CASH WAQFS AND MODERN ISLAMIC ECONOMIES
MURAT CIZACKA
The Cash Waqf constituted a special category of Islamic endowments and played a major role in Ottoman financial history, facilitating the flow of funds from those who were able to save to those who needed capital, primarily entrepreneurs, but also to members of the public. For this reason, the Cash Waqf is considered to be one of the most significant Ottoman contributions to Islamic civilisation.
The Cash Waqf was basically the establishment of a trust with money, the return from which would be utilised for serving mankind in the name of God. These endowments were approved by the Ottoman courts as early as the beginning of the 15th century and by the end of the 16th, they had become extremely popular all over Anatolia and the European provinces of the empire. Yet they found little, if any, application in the Arab provinces.
In a society where health, education and welfare were entirely financed by gifts and endowments, the Cash Waqfs carried serious implications for the very survival of the Ottoman social structure. Moreover, they were instrumental in the emergence of a legally sanctioned and widespread money market. Looking at the relative importance of these institutions with respect to the more traditional Waqf, i.e., the Land Waqfs, it becomes clear that while the Cash Waqfs, constituted about 16 per cent of the Awqaf established during the reign of Mehmed the Conqueror, in the year 1505 the ratio increased to 50 per cent and by about 1560 they had become the dominant mode of endowment.
Legal Background
The legal issues surrounding the legitimacy of Cash Waqfs are complex and have contributed to a long debate among jurists. Th e debate concentrates on three issues: the endowment of moveable assets, the problem of perpetuity and the danger of Riba when transferring the endowment funds.
Classical Islamic Jurists
Being devoted Hanafis, the Ottomans naturally conducted their affairs within the general guidelines established by this school of thought.
The first controversial area was the question of moveable assets. Since the perpetuity of the endowed asset is the essence of any Waqf, in principle, the endowment should consist of real estate. However, Hanafi scholars recognised three exceptions to this general principle. First, the endowment of moveable assets belonging to an endowed real estate, such as the oxen or sheep of a farm, was permitted; second, if a relevant Hadith could be found; and third, if it was the established custom in the region.
The third provision was sanctioned by Imam Mohammed al-Shaybani, who ruled that even in the absence of a relevant Hadith, the endowment of a moveable asset was permissible. However, according to some sources, even tradition was not a required condition, as Imam Muhammed had, in practice approved the endowment of moveables in regions where there was no such tradition.
Furthermore, both Imam Muhammed Al-Shaybani and Abu Yusuf confirmed the endowment of moveables attached to real estate. In view of this, it is not surprising that there are frequent references to combined cash/real estate Awqaf in the Ottoman records.
The next problem concerns the definition of a moveable asset, or more specifically, can money be considered as a moveable asset and therefore be permitted as the basis for the establishment of a Waqf? It was Imam Zufer who answered this question in the affirmative and ruled that the endowment of cash was permissible.
Zufer went into details as to how such an endowment could be organised: the endowed cash could be given as the capital of a Mudaraba partnership and the profit made would be spent in accordance with the general purpose of the Waqf, as stated in its charter. If the moveable assets endowed were not cash, then they could be sold in the market and the cash thus obtained could be utilised as the capital of a Mudaraba.
Thus, the approval of Imam Muhammed Al-Shaybani and Abu Yusuf of moveables as the basis of a Waqf, and the fact that Imam Zufer considered cash to be a moveable asset and approved of the cash endowment, constituted the foundation upon which the later Ottoman jurists built the structure of the Cash Waqf.
The establishment of Cash Waqfs by the Ottomans during the 15th century appears to have taken place smoothly and without any legal complications. But during the next century, when these Waqfs became popular and began to dominate the Waqf system, the military judge of Rumeli (the European provinces), challenged the rulings. He was almost immediately answered by Sayh al- Islam, Ebussuud Efendi, and a fierce debate began, which lasted for more than a century. However, the Cash Waqfs continued to enjoy the support of the state and were able to flourish.
Relevance of Cash Waqfs
If an attempt is to be made to gauge the relevance of the Cash Waqfs to modern Islamic economics, then many questions surrounding the Cash Waqfs, their function, relevance and demise must be answered.
First is the matter of perpetuity, (supporters of the Cash Waqf initially arguing that these Awqaf had as good a chance for survival as any other real estate, and the opposite within a relatively short time). Is it possible to look into this problem in retrospect and judge which side was justified?
We also need to find out why these endowments disappeared so rapidly. Was it because they were badly managed or was it due to other factors? Also, in what way did this institution contribute to the process of capital accumulation? This question has to be tackled from both perspectives, i.e., from the point of view of the savers as well as those who used the funds. More specifically, did the savers pool their capital to form joint Cash Waqfs, or add their capital to the already existing ones? Did the users of capital have recourse to several Cash Waqfs so as to enlarge the available pool of capital at their disposal? Also, how were funds transferred to the entrepreneurs or to the public, and how was the Islamic prohibition of Riba observed? In other words, were criticisms of Cash Waqfs that they violated Islamic law, justified?
And looking to the future, we must ask to what extent can the Cash Waqfs be considered relevant to modern Islamic economics? Would it be possible to initiate a process of modernisation of this institution whereby the mistakes of the past could be avoided and the advantages maintained? If yes, what characteristics should be avoided and what should be kept?
Cash Waqfs and the Problem of Perpetuity
Since perpetuity is considered to be the cornerstone of any Waqf, an analysis of the survival rate of the Cash Waqfs is crucial. Although the Turkish archives are extremely rich, and some 400 million documents are preserved in the Istanbul Archive, unfortunately, only a small fraction of these sources have so far been studied by historians.
However, according to the Barkan-Ayverdi study, there were 1139 Cash and Cash/rent Waqfs in Istanbul during the period 927-953 (1520-1546). Out of these, only 324 survived to be included in the census of the next period, 953-986 (1546-1578). But in this period, 138 new Awqaf were established, thus bringing the total number to 462. Of these, 452 survived into the next period, 986-1005 (1578-1596). In this period, 75 new Awqaf were founded, thus bringing the total number up to 527. Unfortunately, the Barkan-Ayverdi study ends here, leaving us in the dark about the fate of these 527 Waqfs.
Fluctuations in Waqf Fortunes
However, even this incomplete data gives us some important insights into the institution. For some obscure reason, there appears to have been a massive decline in the number of Cash Waqfs between the periods 927- 953/1520-1546 and 953-986/1546-1578. Even so, the Awqaf had survived the earlier periods and the newly established ones during the period 953-986/1546-1578 survived more or less intact into the next period, 986- 1105/1578-1596, when the numbers of the newly established Waqf increased greatly and it is possible to observe an upswing in the overall trend.
Just what forces were behind these fluctuations are difficult to ascertain. But one thing is certain: the Cash Waqfs do not exhibit a downward linear trend and disappear into oblivion as Barkan and Ayverdi suggest. Instead, it is possible to observe cyclical fluctuations.
This theory is supported by the finding of four Waqf censuses belonging to the city of Bursa covering the period 1077/1666 to 1220/1805, and the registers B 135/150, B 199/423, B 211/434, B 352/736, and which indicate that the Cash Waqfs even at this late period were alive and well.
Unfortunately, it is too early to answer the first question. To do so, would mean that a continuous series of Waqf censuses covering several centuries be identified and studied. Only then can we judge which side of the perpetuity debate was actually correct.
However, concerning the second question, we need to go deeper into the management issue. Obviously the most fundamental reason for the collapse of the cash Waqf was the mismanagement of its funds. Such mismanagement could have occurred in a number of ways; the funds could have been usurped by unscrupulous managers or entrepreneurs, or, more likely, the returns achieved by these funds could simply have been less than the inflation rate. Let us now examine what kind of precautions were taken to avoid these problems.
First of all, there is absolutely no doubt that a well-developed system of collaterals and sureties was applied. To give one example: in the year 1002/1593, the foundation for supporting the mosque of the Gurbetler village in the vicinity of Bursa was managed by a certain El-Hat Mehmed. Mehmed transferred the funds of the Waqf to II different individuals. Seven of these had to provide collateral and three had to present other individuals who stood as sureties.
The only person who did not have to provide a collateral or a surety was Mehmed bin Abd-el-Rasul, who was probably well known to, and trusted by, the Waqf manager.
Profits Versus Costs
Let us now look into the question of the rate of return. The Waqf census from the year 1181/1767, catalogued under the number B 199/423 in the Bursa Ottoman Court Registers, reveals important information. All the Awqaf were registered in this defter according to a pattern. First comes the name of the Waqf, which reveals briefly its purpose. Then the name of the trustee is stated. The amount of the capital or Asl-mal is immediately followed by the statement: Murabaha fi se ne-i kamile, i.e., the rate of return in a full year. This is followed by the statement Minha al-desarif, i.e., the total expenditure of the foundation in that particular year.
A sample of 69 cases out of the above-mentioned defter containing some 300 Awqaf provide the following information. In most cases the annual rate of return was preserved for Sadaka, which was usually paid as salaries to the Muezzin or Imam of the local mosque and to those who could read a section of the Qur’an every day; 22 of the Awqaf enjoyed a rate of return greater than the expenses incurred; 14 of these had also made profits above the expenses in the previous year and these profits were added to the capital.
Thus, it is reasonable to assume that in all of the 22 cases, the profits would be added to the Asl-mal, i.e., capital of the foundation in the next year. In all cases, the rate of return was usually 10 to 12 per cent. In eight of the Awqaf there was a merger with other foundations and the capital was thus increased.
The vast majority of the cases studied were Cash Waqfs (61 in total) versus only eight combined Cash/Real Estate Waqfs. Thus, it is clear that despite the legal debate mentioned above, the Cash Waqfs maintained their popularity and continued to dominate the Awqaf system as late as the second half of the 18th century.
Also, most of the Awqaf studied were utilising their capital in full. That is to say, they regularly transferred all of their funds to entrepreneurs or members of the general public. Only four of them kept money idle in their safes.
Concerning the second question, i.e., the management of the Awqaf, the following conclusions can be drawn. The first is that these institutions were profitable. This is supported by the fact that whereas the Awqaf, in general, were generating a profit rate of 10- 12 per cent per annum, the rate of inflation was less than five per cent throughout the 18th century. Thus, there is no doubt that the Awqaf were enjoying substantial profits, at least in the short term.
The long-term profitability, on the other hand, is a different story altogether Normally, the long-term profitability could easily have been ensured by reinvesting the above-mentioned profits and adding them to the capital. This, however, was not done. As we have seen above, the profits, or Murabaha fi se ne-i kamile were distributed to a number of individuals who were performing certain religious, educational or health services, as salaries. Although, their work was no doubt of great social importance, nevertheless, from the perspective of the long-term sui-vival of the institution, such expenditure was unproductive. Consequently, the long-term resilience of the Waqf was endangered.
On the positive side, these recipients of the Waqf income had, in addition to the social services mentioned above, another very important function. Since they were receiving their salaries from the profits of the Waqf, they were the first ones to notice if there was any irregularity in the Waqf management. Indeed, there are many cases indicating that whenever these individuals suspected the trustees of the Waqf of embezzling funds, they immediately notified the courts. In short, the recipients not only fulfilled a social service, but also functioned as a control mechanism.
At this point, one wonders, if there was any link between the problem of long-term profitability and survival and the rapid decline in the numbers of Cash Waqfs observed by Barkan during the second half of the 16th century. Although the unproductive investment of the Awqaf profits could explain a gradual decline and disappearance of the Cash Waqfs over the long term, it cannot explain such a rapid disappearance as observed by Barkan.
Move to Real Estate
Because of this, it can be said that what Barkan observed was not so much a disappearance of Cash Waqfs, but rather a massive conversion of them into Real Estate Waqfs or Istibdal. After all, the period in question was marked by one of the most severe inflationary cycles in Ottoman history. Faced with an inflation of such shocking proportions, the trustees probably chose the most rational avenue open to them, namely the conversion of the cash capital of the Waqf into real estate.
Testing this hypothesis requires a thorough investigation of the Waqf censuses during the inflationary second half of the 16th century. Since the results of such a comprehensive and difficult research will probably take years to emerge, let us for the moment concentrate on the problem from the judicial perspective and determine if conversion of endowed assets was permitted by the authorities.
The legal term Istibdal simply means the conversion of the endowed asset into another type of asset. As such, Istibdal is considered as one of the ten conditions, or Shurut-u ahsere, which the founder of the Waqf may dictate when he establishes the Waqf Since Istibdal has important implications for the perpetuity of the Waqf and because it is open to unscrupulous exploitation, it has been carefully scrutinised by the jurists both before and during the Ottoman era.
According to the Hanafi jurists, the Istibdal procedure may be resorted to, if the founder includes Istibdal within the original charter of the foundation., if the foundation has ceased to become profitable or begun to suffer losses, thus endangering the perpetuity, or if there is a convincing argument that conversion of the endowed asset would enhance the financial situation of the foundation.
It is well-known that Ebu Yusuf had confirmed this procedure, subject to the approval of the judge. This third condition, however, was challenged later on by the Egyptian jurist Ibn-i Nuceym. Finally, the matter was settled once and for all by the Imam-i Azam of the Ottomans, Ebussuud Efendi, in the year 951/1544, who ruled that Istibdal would be valid only if approved by both the Ottoman Sultan and the local judge.
Thus, it can be concluded that whereas Istibdal could be resorted to with relative ease before 951/1544, after this date it became far more difficult to do so.
In this context it is revealing that the rapid decline, observed by Barkan, in the number of Cash Waqfs had taken place in precisely this critical period: 1520/1546 and 1546/1578, thus giving us the impression that large numbers of Cash Waqfs might have been converted into Real Estate before 1544, when it was relatively easy to do so. In the next period, that is two years after Ebussuud’s decision, the decline in the number of cash Waqfs suddenly halts, followed in the next period by a recovery.
As for the third question pertaining to the process of capital accumulation, we can learn the following from the Waqf census of 1767 in the city of Bursa. First of all, as we have already noted above, out of the 69 cases examined, eight were mergers of Waqfs. Thus, Waqf mergers represented a certain type of capital accumulation. In this way, not only would the assets of a declining Waqf be protected from demise, but they would also be utilised to enhance the financial power of another.
As far as the simple citizen is concerned, the Cash Waqfs provided a substantial opportunity for capital accumulation. In a society where the deposit banking system did not exist owing to the prohibition of Riba, Cash Waqfs must have constituted the only source of capital for the ordinary folk. In reality, it seems they have successfully performed the most important function of the banks, i.e., the diffusion of capital from those who have been able to accumulate it to those who have not been able to do so.
Despite the popularity of the Cash Waqfs, many still dismissed its provision of capital as being a form of Riba. This poses the question of whether their criticism is justified or whether, in actual fact, the situation is rather more complicated.
First, as has already been mentioned, the register of transactions used the term Murabaha to refer to the annual return, and although Murabaha is considered to be a synonym of Riba in contemporary Turkey, it obviously carried a different meaning during the 16th century. In actual fact, the term comes from the root Riba which simply means profit.
According to an Ottoman jurist: “…. has decided to endow the said amount which will be profitably invested through Muamele-i-shariye and Murabaha-i-mer’iyye at the rate of 1.25 dirhams for every ten dirhams. The trustees will see to it that their financial operations will be free of Riba.”
Muamele-i-shariye is a general term meaning a commercial operation in conformity with the Sharia, while Murabaha-i mer’iyye means a rate of return that should be observed in commercial operations. The expression “at the rate of 1.25 dirhams for every 10 dirhams” refers to Ilzam-i ribh, or the profit. It indicates whether the money advanced by the Waqf is in the form of a Qard or in the form of profit-sharing. It has been argued that the specific rates given above, do not refer to Riba but merely state that for every 10 dirhams earned by the borrower or entrepreneur, 1.25 dirhams should be returned to the Waqf.
There are other documents that support the view that Murabaha was used as a general expression meaning profit. One gave the example of a Cash Waqf which was founded with a capital of 5,000 akces. The Murabaha of the Waqf was stated as 2,000 akces, thus indicating a rate of return of 40 per cent. Clearly, such a high rate of return could only have been earned through profit-sharing and so provides us with more evidence that Murabaha was used as a general expression meaning the profit and could also refer to other financial instruments such as Mudaraba or Musharaka. In view of all this, dismissing the Cash Waqfs, as many have clone, simply as Riba institutions, is a gross oversimplification, or at the very least is due to a misinterpretation of the complex legal terminology.
It must also be remembered that much of the debate among the Ottoman jurists on the issue of the Cash Waqfs focused on the problem of establishing a Waqf with moveable assets, which can be taken as an indication that the contemporary jurists did not have any qualms about the way these Awqaf transferred their funds to the entrepreneurs. And concerning the problems of perpetuity, any conclusion has to wait until an analysis of Waqf censuses covering several centuries is completed. For the moment we can only assert that the ‘disappearance’ of the system may only indicate a massive Istibdal in response to the economic needs of the period. However, if the critics are indeed right and the Cash Waqfs did in fact vanish, a probable explanation can be found in the way the profits generated by these Awqaf were utilised. Only 32 per cent of the cases examined generated profits above costs, and these were given over entirely for religious and educational purposes. In fact, the majority of the Awqaf studied allocated their entire profits to such expenditure. Re-investment of the profits and enlargement of the original capital was curiously lacking.
Cash Waqfs and the Modern World
The basic function of the Cash Waqfs was to transfer the excess savings of the well-to-do to those who needed capital. This institution performed this function within the framework of Islamic financial principles. The same function is currently performed by Islamic banks. As such. Cash Waqfs should be considered as a complementary measure, and not an alternative, to the Islamic banks already operating in most Islamic countries.
It has been explained elsewhere that while Islamic banks have proven themselves, at least in the case of Turkey, by generating profits well above the conventional Riba banks, they are nevertheless subject to criticism for resorting overwhelmingly to Murabaha in transferring their funds to entrepreneurs. The Murabaha, in the modern context, however, is considered to be dangerously close to Riba. Consequently, the Islamic banks are faced with a dilemma: while, on the one hand, they generated handsome profits thanks to Murabaha, on the other, they are criticised for achieving their profits through this particular instrument.
In response to such criticism, Islamic banks have made great efforts to utilise Mudaraba and Musharaka partnerships, but so far to no avail. The deadlock persists and Murabaha dominates the investment portfolio, at a rate which some claim is as high as 95 per cent.
The inability of Islamic banks to transform their investment portfolios is due to several reasons. Many who occupy managerial positions in the Islamic banks, usually, have learned their trade in the conventional banking system and not surprisingly prefer those Islamic instruments of finance closest to the methods of finance utilised by conventional banks. Since risk minimisation is one of the best-established principles of conventional banks, the riskier Musharaka and, particularly, Mudaraba partnerships are often avoided. Second, Islamic banks find themselves facing fierce competition from the conventional banks and feel obliged to pay their depositors a profit share commensurate with the rate of interest paid by the latter. Particularly in countries such as Turkey, where the current rate of interest paid to the depositors exceeds 50 per cent, the surest way to achieve such rates in the short term is considered to be the Murabaha.
Third, in an economic situation characterised by high rates of inflation and interest rates, these managers are unwilling to venture into the long-term investments which Mudaraba or Musharaka usually entail, and prefer to orientate their investment portfolio towards short-term financing.
Finally, since Mudaraba or Musharaka partnerships involve continuous and close contact between the investor (Rab-al maal) and the entrepreneurs financed, as well as a willingness to lend support to them whenever they encounter problems, it has appeared that Islamic banks simply do not have the patience or resources for such a demanding responsibility.
In view of these problems, it is not surprising that Islamic banks have failed to transform the structure of their investment portfolios. It has been suggested that the Islamic banks should not be expected to alter their portfolios, but if Mudaraba and Musharaka partnerships can be re-packaged as more desirable financial instruments, then they will be utilised by the smaller and more specialised Venture Capital Companies (VCCs).
Similarities in Approach
In fact, there are remarkable similarities between the VCCs and Mudaraba and Musharaka partnerships, so much so that the VCC is considered to be, for all practical purposes, the same as these classical partnerships. Although space restrictions prevent a detailed analysis from being attempted here, it should suffice to say that VCCs have successfully demonstrated in the United States where they were born, that they are not only capable of providing long-term capital to entrepreneurs, but are also willing to support them in the case of difficulties. Comparing the experience of the Islamic banks with that of the West, it has been suggested that financial and managerial support to entrepreneurs in Islamic countries must be provided by small yet financially potent VCCs and these companies must resort to only Mudaraba and Musharaka or equity purchase when financing entrepreneurs.
The implicit problem in this suggestion is the source of finance for the VCCs, and the question of from where the funds for transfer should be obtained. One obvious source, is again the Islamic banks. It has been recommended that Islamic banks be obliged by their governments to allocate five per cent of their investment portfolio, per annum, for the purchase of VCC equities.
Combining Cash Waqfs and Venture Capital
What the venture capital companies will ultimately need is long-term capital. The provision of finance to them can now be linked to the main subject of this article. Equity purchased by Islamic banks cannot by itself solve this problem, as these banks may unexpectedly encounter a liquidity shortage and be forced to sell the shares of the VCC, thereby depriving the VCCs of much-needed capital. It is at this point that the cash Waqfs enter the picture. After all, by definition, Waqf capital once endowed cannot be withdrawn by the founder Thus Cash Waqfs could solve the most serious problem facing the VCCs; the shortage of long-term capital.
Let us now envisage how the Cash Waqfs can be combined with venture capital. Assume that person A wishes to establish a Cash Waqf with his savings. The purpose of this Waqf would be to help finance entrepreneurs who wish to establish their own business. The founder of the Waqf, A’, approaches a VCC and informs them of his attention. He then deposits his savings – which constitutes the capital of his cash Waqf- with the VCC. The VCC would then sign a Mudaraba contract with the Waqf, thus becoming its Mudarib.
When it comes to the transfer of Waqf funds to the entrepreneurs, the VCC also agrees that the capital of the Waqf will be invested solely in Mudaraba/Musharaka partnerships, thus eliminating all doubts about the legitimacy of this investment from the Islamic point of view. Structurally speaking, this would be a triple Mudaraba with three parties involved, the Waqf, the VCC and the entrepreneur
Minimising Risk
In order to minimise and diversify the risks, the VCC can and should invest the Waqf capital with several entrepreneurs. Once profits are generated, they can be distributed among the parties as follows: in a normal Mudaraba partnership, the usual profit-sharing ratio is 1/4 to the Mudarib (the entrepreneur) and 3/4 to the Rab-al-Maal – the VCC. So, the VCC obtains 3/4 of the profit of the entrepreneur, plus the original capital whenever the project matures (there is no time constraint here).
Since the VCC has signed a Mudaraba contract with the Waqf, the same ratios are observed distributing the profits between the VCC and the Waqf Thus while the Waqf obtains the original capital plus 3/4 of the profit earned by the VCC, the latter keeps 1/4 of it for venture capital services rendered. Thus, in short, the Waqf obtains 3/4 of the 3/4 or 9/16 of the profit generated by the entrepreneur. To put it more simply, if the entrepreneur earns a profit of $ 100, the Waqf gets $56.25 as its share, plus, of course, the original capital invested by the Waqf.
Combining the Cash Waqfs with the Venture Capital sector solves not only the problem of perpetuity of the Cash Waqf, but also the problem of Riba, while providing the much-needed long-term capital to the Venture Capital Companies, which are essential in enhancing the entrepreneurial spirit in Islamic countries.
Since what is involved here is essentially Waqf capital, the issue of perpetuity assumes great importance. Risks and the danger of loss can be minimised by forming two separate investment portfolios. The first one should be established by the founder. A, who can divide his total savings among a number of VCCs, thus in effect establishing several cash Waqfs, and the second one by each of the VCCs which can invest the Cash Waqf with several entrepreneurs. While setting up two sets of portfolios reduces the risks to a large minimum, thereby constituting one aspect of ensuring the perpetuity of the Waqf, the other aspect is the reinvestment of the profits generated. As will be recalled, the greatest weakness of the Ottoman Cash Waqfs was their inability to reinvest.
In view of this, it is advisable that the modern Cash Waqf add their profit share to the original capital of the Cash Waqfs, thus ensuring the perpetuity of the endowment. It will be possible then not only to assure the perpetuity, but if the Waqf is managed properly, the original endowment will grow in real terms.
Managerial Expertise
Needless to say, the real test of success is proper management. It has been suggested that the involvement of a third party in the affairs of the Waqf may be desirable. The Ottomans, it will be recalled, had successfully involved the recipients of the Murabaha in the management of the Waqf We have seen that whenever these individuals suspected a mismanagement, they immediately informed the courts. By allocating, say, 1/10th of the Waqf’s profit share to a neutral third party, a body of ‘inspectors’ can be recruited.
Ideally, these inspectors would be capable of analysing the income and balance sheets of the VCC. A business administration department of a nearby university can be declared a recipient of this 1/10th and be employed by the charter of the Waqf, and in the original Mudaraba contract signed between the VCC and the Waqf, to inspect its records.
Cash Waqfs fulfilled a variety of functions in the Ottoman economy. They were instrumental in transferring the savings of the well-to-do to those who needed cash, i.e., the entrepreneurs or even just members of the general public. They also financed a myriad of religious, educational and social services.
While the extent of our knowledge does not yet permit us to draw conclusions on the important issue of perpetuity, we have nevertheless been able to identify certain weaknesses that may have jeopardised it.
Combining the Cash Waqfs with the Venture Capital sector solves not only the problem of perpetuity of the Cash Waqf but also the problem of Riba, while providing the much-needed long-term capital to the Venture Capital Companies which are essential in enhancing the entrepreneurial spirit in Islamic countries.
Edited By Asma Siddiqi
Institute Of Islamic Banking And Insurance London
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