Adding Assets

Deciding which assets to add to your Waqf Fund and when is perhaps the key decision you will make. Arriving at the correct solution is a balancing act, which is made easier by the flexibility the concept of Waqf.

The Assets

Although almost anything can be added to Waqf, most Waqf funds will consist of some primary classes of assets. Click on a type of asset below to find out more.

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Property

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Cash

Shares

Shares

Business

Business

Gold

Gold

Other

Other

Property

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Property is perhaps the most common form of asset that should be considered when creating a Waqf. Property lends itself to being added into Waqf as the benefit can be derived for beneficiaries in one of two ways. Either beneficiaries can live in the property, paying a zero or a reduced rent; or the property can be let out and the rental income distributed to beneficiaries. The long-term maintenance and restoration of the property will also need to be considered, but this is no different from if you were to retain the property in your own ownership and is looked at in more detail below.

Cash

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Cash is a very flexible asset to consider adding to your Waqf. Because of the rule that cash “cannot be specified with specification” – simply meaning that cash is treated as a medium of exchange in Islamic law – cash can be used to purchase assets and investments within your Waqf fund. Cash can also often be added to your Waqf fund as a “non-Waqf asset”. This means that it does not need to follow the usual rules of capital within a Waqf. Find out more about the difference between Waqf and non-Waqf assets below.

Shares

Shares

Many people own shares in various listed companies. These shares can be added to your Waqf fund. The Waqf will then own the value of the shares as these go up and down in the market. Any dividend payments that are issued by the listed company are also then due to your Waqf fund and can be used to make distributions to beneficiaries or built up to purchase additional shares in future, thereby growing the value of the Waqf. In the same way that an individual may buy and sell shares depending on the performance of the company, so too can your Waqf fund, with the Trustees ensuring that decisions are made in the best interests of the company. Rather than owning individual shares, some people own a portfolio of shares within a fund, these too can be added to the Waqf and managed accordingly.

Business

Business

For those who own a business or a share in a business of some type, whether this is a limited company, partnership or sole trading business, another option is to consider gifting a share of your business to the Waqf fund. The business will continue to be run in the usual manner, with no need to adjust the legal ownership or accounting, however any income generated in favour of the owners, by way of dividends, should thereafter be distributed/held in favour of the Waqf fund as appropriate. This method can be a very useful way of ensuring certain family members (such as those working within the business) receive access to a larger share of the business after death, as otherwise, according to the usual Islamic inheritance rules, all beneficiaries have a fixed share, whether they participated in the running and growth of the business or not. In this way the business can be held separate from your other assets and continue to benefit family without the need to break-up the business and distribute the shares Islamically.

Gold

Gold
Gold (and other precious metals) are a common class of assets owned by a wide range of people. By adding gold to your Waqf fund, you can utilise it to lend, lease or trade with others. However, often the gold will be most useful within the Waqf fund if added as a “non-Waqf asset”. This then means that, should the need arise, some or all of the gold can be sold at intervals to provide a capital boost to the value of the Waqf, this capital can then be used to purchase other investments or to repair/maintain Waqf assets within the Waqf fund. Any gold added to the Waqf fund whether as a Waqf asset or a non-Waqf-asset will no longer be treated as a part of your estate and no Zakat will become due on it in future.

Other

Other
As mentioned, pretty much anything can be added to a Waqf fund, including perishable items and personal effects. If you are considering which items to add to your Waqf fund and are not sure how best to proceed we can guide you through the process. Our Waqf Fatwa Center has additional resources available in this area too.

Types of Asset

When you add assets to the Waqf you will need to make a choice between whether you are adding the asset as a Waqf asset or a non-Waqf asset. The choice is important as it will determine how the asset can be utilised in future.

Waqf Asset

Waqf Asset

It is the Waqf assets within your Waqf fund which constitute the permanency of the Waqf. When adding an asset as a Waqf asset, you need to be aware that this asset can no longer be distributed to beneficiaries. Instead, all Waqf-assets are held, maintained and best practice is to try and grow the value of the same by prudent investment. A Waqf fund with Waqf assets added and held on this basis, can then form the basis of a long-term multi-generational fund, that can benefit your family and charitable causes far into the future. Waqf assets can never be converted to non-Waqf assets.

Non-Waqf Asset

Non-Waqf Asset

You may however decide to designate certain of the assets of the Waqf fund as non-Waqf assets. This simply means that these assets are being gifted to the Waqf for use as the Trustees of the Waqf deem appropriate (you may include additional guidance on this point). Having a mixture of Waqf assets and non-Waqf assets within your Waqf fund can be very useful as it gives greater flexibility to you and your Trustees in the management of the Waqf fund. For example, you may find the idea of Waqf appealing but worry that it is too early to know with reasonable certainty whether or not you and your family will need access to capital. If you were to add assets as non-Waqf assets, then you would be able to sell the asset in future and distribute the amounts to beneficiaries, something that isn’t possible with Waqf assets. Further, down the line you can also convert non-Waqf assets into Waqf assets so long as you retain the right to do so in your Waqf Governing Document.

When to add assets?

It can seem daunting to decide how much of your estate you can add now and/or whether to wait until death to add the majority of assets. Read on to see what restrictions apply in each case.

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During my lifetime

There is no limit to the amount or percentage of your estate which you can add to your Waqf fund during your lifetime, you can even add assets over time, as and when you become more familiar and comfortable with the concept. This is the position, so long as you include your close family as one of the beneficiaries of your Waqf fund. If you create a purely charitable Waqf fund then the maximum amount we would usually recommend is one-third of your estate, so as not to deprive your family.

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After my death

Any assets added your Waqf fund via your Islamic Will or during a death-bed illness, must be limited to a maximum of one-third (taking together with any other gifts you are making) of your estate at that time. More than this and for Islamic purposes it is up to your surviving inheritors to decide whether they will agree to the excess. This one-third is known as the ‘Wasiyyah’ and is the maximum amount that can be given to non-inheritors on death. This applies whether or not family can still benefit from the Waqf fund.

Maintaining the Waqf

The principle idea of Waqf is that it should be maintained and grown over time. It is therefore the role of the Trustees to balance the rights of beneficiaries with the needs of the Waqf fund as a whole, to ensure that you too can have a Waqf fund like that of ‘Uthman ibn Affan’s, which is bringing you an ever increasing benefit 1400 or more years from now.

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Expenses

Expenses

You will need to make sure that all the expenses associated with maintaining the assets of the Waqf fund are covered. Some classes of assets will require greater maintenance then other. For example, a property will have costs associated with repairs, managements agent fees and insurance. The role of the Trustees is to ensure that these expenses can all be covered and this will be one of their primary tasks in maintaining the Waqf.

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Growth

Growth

A portion of any income generated within the Waqf fund should also be considered for re-investment. This allows additional assets to be purchased and for the Waqf fund to be grown over time. In a similar manner to how a business owner re-invests profits of their business to grow it, the Trustees must also consider how best to grow the Waqf in order to generate greaters levels of income and benefit for beneficiaries.

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Distribution

There is no point having lots of assets if someone or some cause is not receiving the benefit of the same. You and your Trustees will therefore be keen to distribute assets out. The percentage of total income you decide to distribute may well vary over time, as will the chosen beneficiaries and you can leave instructions in this regard and update them whenever necessary.

Financial Viability

On occasion the value of assets within the Waqf fund may fall or there may not be sufficient income and/or non-Waqf assets to properly maintain the Waqf fund. On such occasions it will be up to the Trustees to decide when to sell assets and purchase other assets. Sale of Waqf assets should be a last resort where there are no viable other options.

Falling shares

In a falling market, the sale of shares may be necessitated.

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You may have employed a financial advisor to ensure your share portfolio is invested as prudently as possible.

Broken house

Sometimes the state of disrepair of a property means that it is not viable to maintain the property.

House

The property can then be sold and another property purchased in its place.

The lifecycle of a Waqf

Below we summarise the concepts of Waqf learnt above and apply them to a scenario. For more information contact us to Establish your own Waqf
Waqf fund

Waqf Fund created with £10

Waqf fund step 1

Property added to Waqf Fund as a Waqf asset.

Waqf fund step 2

Property generates an income of £1,000, £500 of which is given to beneficiaries.​

Waqf fund step 3

Property needs renovation and repairs, but there is insufficient funds from income.​

Waqf fund step 4

Non-waqf assets may be added to the Waqf Fund to provide an additional source of funds.

Waqf fund step 5

Property fully renovated and repaired using £10,000 of non-Waqf assets. Remaining non-Waqf assets can be held, invested or distributed to beneficiaries, depending on needs and priorities of Waqf Fund.​

Waqf fund step 6

Where Now?

Explore the website and get all the information you need to understand why Waqf could be right for you, what Waqf is and how setting up your own Waqf with I Waqf works.

Why would you want to?

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Your Waqf, Your Way

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You decide who benefits

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No tax or legal implications

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Assign assets to those may need them

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Safeguard and control assets

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Harness the exponential benefits of Waqf

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Large tax savings

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Revive a lost Sunnah

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Shariah Compliant - Certified

What is Waqf?

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The Story of Waqf

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Waqf Fundamental Principles

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FAQs on what Waqf is

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Waqf Fatwa Centre

How does it all work?

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Waqf Governing Document

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Adding Assets

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Combining with an Islamic Will

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Waqf Register

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Charitable Waqf

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FAQs on how to establish your Waqf

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