government can assist by introducing a 3rd category of universities - waqf/
endowment-based university category.

28. REFERENCES
1.Abdul Hamid, Mohamad, Wisdom in Strategic Ventures and Alliances of Waqaf Funding for Higher
Education. La Sagesse (Wisdom in the Islamic World), 1/2015. 39-45.
2.Mahamood, Siti Mashitoh & Ab Rahman, Asmak, Financing universities through waqf, pious
endowment: is it possible? University of Malaya. 2015. 446.
3.Othman, Shaya’a, Managing Waqf for Educational Development. International Institute for Islamic
Thought. Feb 2016.
4.Malaysia’s Ministry of Higher Education, Enhancing University Income Generation, Endowment &
Waqf , Sept 2016, 39.
5.Sheikh Omar, Fahmi, Universiti Islam Malaysia. 2016.
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