Abstract
The cash waqf (endowment) has come into prominence in recent years since many Malaysian state Islamic religious councils and the Federal government (through a foundation) began promoting cash waqf schemes. However, unlike the Ottoman form which spent its income―derived from simple money-lending and istighlāl (purchase and lease-back) practices―on the provision of services to meet public needs or for alms-giving, the modern cash waqf invests in low return savings or is converted through the process of istibdāl (substitution) into low-income generating assets. This conceptual paper discusses the application of certain venture capital strategies in both the investment and spending decisions of the cash waqf. In its investment decisions, the cash waqf might utilise some of the tools employed by venture capital firms for choosing its investments and for mitigating risks. In fact, there is also a possibility for the cash waqf to consider certain venture capital opportunities as an alternative asset class in which to invest a portion of its corpus. In its spending decisions, the cash waqf may choose its beneficiaries in much the same way as a venture capital firm would choose its investees; that is, by putting together a portfolio of non-profit organizations (NPOs) with proven track records for delivering social results and which are seeking to grow their organizations to achieve financial sustainability. This paper therefore proposes an Enterprise Waqf Fund (EWF) model that combines the cash waqf model with relevant concepts from venture capital to enhance the dynamism of cash waqf. Policy and legal reforms are also recommended at the end of the paper that would provide an enabling environment within which the Enterprise Waqf Fund can operate.
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