Saudi-owned Al Arabiya TV carries a Reuters report on a re-evaluation of waqf (plural, awqaf, Islamic endowments. These organizations hold billions of dollars of assets, often in the form of real estate, that were left by Muslims upon their death in order to perform social benefits. The various awqaf sponsored schools, hospitals, mosques, and charitable organizations. Over the centuries, the organizations frequently became the target of state governments who took them over — both surreptitiously and blatantly — but many remain independent. The problems with them is that few of their managers (whether state or private) are good asset managers. As a result, many operate with little or no profit: they are a wasting asset.
New efforts are being suggested on how to move their management in a more modern direction. It’s a worthwhile move.
Islamic endowments edge towards modern management
Reuters, DUBAI -
A fund management venture set up in Dubai this month is taking aim at one of the great backwaters of the Middle Eastern economy: Islamic endowments, which control tens of billions of dollars of assets around the region.
The endowments, known as awqaf, receive donations from Muslims to operate specific social projects, such as mosques, schools and welfare schemes. The system goes back more than a thousand years, to soon after the birth of Islam.
Over the past few decades, as Middle Eastern populations have grown and the Gulf’s oil industry has boomed, awqaf have amassed a vast array of assets, from real estate to cash holdings, equities and even valuable books.
But the management of these assets has failed to keep up with their expansion; money is often tied up in property or bank deposits that earn miniscule or even zero returns, analysts of the industry say. That imposes a heavy economic cost on a region which is struggling to boost private sector growth.