Since all the previous posts are all about the big issues that seems impossible to solve, let me be clear on this post as I proposed one solution to clear the mess in our current economy and of course financial systems. Waqf is one of the tool that provides economics sustainability in the many Islamic caliphates and it really is a powerful tool. And this kind of contract is very possible for having the similar impact in our modern economy.
In terms of the Shariah ruling, waqf has been derived from the hadith which states three benefits that will be long last for human life; the useful knowledge, pray from good kids and unbreakable donation. People used to interpret that the point of unbreakable donation is a donation that brings good situation to the beneficiaries which they will bring similar situation to their related and so on. And yet I also was thought this kind of perception in the pass. However, when I've been exposed about this waqf, thanks to Prof. Magda Ismail in her economics class, just then I realized that the meaning of the hadith is about this instrument; Waqf.
Waqf as I mention is an unbreakable donation. It has three ground rules which are irrevocable, unalienable and perpetual. Therefore, waqf is somehow an ultimate donation that cannot be decrease in value and sometimes it was called to be an asset that own by Allah. Of course all asset is own by Allah, but for a man that already given an amanah by Allah to own the asset and gives it back to Him, it must has some special position by Allah.
Cash Waqf moreover is an innovation by Islamic scholars in response to the development of the modern economy. Although cash naturally is not suitable for waqf since it is revocable, Islamic finance scholars has developed the use of it and making it able to suit the waqf characteristics.
The transaction model is simple, just like endowment fund if I have to say. People will inject cash to the waqf fund, and this fund will be invested in the very secured manner. It is due to the first rule of waqf which is the asset cannot be decreasing in value. Its not even numbers, it is value thus the fund also should consider the inflation rate and so on. Then only the profit will be given to the beneficiaries, yet this profit will be given forever periodically without any some sort of maturity point. Therefore, it really is the instrument that creates sustainable development for the beneficiaries.
Practices of this cash waqf still hard to find due to the low literacy of waqf itself. However, some financial institutions like islamic banks or takaful have considered this type of contract to be included in their respective systems such as corporate waqf or waqf-based risk fund. However, people should practice more on this waqf since donation itself is not enough to give sustainability in our economy.
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