DefinePK

Abstract

The concept of Waqf—an endowment made by Muslims for religious, educational, or charitable purposes—has historically played a significant role in the socio-economic development of Islamic societies. However, in the modern era, many Waqf assets remain underutilized due to lack of effective financing mechanisms, poor management, and inadequate regulatory support. This paper explores an innovative, Shariah-compliant framework for Waqf financing that integrates Islamic financial instruments such as Sukuk (Islamic bonds), Musharakah (partnership), Mudarabah (profit-sharing), and Ijarah (leasing) to unlock the economic potential of dormant Waqf properties. The proposed framework is designed to promote sustainable asset development while ensuring compliance with Islamic legal and ethical norms. It emphasizes transparency, accountability, and efficient governance to attract institutional investors and build community trust.
A mixed-method approach is used, including qualitative analysis of classical Islamic jurisprudence and contemporary fatwas, along with a comparative study of existing Waqf models in countries like Malaysia, Turkey, and Indonesia. The paper also evaluates the legal and institutional challenges facing the implementation of innovative Waqf financing models in various jurisdictions. A special focus is placed on how digital financial technologies, such as blockchain and Islamic crowdfunding platforms, can further enhance the management and mobilization of Waqf resources.
The findings suggest that a modernized, innovative approach to Waqf financing can play a critical role in poverty alleviation, social welfare, infrastructure development, and financial inclusion. By aligning traditional Waqf practices with modern financial tools and technologies, stakeholders can revitalize this centuries-old institution to meet the needs of contemporary Muslim societies and contribute to the broader objectives of Maqasid al-Shariah (the higher objectives of Islamic law).