Role of Waqf (Endowment) Funds in Financing Small Projects
Abstract Purpose: The purpose of this paper is to show the role of charity sector by enabling unemployed through Islamic endowments. One of the most important endowment kinds is cash waqf, which was authorized by Maliki position and others. This paper focuses on endowments fund as a type of cash waqf. Background: Most of the important challenges, that face the Islamic nation, have been reflected in the economic side. Most importantly are: the decline in per capita in GNP, the widespread of poverty and the prevalence of the phenomenon of unemployment which represents a grave danger that increased among youth. The rate of unemployment requires necessary treatment or else it will be hotbeds for terrorism, corruption, and crimes. Global experience has shown that the most successful method for the treatment of unemployment is through microfinance. But these kinds of projects require funding which Islamic governments failed to provide. We need to search for new sources of financing. Design/ methodology/ approach: The study reviews the extant literature relevant cases and provides some successful experiments in selected Islamic countries. Findings: The paper adopted several methods of formatting endowment funds: at the case of keeping standing endowment funds or by establishment of new endowment funds, also in the case of funding the small entrepreneurs by the waqf owner himself. Research implications: To activate endowment funds we suggest developing it to a financing instrument for microfinance. Keywords: Cash waqf, endowment funds, small projects, microfinance Introduction Our Islamic nation faces enormous challenges, and it's very difficult to numerate them all now. Economy is one of these affected fields, starting from the decline in per capita in GNP, the widespread of poverty and the prevalence of the phenomenon of unemployment which represents a grave danger of being run rampant in youth. This situation requires urgent treatment, in order not to push naive people to be hotbeds of, corruption, crimes and ultimately terrorism. Problem Identification Most successful method to treat unemployment, according to Global experience, is through the rehabilitation of the unemployed by enabling them to carry out their small projects. These projects require funding which governments failed to do. For example, all efforts including government effort cover just about 10 percent of microfinance market in Pakistan in 2013 (Shirazi Others, 2015) We need to search for new sources of financing. Unfortunately we always forget the hadith of our prophet, peace is upon him, (left you on the right path, its night clear as its day, and no one deviates it, only mortal) This path began with organizing the whole of human life, including the economic side of this life, half of Fiqh is the transactions, and enacted a lot of tools to treat the problem of poverty of Zakat and Wqaf, etc. Objectives of Research The purpose of this paper is to show the role of charity sector by enabling the unemployed through endowments. So, the research aims to shed light on the role of one of endowments (cash waqf) and its role in microfinance. Methodology and Structure of Research To achieve the purpose of this study, the researchers used inductive method to cover the issue and its aspects, as they will resort the deductive method to obtain the necessary rules with regard to the issues of cash waqf. There have been some researches tackled the relationship between waqf and microfinance (Amuda, Others, 2016; Dakhli, 2016; Mohamed et al. 2015; Shabana, 2011; Shirazi et al. 2015) This research differs in suggesting the cash waqf as a fund. To achieve research goals, the research is divided into four sections, the first section deals with small enterprises in terms of the concept, the second one shows the opinions of Fiqeh (or rule) in cash waqf, the third section explains the role of waqf funds as a kind of cash waqf (financing) foxing on some successful experiments in selected Islamic countries.