3rd ICEEBA

International Conference on Economics, Education, Business and Accounting

Volume 2019

Conference Paper

The Role of Waqf in Social Development

Rohmawati Kusumaningtias

Abstract
The purpose of this article is to explore waqf in practice by understanding the concept-
history-issues of waqf. This study uses secondary data from books, journal, proceedings,
and government rules. It was found that waqf could be the effective instrument to
support social development. It has a social function for poverty alleviation, encourages
entrepreneurship, and improves education. For waqf institution, administration and
comprehensive rule are significant for their sustainability.

Keywords: waqf, social development, sustainability

Corresponding Author:
Rohmawati Kusumaningtias

Received: 29 January 2019

Accepted: 27 February 2019
1. Introduction
Published: 24 March 2019

The Waqf has the nature of being an endowment with the benefits obtained indefinitely.
Publishing services provided by
Knowledge E
This article aims to show the role of waqf in improving the social conditions of the
community. This article is divided into 3 parts. First, describes the use of waqf historically.
Rohmawati
Kusumaningtias. This article is Second, identify issues related to the benefits of waqf for social purposes. Third, is a
distributed under the terms of synthesis of the findings obtained to form waqf structures.
the Creative Commons
Attribution License, which
permits unrestricted use and
redistribution provided that the 2. Method
original author and source are
credited.
To identified issues, this study used secondary data from literature. We describe the
Selection and Peer-review under
concept-history of waqf and the issues of waqf for social function in Indonesia. A clear
the responsibility of the 3rd
ICEEBA Conference Committee.
structure of waqf for social is synthesized from analysis and literature review.

2.1. Concept-history of waqf

Waqf is a form of charitable charity in Islam. Waqf or awqaf (plural) means holding assets
and preserving them for certain benefits with certain terms and conditions in use. From
an economic standpoint, (Ambrose, Hassan, & Hanafi, 2018) stated that waqf is an

How to cite this article: Rohmawati Kusumaningtias, (2019), “The Role of Waqf in Social Development” in International Conference on Economics,
Education, Business and Accounting, KnE Social Sciences, pages 348–352. DOI 10.18502/kss.v3i11.4018
Page 348
 3rd ICEEBA

attempt to divert funds and other resources from consumption needs into investments
in the form of productive assets that provide income in the future.
Unlike shadaqa, waqf objects cannot be sold, inherited, or given as gifts. This charac-
teristic by (Mohsin, 2013) termed that waqfs are irrevocability and permanence. Irrevoca-
bility means that the waqf object is permanent, cannot be sold, inherited or awarded. Per-
manence means that the waqf object must be entirely (full), not destroyed and stopped
intentionally. However, this provision is not rigid in its application. Waqfs that are tempo-
rary are permissible if the benefactor states that the purpose of the waqf is temporary
(Kahf, 2014). In this statement, Ambrose et al. (2018) provides an example that waqf can
be in the form of shares, bonds, sukuk, and the benefits of these financial instruments
on condition that they are consistent with sharia business activities. But if the purpose
is unknown or not clearly stated, then according to fiqh, waqf must be reserved for the
poor (Kahf, 2014). Then the purpose of waqf must be known with certainty to eliminate
doubts about the use of waqfs.
Ambrose et al. (2018) explained that the history of waqf in the form of goods has
been widely carried out, since the existence of the Prophet Muhammad who changed
the property of Mukhayriq into waqfs to finance defense. Uthman ibn Affan who bought
a well as a source of water for all his citizens for free in Medina. During the Umayyad
period, the number of waqf properties increased and was used mostly for educational
purposes through the construction of schools and libraries, teacher salaries, and scholar-
ships for students. In the Abbasid period, waqfs were used to improve health, education,
agriculture, housing, animal preservation, marriage, pharmacy, and new doctor training
services. This phenomenon shows that the waqf structure is flexible. During the Ayyubid
period, the adoption of waqf grew larger and reached its peak during the Ottoman
Empire. Waqf is used for education, fruitfulness, store distribution, city defense, free
water, and the creation of job opportunities. Income from waqfs equals one third of total
annual income. So it is not surprising that waqf is classified as a treasury fund after tax.
In the mid-19th century, the waqf system began to collapse for three reasons. First,
political reasons. France and Russia intervened in the internal politics of the Ottoman
Empire and excessive pressure from European banking to change the waqf system
from decentralized and autonomous to centralized systems. Centralized Waqf imme-
diately causes the growth of material exploitation and corruption. Second, structural
weaknesses in the use of waqf. Waqf is considered not capable enough to adapt to
industrialization. Third, cash waqf is more used for consumptive financing so that the
profits are small. This loan is classified as a usury transaction.

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History shows that waqfs have experienced glory, but due to the lack of wisdom in
the distribution of waqf, the waqf collapses. This shows that the use of the waqf system
is still possible to be revitalized by taking into account the excess benefits obtained and
the sharia provisions.

2.2. Issues of waqf for social function

The application of waqf in Indonesia is still lacking. Educational institutions funded by

waqf, one example is Pondok Pesantren Gontor, East Java. Waqf at this lodge has had
a significant influence on people’s lives from all sides, namely education, economy,
social, and culture. The implementation of this waqf makes the people involved become
independent and responsible.
Other autonomous institutions that have practiced waqf are Dompet Dhuafa Repub-
lika. This institution provides medical services with permanent facilities for the poor for
free for 24 hours.

2.3. Cash waqf

Community empowerment is easier to use cash waqf. Cash waqf is easier to process
than movable or immovable waqf (such as schools and hospitals). In addition, cash waqf
can be done by various groups. A person can do a cash waqf of Rp. 100,000. The Waqf
can be collected together and managed productively and responsibly. The number of
Muslims in Indonesia is the biggest asset to raise funds and develop waqf funds.
In the cash waqf management system, it is almost similar to waqf of movable goods
(Arif, 2012). The nominal value of the money invested must not be reduced and the return
on investment is allocated to Nazir (maximum 10%) and public welfare (minimum 90%).
At present, Islamic banks partner with Nazhir in the management of waqf funds.
Cash Waqf has a double effect. The explanation is as follows. Investment returns to
the community (mauquf ‘alaih) of 90% are allocated to two sectors, economic and non-
economic (social and education). Waqf results for the economic sector are cash funds
that can be used for additional modes of increasing productivity. Indirectly increasing
productivity will also increase national development.
Whereas the distribution of waqf for the non-economic sector will improve human
quality that is able to contribute to national welfare. In addition, other non-economic
sector waqf such as consumptive distribution can increase people’s purchasing power
which has an impact on national spending.

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From the description above, cash waqf has a dual effect on the economy that will
directly and indirectly affect the improvement of people’s welfare. The greater the
amount of cash waqf, the greater the opportunity for the Indonesian people to prosperity.
Donna (2007) states that cash waqf can also be used through financial institutions
with muamalah transactions. The transaction can be in the form of mudharabah and
ijarah. Profits from profit sharing and rent can be used for other productive purposes
or consumption of the poor. Mudharabah is a cooperative scheme, one of the parties
contributes funds and other parties as the management of waqf funds. Whereas ijarah
is the transfer of the benefits of an item within a certain time with rent payment. Waqf
funds can be used to facilitate poor communities to have the benefit of productive goods
for their daily needs.

2.4. Productive waqf

One example of productive waqf is the waqf in the form of land. In general, land waqf
is used for social and worship purposes, such as land used for mosques. Al-hadi (2009)
describes that land waqf in the form of a mosque that is not produced will be a burden for
the mosque management. Mosque financing needs such as electricity, water, PAM, and
maintenance costs cannot be met if you only rely on charity boxes every month. Mosque
financing can only be fulfilled around 30-40% of the total needs. As a result, the mosque
only functions as a place of worship and the study of children. This condition limits the
role of mosques for the benefit of Islam.
Mosques need to be empowered to be able to fulfill their social functions, such as par-
ticipating in Islamic education, benefiting orphans around, and most importantly being
able to pay for operational needs every month. One way is to empower the land in
accordance with the Islamic economy, by offering of productive land investments. Waqf
land, in addition to mosques, can also be for productive investments such as for Islamic
hospitals, Islamic financial institutions, mini markets, or other services. Economic benefits
obtained reach 200-300% compared to the initial conditions of land without productivity.
The productive waqf land is finally able to provide benefits to the surrounding envi-
ronment. In addition to being able to pay off monthly operational needs, the proceeds
from the land waqf can be used for other indictments,the provision of scholarships, poor
compensation, and the provision of small business capital.

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3. Conclusion

The application of waqf is one form of individual social responsibility toward society.
Waqf potential with the largest Muslim population is a supplementary source of income
other than tax. Waqf could be in the form of cash, movable goods, or immovable. Both
require professionalism in its management so that it can have an impact on community
welfare and national development.

References

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