Timur Kuran, a Turkish-American scholar, highlights in his paper that two crucial legacies of Islamic civilization have significantly shaped the global economy: waqf (endowment) and qard (Islamic financial contract). Linguistically, waqf means to halt, restrain, or cease. In Islamic jurisprudence, waqf is understood as the relinquishment of ownership of an asset (returning it to Allah) so that it may be used for the public good and beneficial purposes, in accordance with the conditions stipulated in the endowment agreement.
Qard, as mentioned in the Quran, is generally associated with Qard al-Hasan, meaning a benevolent loan given purely for the sake of Allah. Practically, Qard al-Hasan is an interest-free loan extended with the intention of seeking divine pleasure rather than financial gain. Over time, qard evolved into a form of capital loan or investment based on mutual trust within communities. In Islamic jurisprudence, such agreements were formalized through written contracts witnessed by two individuals—an unfamiliar concept in medieval Europe at the time.
This practice later influenced the development of financial instruments in Europe, particularly in trade and commercial partnerships. Many European merchant groups relied on contractual agreements as a basis for financing. These agreements eventually evolved into letters of credit, derived from the term credo (Latin for trust) or qard. Today, financial contracts have become highly sophisticated, with various securitized instruments serving as a foundation for global economic transactions. However, despite its revolutionary impact on economic civilization, the system is also vulnerable to fraud and exploitation.
The Significance of Waqf in Global Civilization
Another vital contribution of Islamic civilization is the concept of waqf. The public declaration of waqf was first introduced by the Prophet Muhammad (PBUH) when Umar ibn al-Khattab (RA) endowed the lands of Khaibar. Since then, waqf has evolved into various forms, shaped by time and place, with differing interpretations among Islamic scholars.
Historically, many Islamic dynasties and kingdoms distinguished between private property and waqf, ensuring that endowed assets remained outside personal ownership. This concept, however, has not significantly evolved in modern governance. Today, ownership and territorial control are considered inseparable, with no alternative frameworks for managing land and property rights. This is in stark contrast to earlier civilizations, including pre-modern Europe, which operated on a feudal system that fused ownership and dominion, often resulting in slavery and caste-based hierarchies. Over time, European monarchies monopolized land ownership and governance—a model that influenced modern nation-states’ territorial boundaries.
Waqf and State Governance
The Indonesian Constitution (UUD 1945) states that the nation has control over land, water, and natural resources. The phrase “has control over” represents a nuanced interpretation of state authority, similar to the Islamic concept of qard. Muhammadiyah scholars refer to this idea as Darul Ahdi wa Syahadah, where a nation is established through a mutual agreement among its citizens. The phrase “has control over” rather than “owns” suggests that state governance recognizes individual, collective, and customary ownership while maintaining oversight in the public interest. This legal framework underscores the importance of empirical, historical, and collective evidence of ownership, ensuring that state intervention serves the greater good without violating individual rights.
The modern nation-state—a concept that only materialized in the 19th century—was largely inspired by earlier civilizations that regulated property and governance. The evolution of statehood influenced democratic and socialist movements, both of which sought to redistribute power and ownership from monarchies to the people.
Waqf, Endowment, and Trust in Western Societies
The concept of waqf also inspired the development of endowments and trusts in Western financial systems. Endowments refer to the management of assets for public welfare, while trusts involve capital administration for collective benefit. In practice, both models are similar and enjoy tax exemptions as incentives.
The fundamental principle of waqf is the cessation of private ownership for the sake of the public good. However, such a system can only function if ownership rights exist in the first place. In Islamic jurisprudence, waqf is a voluntary renunciation of individual ownership, returning the asset to Allah. This process is formalized through an endowment contract, where a designated nazir (trustee) assumes responsibility for managing the waqf according to its stipulated terms, with the ultimate aim of seeking divine reward.
The Genetic Legacy of Waqf in Islamic Civilization
Over the centuries, waqf has become deeply embedded in Islamic teachings, offering a range of interpretations and applications adaptable to different contexts. While waqf is not an obligatory religious pillar, collective wealth management within the Muslim community has often relied on the waqf system. In the modern era, this function has largely been assumed by the state, which now serves as the primary institution overseeing public welfare. Historical accounts illustrate how donated buildings, roads, and lands became state assets—an integral part of Indonesia’s historical and legal traditions. This genetic legacy of waqf continues to shape Islamic practices in the Nusantara region and should be further cultivated.
Waqf and Customary Land: A Historical Debate
The genetic legacy of waqf also manifests in various societal structures, such as customary land (tanah ulayat) and indigenous land ownership. In the early 20th century, prominent Islamic reformers from Sumatra—including Thawalib scholars like Sheikh Abbas Abdullah, Sheikh Abdul Karim Amrullah, and Sheikh Ibrahim Musa—advocated for a renewed understanding of customary land ownership in alignment with Islamic principles. Their goal was to optimize land use for collective benefit. Later, HAMKA also emphasized the need to classify traditional wealth as waqf assets, though significant shifts in public perception have yet to materialize.
The Urgency of Waqf Optimization
Today, many of the concerns raised by early reformers have been proven valid. We continue to witness the fragmentation of inherited assets, particularly in matrilineal societies, where land is divided according to maternal lineage. Additionally, vast waqf properties remain underutilized, despite their potential to be converted into productive assets. This issue should be a priority for community leaders and religious scholars, who must work towards revitalizing waqf as a tool for social and economic empowerment.
The Future of Waqf: A Model for Sustainable Development
Waqf is one of the most advanced and forward-thinking economic concepts, providing an alternative model for ownership and resource management that prioritizes public benefit. As human civilization progresses, waqf remains a mature and ideal system for optimizing societal welfare. By enhancing the waqf framework, we can address critical public needs, particularly in education, healthcare, and social welfare.
It is essential for reformists and scholars to identify and refine the existing waqf models, ensuring that their management aligns with contemporary needs while maximizing societal benefit in accordance with their founding agreements. The waqf system, deeply rooted in Islamic civilization, should be continuously adapted and strengthened to serve future generations.
References:
- Abdul Aziz,Ahmad Hafiz Bin; Zhang,Wei; Hamid,Baharom Abdul; Mahomed,Ziyaad; Bouheraoua,Said; Kasri,Noor Suhaida; Sano,Mohamed Al-Amine. (2019). Maximizing Social Impact Through Waqf Solutions (English). Washington, D.C. : World Bank Group.
- Afifi, A. A. (2024). Waqf Business Model (WBM): Towards A Sustainable Social Business Model on The Mainstream Economics. Journal of Regional Development and Technology Initiatives, 2, 63-78.
- Afifi, A. A., & Abbas, A. F. (2020). Periode Perkembangan Darulfunun El-Abbasiyah 1854-2020. AL-IMAM: Journal on Islamic Studies, Civilization and Learning Societies, 1, 1-12.
- Afifi, A. A., Adrian, H., Azami, E., & Farid, M. (2024). Re-Viewing Sumitro’s Policy and Industrial Maturity: Powering Downstream and Manufacturing Industries for Economic Growth and Sustainable Society. Journal of Regional Development and Technology Initiatives, 2, 79-102.
- Arshad, M. N. M., & Haneef, M. M. A. (2015, April). Repositioning issues of waqf as a third sector organization into the mainstream economy. In Asia Pacific Awqaf Congress, Sydney, Australia (pp. 15-17).
- Elasrag, Hussein. (2017). Towards a New Role of the Institution of Waqf.
- Kuran, T. (2008). Islamic Economic Institutions. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London.
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How to cite:
Afifi, A. A. (2025). The Genetic Legacy of Waqf. Waqf Business Review.
