CASH WAQF INNOVATION IN ISLAMIC FINANCIAL

INSTITUTION IN MALAYSIA

MUHAMMAD YUNIZAR

MASTER IN ISLAMIC FINANCE AND BANKING

UNIVERSITI UTARA MALAYSIA
APRIL 2025
 1 CHAPTER ONE

INTRODUCTION

1.1 Introduction

Cash waqf has been identified as a useful financial instrument that can promote

social and economic development. This research is concerned with thematic literature

review with the aim of investigating innovations in cash waqf within Malaysian Islamic

financial institutions. Through examination of existing literature, this study aims to find

out themes on innovations, issues, and future recommendations regarding the

management of cash waqf. This chapter explains the background of the study, presents

the problem statement, identifies the research objectives, constructs the research

questions, highlights the significance of the study, and delineates the scope and

limitations.

1.2 Background of the Study

Waqf has long been recognized as a cornerstone of Islamic economic and social

systems, designed to ensure sustainable charitable giving and social welfare. The term

waqf refers to the permanent dedication of an asset or property by a Muslim for

religious, educational, or philanthropic purposes, where the usufruct is used for the

benefit of society. This concept, deeply rooted in Islamic teachings, reflects the spirit

of altruism and communal support emphasized in the Qur'an and Hadith (Ibrahim et al.,

2013). Throughout Islamic history, waqf has played a vital role in financing education,

healthcare, infrastructure, and poverty alleviation.

The origins of waqf can be traced back to the practices of Prophet Muhammad

S.A.W, who initiated the first waqf by dedicating land for the construction of the

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Prophet's Mosque in Madinah, which served as a center for education, governance, and

community services (Farooqi, 1992; Sahih Bukhari, n.d.). Inspired by such examples,

companions like Abu Talhah, Umar ibn Khattab, and Uthman ibn Affan endowed

properties for public benefit, thus institutionalizing the practice of waqf (Ibn Hashim,

1955).

Building upon these foundations, the waqf system continued to evolve during

the eras of the Khulafa' al-Rashidin and subsequent Islamic empires. In regions such as

Damascus and under the Ottoman Empire, waqf developed into a sophisticated

mechanism for funding public goods. Ibn Battuta's travels in the 14th century

documented extensive waqf networks financing education, healthcare, road

infrastructure, and even aid for travelers and prisoners (Ibn Battuta, 1327 CE). In these

societies, waqf not only supported religious activities but also formed the backbone of

the social welfare system.

A significant innovation in waqf history was the development of cash waqf

(waqf al-nuqud), particularly during the Ottoman Empire. Unlike traditional waqf that

involved immovable properties, cash waqf allowed individuals to donate monetary

assets. The capital was invested in Shariah-compliant ventures, and the returns were

channeled into charitable activities. Cash waqf provided greater flexibility, enabling

broader participation among Muslims who might not possess land or physical

properties (Mahadi, 2019).

In Fes, Morocco, similar practices were adopted where cash waqf facilitated

lending without the involvement of riba (interest), offering an Islamic alternative to

conventional financial systems. The success of cash waqf in the Ottoman Empire and

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North Africa demonstrated its potential as an instrument for inclusive economic growth

and social development.

In the contemporary Islamic world, the concept of cash waqf is experiencing a

resurgence. Countries such as Kuwait, Oman, the United Arab Emirates, and Saudi

Arabia have incorporated cash waqf into their social finance strategies. Moreover,

hybrid waqf models combining traditional donations with modern financial instruments

have been introduced to mobilize funds for education, healthcare, housing, and poverty

alleviation (Aldeen & Herianingrum, 2021).

This modern evolution of cash waqf has been significantly supported by

advancements in financial technology (fintech). The development of online donation

platforms, digital waqf certificates, and blockchain-based waqf tracking systems aims

to enhance transparency, governance, and donor confidence, making cash waqf more

accessible to the younger generation.

Cash waqf has proven to be a powerful tool for socio-economic development

by mobilizing financial resources to fund schools, universities, hospitals, microfinance

programs, and infrastructure projects. It provides a sustainable model of philanthropy

where the capital remains intact while the returns are used for social welfare initiatives.

Economically, cash waqf creates a multiplier effect, stimulating growth, generating

employment, and reducing poverty (Adam & Lahsasna, 2013).

In Malaysia, recognized globally for its leadership in Islamic finance, structured

initiatives have been taken to institutionalize cash waqf. In 2007, the National Fatwa

Council endorsed the legitimacy of cash waqf, paving the way for its widespread

adoption. Following this endorsement, Yayasan Waqaf Malaysia (YWM) was

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established in 2008 under the Department of Awqaf, Zakat, and Hajj (JAWHAR) to

coordinate waqf activities at the national level (YWM, 2014).

Further momentum was gained in 2010 with the launch of the Wakaf Tunai

Nasional program aimed at mobilizing cash waqf collections nationwide. These efforts

were further supported by Islamic financial institutions, which introduced innovative

products such as waqf-linked savings accounts, investment schemes, and takaful

policies integrating cash waqf elements (Berakon et al., 2021).

Malaysia's regulatory support was further solidified through the issuance of the

Islamic Fund and Wealth Management Blueprint 2017–2021 by the Securities

Commission Malaysia, encouraging the development of Islamic social finance

instruments, including cash waqf.

Figure 1. 1: Potential Annual Cash Waqf Collection in Malaysia

Potential Annual Cash Waqf Collection in Malaysia
6

0
1 2 3 4 5 6

Annual Collection (RM Billion)

Source: Author’s estimation based on population and daily donation simulation

(adapted from Saiti et al., 2019)

This figure illustrates the potential annual cash waqf collection in Malaysia if

each Muslim donates between RM0.50 and RM5.00 daily. The projection indicates a

significant increase in annual cash waqf accumulation corresponding to higher daily

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contributions, emphasizing the importance of consistent micro-donations to achieve

substantial social finance outcomes.

The Malaysian government has consistently emphasized the role of waqf in

national development. Initiatives such as the National Wakaf Blueprint and the

inclusion of waqf in Malaysia's Shared Prosperity Vision 2030 highlight the strategic

importance of mobilizing waqf assets to achieve socio-economic objectives. In parallel,

several state religious councils (Majlis Agama Islam Negeri) have introduced state-

level waqf programs, such as Wakaf Selangor Muamalat and Wakaf Johor Corporation,

further decentralizing and diversifying cash waqf initiatives.

Table 1. 1: Chronological Summary of Major Government Efforts in Cash Waqf

Institutionalization in Malaysia (2007–2017)

Year Initiative Institution Objective

National Fatwa Legal endorsement of
2007 Fatwa on Cash Waqf Council cash waqf
Establishment of
Government of Central coordination of
2008 Yayasan Waqaf
Malaysia waqf efforts
Malaysia (YWM)
Launch of Wakaf Tunai National mobilization
2010 JAWHAR
Nasional of cash waqf
Islamic Fund and
Securities Policy support for
2017 Wealth Management
Commission Malaysia Islamic social finance
Blueprint

Despite commendable progress, several challenges hinder the full realization of

cash waqf's potential in Malaysia. Public awareness regarding cash waqf mechanisms

and benefits remains low, with surveys indicating that many Muslims still associate

waqf exclusively with land endowments (Furqon, 2011).

Limited adoption of technology further constrains the efficiency of cash waqf

management, as digital platforms, online payment systems, and blockchain-based

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tracking are underutilized (Rahardjo, 2021). Governance and transparency issues also

persist, as many waqf institutions lack standardized reporting systems and robust

accountability frameworks, leading to reduced public trust (Mohd Mokhtar et al., 2015;

World Bank Report, 2019).

Furthermore, existing regulatory frameworks are often rigid and not sufficiently

supportive of innovative cash waqf products, thereby limiting the creative potential of

Islamic financial institutions in offering new waqf-linked services (Haryanto, 2013).

Nevertheless, the potential for growth remains substantial. Statistical

projections by Saiti et al. (2019) suggest that Malaysia could generate up to RM4.3

billion annually in cash waqf contributions if every Muslim contributed just RM1 per

day.

Leveraging financial technology, strengthening regulatory frameworks, and

enhancing public education could transform Malaysia's cash waqf sector into a dynamic

and sustainable pillar of Islamic social finance. Strategic collaborations between

Islamic financial institutions and waqf organizations could further enhance the reach

and impact of cash waqf programs.

Malaysia is selected as the focal point of this study due to several compelling

reasons. As of 2023, Malaysia accounts for approximately 22% of global Islamic

banking assets (IFSB Report, 2023) and has consistently been recognized as one of the

top Islamic finance hubs globally.

The establishment of structured national waqf initiatives, comprehensive

regulatory support, and the introduction of waqf-linked financial products by Islamic

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banks highlight Malaysia's leadership in Islamic social finance. Additionally, while

Malaysia has made significant strides, academic research specifically focusing on cash

waqf innovation within Islamic financial institutions remains limited. This gap

underscores the relevance and timeliness of conducting an in-depth study focusing on

Malaysia's experiences, challenges, and innovations in cash waqf development.

In conclusion, while Malaysia has made commendable progress in cash waqf

institutionalization, various challenges must be addressed to fully harness its potential

for socio-economic development. These challenges form the basis of the research

problem, which will be discussed in the subsequent section.

1.3 Problem Statement

Cash waqf, a specialized form of Islamic endowment, represents a significant

financial mechanism where monetary assets are permanently dedicated to religious,

educational, healthcare, and socio-economic welfare initiatives. The principal amount

of cash waqf is invested in Shariah-compliant sectors, with the profits directed towards

designated social causes (Khademolhoseini, 2013). As highlighted by

Khademolhoseini, this structure ensures that cash waqf remains a resilient and perpetual

vehicle for sustaining charitable projects across generations, demonstrating its

importance in Islamic social finance.

Historically, waqf has played a transformative role in Islamic societies,

financing public infrastructure, education, and healthcare systems. In contemporary

contexts, cash waqf is increasingly recognized as a viable Islamic social finance tool

capable of addressing budgetary gaps and promoting sustainable development

(Mohamad, 2012). Mohamad's perspective underscores the relevance of modernizing

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traditional waqf concepts to meet current economic and societal needs, an approach this

study embraces.

Islamic banks and financial institutions have facilitated cash waqf by providing

structured mechanisms that enable individuals without tangible assets to participate in

waqf contributions (Osman et al., 2012). This democratization of participation, as noted

by Osman et al., emphasizes the inclusive nature of cash waqf and its potential for

widespread societal impact, particularly in expanding opportunities for philanthropy

among broader segments of the population.

Despite these potentials, public perception remains narrow, with many Muslims

still associating waqf exclusively with immovable properties such as land and

buildings. This misconception has hindered the broader acceptance and optimal

utilization of cash waqf as a dynamic financial instrument (Ab. Aziz et al., 2013; Mohd

Puad et al., 2014). These findings highlight the urgent need for educational initiatives

that realign public understanding toward the flexibility and modern applicability of cash

waqf.

Globally, the development and management of cash waqf have witnessed

notable progress. For example, during the Ottoman Empire, Turkey institutionalized

cash waqf to finance education, healthcare, and infrastructure, a legacy that continues

today through modern foundations (vakiflar) blending tradition with contemporary

financial management. Similarly, countries such as Kuwait and Saudi Arabia have

incorporated cash waqf into various social finance programs, demonstrating the

instrument's versatility and sustainability across different economic contexts (Mahadi,

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2019). Mahadi’s insights confirm that modern adaptations of cash waqf principles offer

robust models for Malaysia to consider in enhancing its social finance landscape.

In Malaysia, the institutionalization of cash waqf has achieved several critical

milestones. The issuance of a national fatwa in 2007 legitimizing cash waqf, followed

by the establishment of Yayasan Waqaf Malaysia (YWM) in 2008, marked significant

progress towards coordinated national efforts (YWM, 2014). Initiatives such as Wakaf

Tunai Nasional and the Islamic Fund and Wealth Management Blueprint 2017 by the

Securities Commission Malaysia reflect Malaysia’s commitment to integrating cash

waqf into the broader Islamic finance ecosystem (Berakon et al., 2021). These

milestones, however, represent only preliminary steps, as sustained innovation and

governance improvements are necessary for full optimization.

Despite these initiatives, the primary research problem identified is the

underutilization and inefficiency of cash waqf management by Islamic financial

institutions in Malaysia. Empirical studies and industry reports suggest that the

operationalization of cash waqf remains suboptimal. Saiti et al. (2019) estimated that

Malaysia could potentially mobilize RM4.3 billion annually through cash waqf if

managed systematically; however, actual mobilization remains significantly below this

potential. This substantial gap reflects deep-seated challenges within the institutional

and regulatory frameworks that demand urgent attention.

Several minor research problems further compound the major issue. First, there

is a notable lack of product innovation in cash waqf. Islamic financial institutions have

been relatively slow in designing creative, flexible, and Shariah-compliant cash waqf

products that resonate with contemporary donors, particularly among the younger, tech-

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savvy generation (Aldeen & Herianingrum, 2021). As Aldeen and Herianingrum assert,

aligning waqf offerings with evolving donor preferences is critical for rejuvenating

engagement and participation.

Second, public awareness and participation levels remain low. Surveys reveal

that many Malaysian Muslims possess limited understanding of cash waqf mechanisms

and their socio-economic benefits (Norizan et al., 2018). This observation reinforces

the necessity for comprehensive awareness campaigns to ensure that cash waqf’s socio-

economic contributions are effectively communicated to the masses.

Third, regulatory fragmentation continues to impede effective cash waqf

management. Overlapping jurisdictions between state Islamic religious councils and

Islamic financial institutions create ambiguities, inconsistencies, and compliance

burdens (Ismail et al., 2023). As Ismail et al. caution, achieving regulatory coherence

is paramount to creating an enabling environment for innovation and efficient

management.

Fourth, the slow adoption of financial technology (fintech) within cash waqf

management frameworks further hampers efficiency and transparency. Research

underscores that digital waqf platforms, blockchain applications, and online donation

systems could significantly enhance trust, accountability, and participation (Rahardjo,

2021). Rahardjo’s findings affirm that leveraging technology is essential for enhancing

operational performance and building public trust.

The cumulative effect of these issues has constrained the capacity of cash waqf

to emerge as a mainstream Islamic social finance instrument in Malaysia. Compared to

global benchmarks, Malaysia’s cash waqf sector exhibits slower growth, lower fund

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mobilization, and weaker integration into national socio-economic development

agendas.

Addressing these challenges is imperative. Strengthening cash waqf

management practices, fostering product innovation, enhancing regulatory clarity,

promoting financial literacy, and leveraging technology are critical strategies that can

collectively transform cash waqf into a robust mechanism for wealth redistribution,

poverty alleviation, and inclusive growth.

Moreover, there exists a discernible research gap concerning the role of Islamic

financial institutions in innovating and managing cash waqf. While previous studies

have explored the concept and potential of cash waqf, few have systematically

examined the institutional practices, governance frameworks, and innovation models

employed by Islamic financial institutions in Malaysia.

This study, therefore, seeks to fill this gap by investigating innovations in cash

waqf management within Islamic financial institutions in Malaysia. It aims to identify

key challenges, assess current practices, and propose strategic enhancements grounded

in global best practices and technological advancements.

In conclusion, optimizing cash waqf management is not merely a financial

imperative but a socio-economic necessity. By addressing the underutilization and

inefficiency of cash waqf, Malaysia can unlock substantial resources to fund education,

healthcare, housing, and social welfare initiatives, thereby advancing its national

development goals. The findings of this study are expected to contribute significantly

to the literature on Islamic social finance and provide actionable insights for

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policymakers, waqf managers, and Islamic financial institutions striving to revitalize

and expand the cash waqf sector.

1.4 Research Questions

Building upon the research problem identified, this study is structured to address

the following key research questions:

(i) What notable cash waqf products have been introduced by Islamic

financial institutions in Malaysia?

(ii) What regulatory and operational challenges are encountered by Islamic

financial institutions in administering cash waqf?

(iii) What strategic measures can be proposed to enhance the management of

cash waqf and to increase public awareness and participation in

Malaysia?

These questions are designed to guide a comprehensive inquiry into the

innovative practices, institutional barriers, and potential opportunities that characterize

the cash waqf sector in Malaysia.

1.5 Research Objectives

Aligned with the research questions, the objectives of this study are:

(i) To identify and describe the main cash waqf products introduced by

Islamic financial institutions in Malaysia, highlighting their features,

structures, and operational models.

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 (ii) To analyze the regulatory and operational challenges faced by Islamic

financial institutions in the administration and management of cash

waqf, including legal, institutional, and technological factors.

(iii) To propose strategic recommendations for improving cash waqf

management and enhancing public awareness and participation in cash

waqf initiatives in Malaysia.

By achieving these objectives, the study aims to contribute valuable insights

into strengthening the role of cash waqf as an effective Islamic social finance

instrument, thereby supporting Malaysia’s broader socio-economic development goals.

1.6 Contribution of the Study

This study makes significant contributions both theoretically and practically to

the field of Islamic finance, particularly in the area of cash waqf management and

innovation by Islamic financial institutions in Malaysia.

1.6.1 Academic Contribution

This research enriches the academic discourse in Islamic social finance by

systematically analyzing innovations and challenges associated with cash waqf

management—an area that remains relatively underexplored in existing literature. By

addressing the primary problem of underutilization and inefficiency, along with

associated issues such as lack of product innovation, limited public awareness,

regulatory fragmentation, and slow technological adoption, this study fills critical gaps

highlighted by previous scholars (e.g., Berakon et al., 2021; Ismail et al., 2023;

Rahardjo, 2021). The findings are expected to serve as a foundational reference for

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future academic inquiries aiming to optimize waqf-based financial models within

Islamic financial institutions.

1.6.2 Practical Contribution

From a practical perspective, the study offers Islamic financial institutions

strategic insights and actionable recommendations for enhancing cash waqf

management. By identifying innovation gaps and emphasizing the integration of

financial technology solutions, the research provides a framework for designing more

attractive, efficient, and transparent cash waqf products. These contributions aim to

tackle the low participation rates and operational inefficiencies that currently constrain

the full potential of cash waqf in Malaysia.

1.6.3 Policy Contribution

In terms of policy, this study delivers targeted recommendations for

policymakers and regulatory authorities to improve the governance framework

surrounding cash waqf. It underscores the need for harmonization between state Islamic

religious councils and financial institutions to streamline operations and elevate

governance standards. By addressing regulatory ambiguities, the study advocates for

the establishment of a more integrated, efficient, and transparent cash waqf ecosystem

in Malaysia.

1.6.4 Societal Contribution

At the societal level, this research seeks to promote broader public

understanding and engagement with cash waqf initiatives. By raising awareness about

the mechanisms, benefits, and societal impact of cash waqf, the study contributes to

mobilizing greater participation in philanthropic financial activities. This expanded

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engagement is anticipated to support national efforts in achieving socio-economic

objectives, including poverty alleviation, education funding, healthcare support, and

community development.

Through these multi-dimensional contributions—academic, practical, policy-

related, and societal—this study aspires to reinforce the role of cash waqf as a

sustainable Islamic social finance tool, aligned with Malaysia’s broader goals of

economic inclusion and national development.

1.7 Significance of the Study

This study holds significance for multiple stakeholders by contributing to

theoretical development, providing practical solutions, informing policy, and

promoting societal advancement.

1.7.1 Theoretical Contribution

This research advances the academic discourse in Islamic social finance by

addressing existing gaps related to innovations in cash waqf management by Islamic

financial institutions. It offers new insights into underexplored areas such as waqf

product development, fintech integration, and the regulatory impacts on cash waqf

practices. By systematically examining these dimensions, the study enhances scholarly

understanding of how Islamic financial institutions can optimize cash waqf as an

effective mechanism for socio-economic development.

1.7.2 Practical Contribution

The findings of this study provide actionable guidance for Islamic financial

institutions in designing innovative cash waqf products, improving operational

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efficiency, and adopting technology solutions to strengthen cash waqf management.

The practical recommendations proposed aim to address persistent challenges such as

low public participation, inefficiency in fund management, and a lack of public trust,

thereby enhancing the overall performance and impact of cash waqf initiatives.

1.7.3 Policy Contribution

From a policy standpoint, this research offers recommendations to policymakers

for harmonizing regulatory frameworks, thus creating a more conducive environment

for the nationwide growth of cash waqf initiatives. By addressing regulatory and

governance challenges, the study supports efforts to establish a more standardized,

transparent, and effective waqf management system in Malaysia, aligning regulatory

practices with global best standards in Islamic social finance.

1.7.4 Societal Contribution

At the societal level, this study aims to promote greater public awareness and

engagement with cash waqf mechanisms. Enhanced understanding and participation

can significantly contribute to achieving broader socio-economic development

objectives, including education funding, healthcare access, poverty alleviation, and

community welfare. By strengthening cash waqf practices, the research supports

national efforts toward uplifting marginalized communities and fostering sustainable

social welfare initiatives across Malaysia.

Through these multidimensional contributions, the study aspires to reinforce the

role of cash waqf as a sustainable Islamic social finance tool, ultimately benefiting

academic researchers, Islamic finance practitioners, policymakers, and society at large.

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1.8 Scope and Limitation fo the Study

This study explores the innovations in cash waqf management within Malaysian

Islamic financial institutions, focusing specifically on technological advancements,

public engagement strategies, and regulatory developments from 2020 to 2024. The

primary aim is to provide a comprehensive understanding of how cash waqf practices

have evolved within Malaysia's Islamic finance sector and to identify key innovations

that can enhance management practices and sustainability. By analyzing the integration

of technology, regulatory framework improvements, and strategies to bolster public

participation, this study offers valuable insights into the critical drivers shaping the

development of cash waqf in Malaysia.

The scope of this research is deliberately confined to the Malaysian context.

While a comparative analysis with jurisdictions such as Indonesia, Turkey, or Saudi

Arabia could offer broader perspectives, the study prioritizes an in-depth, context-

specific exploration in alignment with the objectives and academic requirements of a

Master's-level research project. Consequently, all data collection, analysis, and

recommendations are strictly based on Malaysia’s regulatory, technological, and

operational environment within its Islamic financial sector.

Despite its extensive coverage, the study acknowledges several limitations.

First, it relies exclusively on secondary data sources, including academic literature,

journal articles, institutional reports, and official publications, without incorporating

primary data collection methods such as interviews or surveys. This reliance may limit

the study's ability to capture the most recent insights and firsthand experiences from

waqf practitioners and financial sector professionals.

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 Second, while the findings of this study may offer valuable lessons for countries

with similar Islamic financial ecosystems, they may not be directly applicable to nations

with differing regulatory structures or socio-economic conditions. The contextual

specificity to Malaysia necessitates caution in generalizing the results beyond similar

jurisdictions.

Third, the research focuses exclusively on cash waqf initiatives and innovations,

thereby excluding other forms of waqf such as land waqf, corporate waqf, and other

endowed waqf assets, which may operate under distinct dynamics within the broader

Islamic finance landscape.

Nevertheless, the relevance of this study remains substantial. By systematically

examining technological innovations, regulatory adjustments, and public engagement

strategies specific to cash waqf in Malaysia, this research contributes significant

knowledge to the Islamic finance sector. Furthermore, it provides practical

recommendations aimed at policymakers, Islamic financial institutions, and waqf

authorities to strengthen the management, governance, and sustainability of cash waqf,

thereby promoting its long-term impact on Malaysia’s socio-economic development.

1.9 Definitions of Key Term

1.9.1 Cash waqf

Cash waqf is a new model of charitable endowment in Islamic finance in which

cash donations from individuals are invested or managed to provide funds for social,

educational, or religious causes. In contrast to conventional waqf, in which physical

assets like buildings or land are usually involved, cash waqf uses liquid funds to

enhance the flexibility of meeting societal needs (Ibrahim et al., 2013).

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1.9.2 Islamic Financial Institutions (IFIs)

Islamic Financial Institutions (IFIs) function under the principles of Shariah,

providing banking, investment, and insurance financial products in line with the

prohibition of riba (interest). IFIs are heavily involved in managing and distributing

cash waqf, demonstrating that they are serious about enhancing socio-economic

development along Islamic principles (Haron et al., 2016).

1.9.3 Innovation in cash waqf

The cash waqf development involves the application of contemporary

technologies, financial instruments, and management practices aimed at improving the

efficiency and effect of waqf projects. This involves the utilization of online platforms

for receiving donations, the creation of financial products associated with cash waqf,

and the implementation of blockchain technology to provide transparency and

accountability in the management of funds (Nofianti et al., 2020).

1.10 Organization of the Thesis

This thesis consists of five chapters that address different facets of the study.

Chapter 1, Introduction, presents a comprehensive introduction of the study

covering the background to the context, issue, research objectives, research questions,

significance, as well as demarcations for the study. The chapter serves as the precursor

to the research in presenting key facets of cash waqf innovation in Malaysia and

providing rationale for why a thematic literature review would constitute a viable

research design.

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 Chapter 2, otherwise known as the Literature Review, provides a vast thematic

analysis of existing research into cash waqf. This chapter explores historical

development, groundbreaking innovations, compliance challenges, and best practices

of managing cash waqf. This chapter merges several studies so as to underline recurring

themes, detect gaps within the literature available, and map areas that are in need of

further research.

Chapter 3, the Research Methodology, describes the research design and

provides justification for the application of a Thematic Review methodology. It

describes the selection criteria for literature, the data collection methodologies

employed, and the thematic analysis techniques applied. The chapter also addresses the

benefits associated with thematic reviews in systematically structuring and evaluating

innovations, challenges, and trends in cash waqf management.

Chapter 4, Findings and Discussion, presents the results of thematic analysis

according to thematic themes that were identified in the literature. These themes include

cash waqf innovations, regulatory hurdles, public engagement approaches, and

technology advancements. The chapter critically evaluates how these themes influence

the management of cash waqf in Malaysian Islamic financial institutions and discusses

the implications.

Chapter 5, which is titled Conclusion and Recommendations, recapitulates the

key findings of the research and identifies the contribution of the research to academic

research and practical application. It also offers policy suggestions on how to enhance

the regulation of cash waqf and promote innovation among Islamic financial

institutions. This chapter finally identifies the limitations of the study and proposes

20
avenues for further research in a bid to advance the relevance of cash waqf within

Malaysia's Islamic finance system.

1.11 Conclusion

This chapter defined the focus of research on cash waqf innovations of Islamic

financial institutions in Malaysia. It posited the problem statement, research aim, and

questions, and asserted the need for a thematic review of literature. The subsequent

chapter presents a comprehensive thematic overview of the literature to facilitate an

ordered comprehension of cash waqf innovation, issues encountered, and strategic

recommendations.

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 2 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter is a thematic literature review of cash waqf innovation in Islamic

financial institutions. This chapter aims to review the literature on cash waqf, its

evolution, challenges, and best practices in Islamic finance. A thematic review is used

to classify the literature into overarching themes, such as the concept and historical

evolution of cash waqf, cash waqf innovations, regulatory challenges, and effective

waqf management practices.

2.2 Thematic Review Approach

Thematic review is one of the ways of synthesizing literature through

identification and exploration of repeated themes and patterns in studies (Braun &

Clarke, 2006). Thematic review enables researchers to classify knowledge in an orderly

manner and compare across studies. Thematic review has extensively been applied in

qualitative research for revealing trends and patterns in scholarly literature and as such

is an appropriate approach to use in cash waqf innovation review in Islamic financial

institutions.

Through the use of thematic review, the study intends to categorize literature

into systematic themes that represent substantive issues of cash waqf. The use of

thematic analysis enables a holistic examination of the different aspects of cash waqf,

ranging from historical, financial products, governance, and operational matters. The

necessity to categorize literature into a theme is identified in existing research, where

researchers like Braun & Clarke (2006) and Nowell et al. (2017) indicate that thematic

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analysis offers an effective way towards gap identification in literature and making

reflective summaries of particular research fields.

Here, the literature is reviewed thematically under the following overarching

themes by consolidating related studies: (1) The Concept and Historical Development

of Cash Waqf, (2) Innovations in Cash Waqf, (3) Governance and Regulatory

Challenges, and (4) Strategies for Improving Cash Waqf Management. Each of these

themes captures a significant aspect of cash waqf that has been explored in the existing

academic literature, allowing this research to build on existing knowledge while

identifying areas where further research is needed.

Further, thematic review is also a potential instrument in studying the

intersection between cash waqf and contemporary financial instruments. For example,

recent studies by Saiti et al. (2019) and Ismail et al. (2023) have shown the role of

digital transformation in the management of cash waqf, including developments in

blockchain integration and fintech-based services. Using thematic classification, this

research seeks to synthesize these advancements and confirm whether they are

implementable in Islamic financial institutions.

Additionally, thematic analysis also enables the exploration of regulatory and

governance issues. Research like Haryanto (2013) and Furqon (2011) has shown that

waqf law differs across nations, and so does the management of funds. Through the

systematic categorization of literature into regulatory themes, this research offers a

better appreciation of the legal and institutional barriers to cash waqf practice.

In total, the thematic review method not only enables an exhaustive scan of cash

waqf literature but also guarantees that overall trends, issues, and opportunities are

23
examined in-depth. The systematic nature of the thematic analysis enables strong

synthesis of current research while providing space for future research to expand on

these findings.

Waqf as a social institution with broad historical roots in Islamic civilization

was initiated in the era of Prophet Muhammad (peace be upon him). Waqf as an

institution is used to abstain or set aside assets for the aim of benefiting the public,

under the doctrine of solidarity and social care within Muslim society. One of the most

ancient historical examples of waqf is the Prophet's waqf in the Nabawi Mosque, which

was not just a mosque but an educational and social institution as well. Waqf slowly

evolved to be a more institutionalized form with different categories such as land waqf,

cash waqf, and education waqf (Md Nurdin, 2015).

The role of waqf in socio-economic development is extremely valuable in the

education sector. Waqf funds were used to construct most educational institutions,

including madrasas and universities, which increased the availability of education to

the masses. In this regard, waqf is a permanent source of finance, which facilitates the

running of educational institutions without over-reliance on government grants or

donations from individuals. There is evidence that waqf in education has helped to

enhance education and literacy rates in certain Muslim nations such as Malaysia and

Indonesia (Norizan et al., 2018).

Besides education, waqf is also a major contributor to the health sector. Various

waqf schemes have been established to build hospitals and health centers to facilitate

greater access to health services, especially for the poor. Waqf is thus a social safety

net that operates to meet society's fundamental needs. There is evidence that health

24
waqf can enhance populations' well-being and quality of life while minimizing

healthcare expenditure for families and individuals (Fauzi et al., 2019).

Still, although waqf has enormous potential in advancing socio-economic

development, its practice is faced with challenges. Some of them include inadequate

legislations, weak management, and insufficient transparency in waqf fund

management. In order to enable waqf to fully play its role, such challenges need to be

overcome through enhancing the capacity of legal frameworks as well as developing

managerial capacity in waqf institutions (Mohd Mokhtar et al., 2015).

2.3 Meaning of waqf and cash waqf

Originating from the Arabic root "waqafa," meaning to halt and remain

stationary, the term "waqf" conveys the concept of "imprisonment" or the restriction of

property from private ownership (Wizarah al-Awqaf, 2006). Within the framework of

Islamic jurisprudence, waqf is defined as the mechanism through which a property is

preserved in trust, allowing only the usufruct or income generated from it to be utilized

for charitable or specific community purposes (Ismail, Haneef, & Amin, 2014).

Under Islamic law, waqf is recognized as a perpetual charitable endowment

whereby assets such as buildings, land, or other properties are irrevocably dedicated to

religious, educational, or welfare causes, permanently removing them from private

possession (Abdul Rahman & Awang, 2018). For a waqf to be valid, the endowed

property must meet Islamic contractual requirements: it must be lawful (halal), capable

of generating continuous benefit, and not already in the public domain.

Classical Islamic jurists, including Imam al-Hanafi, Imam al-Maliki, Imam al-

Shafi'i, and Imam al-Hanbali, unanimously emphasized that waqf serves to safeguard

25
wealth and direct its benefits towards the welfare of marginalized and underprivileged

communities (Abbasi, 2012). This enduring function underpins waqf's essential role in

supporting community development initiatives and offering long-term solutions for

social welfare.

Over time, waqf evolved beyond land-based endowments to incorporate more

dynamic forms such as cash waqf. Today, waqf institutions are recognized as integral

pillars within the Islamic economy, significantly contributing to the sustainability of

social welfare systems and community-based services.

2.3.1 Types of Waqf

Waqf can be categorized into several forms based on its purpose and designated

beneficiaries:

1) Waqf 'Amm (General Waqf)

This form serves the public good by supporting essential services such as schools,

hospitals, and mosques (Abdullahi, 2020).

2) Waqf Khass (Private Waqf)

Dedicated specifically to individuals, often benefiting the founder's family or

descendants (Abdullahi, 2020).

3) Waqf Khayri (Charitable Waqf)

Entirely intended for charitable purposes, aiming to alleviate poverty and enhance

communal welfare (Abdullahi, 2020).

26
The evolution of society's needs has necessitated the adaptation of these traditional

waqf forms, leading to the emergence of cash waqf as an innovative and flexible

modality.

2.3.2 Evolution towards Cash Waqf

To address the inherent limitations in managing immovable waqf properties,

Islamic scholars conceptualized waqf al-nuqud, or cash waqf. This adaptation enabled

Muslims to contribute liquid financial assets that could be invested and mobilized for

diverse community initiatives (Ismail et al., 2014).

Cash waqf retains the original philanthropic spirit of traditional waqf while

embracing modern financial management practices. It allows for diversified

investments and flexible fund deployment, providing sustainable support for

educational, healthcare, and infrastructural development.

2.3.3 Definition and Importance of Cash Waqf

Cash waqf refers to the endowment of monetary assets where the principal

remains intact, and only the profits are used for charitable activities (Fauzi, Zakaria, &

Abdul Rahim, 2019). This liquidity advantage facilitates broader donor participation,

efficient fund management, and quicker response to societal needs.

Compared to conventional waqf forms anchored in physical assets, cash waqf

offers unparalleled adaptability, making it exceptionally relevant for addressing

contemporary socio-economic challenges.

27
2.3.4 Types of Cash Waqf

Cash waqf can be classified into:

1) Unrestricted Cash Waqf

Donors entrust waqf managers (mutawalli) with the discretion to allocate the

endowed funds toward any socially beneficial projects (Fauzi et al., 2019).

2) Restricted Cash Waqf

Donors stipulate specific purposes or projects for the use of the cash, such as

scholarships, hospital construction, or religious education (Fauzi et al., 2019).

Furthermore, the advancement of financial innovation has facilitated the

creation of waqf-linked financial instruments, such as waqf-based sukuk and

specialized waqf investment accounts, significantly enhancing the scalability and

sustainability of waqf initiatives.

2.3.5 Relevance of Cash Waqf in the Contemporary Era

Today, cash waqf functions as a strategic tool for Islamic social finance,

addressing modern issues like poverty alleviation, education accessibility, and

healthcare support. The integration of cash waqf within Islamic financial institutions

has enabled better fund mobilization, governance, and accountability (Ahmad &

Lahsasna, 2023).

With the adoption of blockchain technology, digital waqf certificates, and online

donation platforms, cash waqf initiatives have achieved greater transparency,

28
traceability, and donor engagement. Thus, cash waqf stands as a critical mechanism for

advancing Shariah objectives in modern society.

2.3.6 Historical Backround of cash waqf

The practice of cash waqf can be traced back to the era of Prophet Muhammad's

companions. Sayyidatunah Hafsah (radhiyallahu 'anha) purchased jewelry worth

20,000 dirhams and dedicated it as waqf for her family, indicating an early precursor to

the concept of cash waqf (Ibn Qudamah, n.d.). Although the waqf involved jewelry

rather than currency, in that period, gold and silver held the functions of money.

The legitimacy of cash waqf was later reinforced by jurists across the four major

Islamic schools of thought. Imam Malik explicitly endorsed cash waqf in "al-

Mudawwanah," affirming the acceptability of endowing gold and silver in a revolving

loan system compliant with Islamic principles (Imam Malik, n.d.).

Similarly, Zufar Ibn al-Huzail, a renowned Hanafi jurist, approved of cash waqf

under the principle that the principal is invested through mudarabah contracts, and only

the profits are expended for charity (Ibn Nujaym, 1997). His endorsement emphasized

the importance of preserving capital and ensuring responsible fund management.

In the Shafi'i and Hanbali schools, cash waqf also found legitimacy, albeit with

certain conditions regarding the perpetuity and utility of the waqf assets (Nawawi, n.d.;

Ibn Qudamah, n.d.).

Historically, the Ottoman Empire institutionalized cash waqf on a significant

scale between the 15th and 16th centuries, using it to fund healthcare, education, and

social services (Cizakca, 1998). Wealthy individuals endowed cash waqf, which was

29
then circulated in the economy through structured lending systems, ensuring the

preservation of the principal while generating sustainable charitable outcomes

(Mandaville, 1979).

In Fes, Morocco, similar cash waqf practices emerged, although on a more

limited scale compared to the Ottoman system (al-Dasuqi, n.d.). Despite some initial

resistance and legal debates, cash waqf became an enduring institution, showcasing its

adaptability to various socio-economic contexts.

Nevertheless, critiques arose concerning the permissibility of certain cash waqf

operations, particularly regarding issues of riba (interest). Shariah scholars such as

Shaykh Suhaib Hasan (2002) emphasized that while charitable purposes are laudable,

any involvement in interest-bearing transactions remains impermissible according to

Islamic law.

Modern advancements in cash waqf practices include the introduction of waqf

shares and structured bank deposits, pioneered in Oman, Kuwait, and the UAE in the

late 1990s and early 2000s (Qutb al-Arabi, 2013). These initiatives signified a revival

of cash waqf mechanisms aligned with Shariah principles and contemporary financial

practices.

In Malaysia, the National Fatwa Council's 2007 ruling recognizing cash waqf,

coupled with institutional efforts by bodies such as Yayasan Waqaf Malaysia, has

rejuvenated interest in cash waqf as a viable Islamic social finance tool. Continuous

innovation and digitalization promise to further advance the role of cash waqf in

addressing societal needs while remaining firmly anchored to Islamic legal and ethical

foundations.

30
2.4 Innovations in cash waqf

Innovations in cash waqf management have revolutionized the way Islamic

financial institutions collect, manage, and distribute waqf funds. The integration of

financial technology (fintech), blockchain, and crowdfunding platforms has

significantly enhanced transparency, accessibility, and efficiency in cash waqf

administration. Several studies emphasize that the digitalization of waqf not only

increases trust among donors but also improves participation from a broader

demographic, particularly younger generations who prefer online platforms for

charitable giving (Berakon et al., 2021; Obaidullah, 2020). Moreover, Islamic banks

and waqf institutions have introduced digital waqf wallets, automated Zakat-Waqf

integration systems, and waqf-based microfinance programs to expand the scope and

impact of waqf (Rahardjo, 2021; Osman et al., 2019).

One of the most notable innovations in cash waqf is the blockchain-based waqf

management system, which ensures greater transparency, security, and efficiency in

handling funds. Blockchain technology allows donors to track their contributions in

real-time, ensuring that waqf funds are utilized in accordance with Shariah principles

(Aldeen & Herianingrum, 2021; Saiti et al., 2019). Studies suggest that the

implementation of blockchain in waqf management mitigates risks related to fraud,

mismanagement, and lack of accountability, which are common concerns in

conventional waqf administration (Hassan et al., 2022). In Malaysia, institutions such

as Bank Muamalat Malaysia and Maybank Islamic have explored blockchain

technology for cash waqf initiatives, highlighting its potential to foster greater

transparency and trust within the waqf sector (Ismail et al., 2023).

31
 Another significant development in cash waqf innovation is the introduction of

Waqf-linked Sukuk, a Shariah-compliant investment vehicle that leverages waqf funds

for long-term economic projects. Waqf-linked Sukuk allows Islamic financial

institutions to invest cash waqf in revenue-generating activities such as real estate,

healthcare, and education, ensuring sustainability and continuous social impact (Saiti

et al., 2019; Norizan et al., 2018). Research indicates that the integration of Sukuk and

waqf structures facilitates the efficient mobilization of Islamic social finance, reducing

dependency on government funding while promoting self-sufficiency within waqf

institutions (Mohd Mokhtar et al., 2015).

The use of crowdfunding platforms for cash waqf collection has also gained

popularity in recent years. Several Islamic financial institutions and fintech startups

have launched online waqf crowdfunding portals, allowing individuals to donate cash

waqf seamlessly through mobile applications and digital banking services (Rahman &

Kasri, 2021). Research highlights that digital crowdfunding enhances community

participation and financial inclusivity, as it provides a convenient and transparent

method for individuals from diverse economic backgrounds to contribute to waqf

initiatives (Berakon et al., 2021). Malaysia’s Yayasan Waqaf Malaysia has actively

adopted crowdfunding mechanisms to increase waqf contributions, particularly for

funding educational and healthcare projects (YWM, 2022).

32
Table 2. 1 : Comparative Analysis of Cash Waqf Innovations table

Study Innovation focus Findings

Digitalization improves
Aldeen & Herianingrum Digital platforms for cash
accessibility and increases
(2021) waqf
donor participation.
Blockchain enhances
Blockchain-based waqf transparency and
Berakon et al. (2021)
management accountability in fund
management.
Investment-based waqf
models improve
Saiti et al. (2019) Waqf-linked Sukuk
sustainability and fund
utilization.
Crowdfunding improves
Waqf-crowdfunding accessibility and
Osman et al. (2019)
platforms community engagement
in waqf programs.
Fintech solutions enhance
Fintech adoption in efficiency and governance
Ismail et al. (2023)
Islamic social finance in waqf fund
management.

In conclusion, technological advancements and financial innovations have

played a crucial role in enhancing cash waqf collection, investment, and distribution.

The adoption of blockchain, crowdfunding, waqf-linked Sukuk, and digital fintech

solutions has significantly increased transparency, efficiency, and public trust in cash

waqf management. However, despite these advancements, challenges such as

regulatory constraints, lack of standardization, and limited public awareness still hinder

the full potential of cash waqf innovations. Future research should explore strategies to

integrate these innovations into a more structured and harmonized Islamic financial

ecosystem, ensuring the long-term sustainability of waqf institutions.

33
2.5 Cash waqf in Islamic Financial Institutions

2.5.1 Objectives of cash waqf in Islamic Finance

Cash waqf represents a significant component of Islamic finance dedicated to

generating social benefits through the strategic allocation of charitable donations. The

objectives of cash waqf extend beyond mere financial contributions; they encompass a

holistic approach to socio-economic development within Muslim communities. This

section elaborates on the principal objectives of cash waqf, supported by relevant case

studies illustrating these goals in practice.

2.5.1.1 Promoting Socio-Economic Development,

A fundamental objective of cash waqf is to promote socio-economic

development by channeling funds into projects that address pressing community needs.

Cash waqf can provide sustainable financing for various initiatives, such as education,

healthcare, and poverty alleviation. For example, Universiti Sains Islam Malaysia has

harnessed cash waqf to sponsor scholarships for underprivileged students, thereby

enhancing access to education and fostering human capital development (Mohamad,

2018).

Such endeavors underscore the potential of cash waqf to uplift communities,

showcasing how innovative financial products can lead to tangible societal benefits

while adhering to Islamic principles of charity and support for the ummah.

2.5.1.2 Financial Sustainability for Islamic Institutions

Another critical objective of cash waqf is to ensure the financial sustainability

of Islamic institutions and charitable organizations. By establishing cash waqf funds,

these institutions can secure a steady stream of income to support their operational and

34
project-related expenses. For instance, the cash waqf model implemented by Al-Azhar

University in Egypt has successfully provided ongoing financial support for its

educational programs and public services, thereby allowing the institution to maintain

its legacy and contribute to social welfare (Khamis & Salleh, 2018).

The sustainability aspect of cash waqf aligns with the Islamic principle of

preserving wealth for future generations while also fostering a philanthropic culture

that encourages individuals to contribute towards community welfare.

2.5.1.3 By focusing on community infrastructure

Cash waqf serves as a vital mechanism to encourage philanthropy among

Muslims by facilitating easy and accessible means for financial contributions. This

objective resonates with the Islamic ethos of social responsibility and charitable giving.

For example, the initiative by the Malaysian Waqf Foundation to create an online

platform for cash waqf donations has significantly increased donor participation,

particularly among the younger demographic who are more inclined towards digital

transactions (Amin et al., 2014).

Through such initiatives, cash waqf can transform the act of giving into a

community-driven effort, fostering a collective spirit of charity that aligns with Islamic

values.

2.5.1.4 Funding Infrastructure Development

A significant objective of cash waqf is to fund infrastructure development

projects that enhance the quality of life in communities. This includes building schools,

hospitals, and public facilities that are essential for community growth. The case of the

Waqf Fund in Turkey illustrates this objective effectively; funds generated through cash

35
waqf have been allocated towards constructing healthcare centers that provide

affordable medical services to underserved populations (Nafar, 2019).

By focusing on community infrastructure, cash waqf can play a transformative

role in alleviating socio-economic challenges while ensuring that developmental

initiatives adhere to Islamic ethical standards.

In summary, the objectives of cash waqf in Islamic finance encompass a broad

spectrum of socio-economic imperatives, notably promoting community welfare,

ensuring the financial sustainability of charitable institutions, fostering a culture of

philanthropy, and empowering communities through infrastructure development. As

illustrated through various case studies, cash waqf holds the potential to significantly

impact social development while remaining congruent with Islamic teachings.

Therefore, enhancing awareness and participation in cash waqf initiatives emerges as a

crucial strategy for achieving these multifaceted objectives.

2.6 Cash waqf in the Malaysian Context

2.6.1 Development of cash waqf in Malaysia

Cash waqf in Malaysia has developed as an effective social finance instrument,

offering tremendous potential to finance various social and economic ventures. Within

this model, cash waqf serves not only as a financial tool but also as a mechanism for

empowering individuals and enhancing overall societal well-being. With the support of

government agencies and Islamic financial institutions, cash waqf is positioned to

address the diverse needs of the Malaysian Muslim community, particularly in the

sectors of education, healthcare, and infrastructure development (Mohd Mokhtar et al.,

2015).

36
 According to Section 2 (Interpretation) of the Selangor Waqf Enactment 2015,

waqf is defined as: (a) the transfer of ownership rights over a property whose benefits

and interests are capable of being enjoyed; (b) the transfer of the benefits or interests

capable of being derived from any property; or (c) the gift of expertise and services that

result in beneficial outcomes; encompassing both general and special waqf under

Shariah principles, but explicitly excluding trusts governed under the Trustees Act 1949

[Act 208]. This description frames cash waqf as monetary donations, gold equivalents,

or other similar contributions aimed at sustaining waqf activities. Saifuddin et al. (2014)

emphasize that cash waqf involves financial donations sourced from an individual's

property, generating benefits for societal use through investments yielding returns. This

form of waqf is restricted to monetary contributions, with profits often derived from

income-generating activities such as rental properties (Abdul Rahman & Awang, 2018).

Furthermore, Norzilan et al. (2018) highlight that cash waqf initiatives are

primarily seen as continuous fundraising activities that solicit donor funds for

investment in productive assets, thereby generating benefits (manfa'ah) for individuals

or groups according to donor policies and institutional guidelines (Mohd Mokhtar et

al., 2015).

According to Amalina Abdullah et al. (2021), the waqf administrative

jurisdiction in Malaysia resides under state authority as stipulated in the Federal

Constitution (Schedule 9, List II: State List). Through their Islamic Religious

Enactments/Ordinances, states have designated the State Islamic Religious Councils

(SIRCs) as the sole trustees of their respective waqf properties. Before the

establishment of dedicated waqf agencies, SIRCs directly managed waqf funds.

However, beginning in 2001, several SIRCs founded waqf agencies—such as

37
Perbadanan Wakaf Selangor (PWS)—to manage waqf properties in a more

professional, corporate-like manner, while maintaining the SIRCs as the legal trustees.

2.6.1.1 The Establishment of Yayasan Waqaf Malaysia

Recognizing the need for greater national coordination in waqf management,

the Malaysian government established the Department of Awqaf, Zakat, and Hajj

(JAWHAR) in 2004. One of JAWHAR's mandates is to regulate and standardize waqf

practices across Malaysia by providing advisory services to the SIRCs, monitoring

waqf-related activities, and fostering collaboration between federal and state levels

(Mohd Mokhtar et al., 2015).

In July 2008, the Malaysian Waqf Foundation (Yayasan Waqaf Malaysia,

YWM) was registered under the Trustees Incorporation Act 1952. YWM was

envisioned as a catalyst for advancing waqf development nationwide, working closely

with SIRCs to mobilize waqf funds and invest in impactful social and economic

projects.

Currently, several SIRCs have further enhanced professionalism by privatizing

aspects of waqf management through the creation of specialized waqf agencies. While

this model promises greater operational efficiency, it presents challenges related to

taxation. Unlike SIRCs—which enjoy tax exemptions as government entities—waqf

agencies operate similarly to corporate entities and thus are subject to standard tax

regulations. As noted by Abdullah et al. (2021), while SIRCs receive state funding and

tax privileges, waqf agencies must independently generate income streams to sustain

their operations and fulfill their developmental objectives.

38
2.6.1.1.1 Perbadanan Wakaf Selangor (PWS)

Table 2. 2 : Waqf Collection by Perbadanan Wakaf Selangor (2015-2023)

Year General (Cash Waqf) Special Waqf

2015 7,061,854.00 25,325,048.00
2016 7,869,136.00 35,136,363.00
2017 7,751,908.00 38,900,662.00
2018 10,044,756.00 32,068,559.00
2019 10,770,305.00 35,110,720.00
2022 11,311,279.00 51,968,000.00
2023 11,480,535.00 69,553,000.00
Source: Perbadanan Wakaf Selangor (2023)

From the above table it is clear that although the amount of cash waqf

collected by PWS is smaller than the special waqf, but the cash waqf has been

increasing since 2015 until 2023.

2.6.1.1.2 Yayasan Wakaf Malaysia (YWM)

Unlike Perbadanan Wakaf Selangor (PWS), Yayasan Wakaf Malaysia (YWM)

represents a unique case among waqf agencies. Established in 2008 under the

Malaysian Department of Awqaf, Zakat, and Hajj (JAWHAR), YWM serves a dual

role: assisting State Islamic Religious Councils (SIRCs) in the development and

management of waqf properties while simultaneously operating under federal oversight

(Abdullah et al., 2021). Several states have officially authorized YWM to collect cash

waqf on their behalf, showcasing a model of collaboration between federal and state

waqf institutions.

The main operations of YWM include fundraising for waqf projects, developing

new and existing waqf assets, managing welfare and social programs aligned with

donor intentions, undertaking investment ventures to support waqf distributions, and

39
actively promoting waqf awareness (World Bank, INCEIF, and ISRA, 2019). In

collaboration with Islamic banks, YWM has innovated financial products that integrate

cash waqf elements, such as profit-sharing waqf deposits allocated to educational and

social projects (Rusydiana & Devi, 2018).

Notably, through initiatives like the Waqf Fund Programme by the Association

of Islamic Banks in Malaysia (AIBIM), YWM has partnered with six Islamic banks and

the SIRCs of ten states to streamline cash waqf collection and management processes.

These structured collaborations have brought greater professionalism and transparency

to waqf practices.

As a federally registered institution, YWM enjoys several tax incentives:

income tax exemption for YWM itself, tax reliefs for individual and corporate waqf

donors, and special CSR-related tax incentives for supporting organizations. However,

these tax privileges apply exclusively to waqf-derived income and not to income

generated through other sources like fixed deposits (Abdullah et al., 2021).

YWM employs a dual fund management model: 65% of collected waqf funds

are channelled to respective MAINs, while YWM retains 35% for direct management

(Ramli et al., 2022). This model ensures both state participation and centralized fund

governance. Despite structural differences compared to state-level waqf agencies,

YWM's practices present a benchmark for professional waqf management that other

institutions can emulate.

2.6.2 Cash waqf Regulatory in Malaysia

The regulatory framework governing cash waqf in Malaysia consists of a

complex array of state-level policies and federal guidelines aimed at promoting

40
effective waqf development. The Malaysian Waqf Board (BWM) and the State Islamic

Religious Affairs Departments (JAIN) play key regulatory roles in overseeing waqf

activities, including cash waqf operations.

However, implementation inconsistencies between states pose significant

challenges. While supportive policies exist, Nofianti et al. (2023) highlight the urgent

need to redesign the regulatory environment to better align with contemporary social

and economic needs.

In Malaysia's federal structure, each of the 13 states holds exclusive jurisdiction

over waqf affairs. Accordingly, each State Islamic Religious Council (SIRC) is legally

designated as the sole trustee of waqf assets in its territory. These councils manage,

regulate, and supervise waqf activities to ensure benefits reach intended beneficiaries.

Yet, decentralization has led to disparities in regulatory and operational standards

across states, creating a fragmented waqf management landscape.

Some states have been proactive in formalizing cash waqf. For instance, the

Perak State Islamic Religious Council recognized cash waqf under the Waqf

Regulations of 1959, authorizing the acceptance of monetary endowments for Muslim

community benefit (Mahamood, 2007 in Osman et al., 2012). Nevertheless, many states

lag behind in developing comprehensive legal frameworks, necessitating national

harmonization efforts.

A fundamental distinction exists in Malaysian law between waqf and

conventional trusts. Section 5 of the National Land Code excludes waqf from the

general definition of "trust," emphasizing that waqf must conform to Islamic

jurisprudential principles (Sharifah Zubaidah & Nor Asiah, 2014). If an asset is

41
dedicated for purposes forbidden under Islamic law, it cannot attain waqf status but

would instead fall under trusteeship governed by secular statutes like the Trustees Act

1949 (Act 208).

Despite significant progress, the lack of a centralized regulatory body for waqf

continues to hinder the uniform development of cash waqf nationwide. Discrepancies

in governance, administration, and fund management models persist. To address these

challenges, scholars and practitioners advocate for the establishment of a national cash

waqf framework. Such a standardized framework would ensure consistent governance

across states, facilitating the effective mobilization, investment, and utilization of cash

waqf in Malaysia as a vital component of Islamic social finance.

2.6.3 Role of Fatwa in cash waqf Implementation

The functioning of cash waqf (wakaf tunai) in Malaysia is heavily reliant on

the role of fatwa as a fundamental regulatory mechanism to ensure its full compliance

with Islamic law (Shariah). In the Malaysian context, state fatwa councils wield

authoritative influence over the management of waqf, including cash waqf, thereby

mandating adherence to Shariah standards.

One of the most crucial contributions of fatwa to the cash waqf landscape is

the formal establishment of its legitimacy within the Islamic financial system. Prior to

official fatwa recognition, waqf traditionally revolved around immovable assets such

as land and buildings. This conventional understanding limited the flexibility of waqf

operations.

The breakthrough came when the 77th Fatwa Committee of the National

Council for Islamic Religious Affairs, convened in Kuala Terengganu between April

42
10 and April 12, 2007, resolved that cash waqf was permissible under Islamic law.

Further refinements were observed during the 5th Selangor State Fatwa Committee

Meeting on October 17, 2017, wherein specific conditions for the validity of cash waqf

were established (Ajlaa Ali & Markom, 2020):

1) The principal endowment must be preserved, enhanced, and developed over

time;

2) Purchases made with waqf funds must strictly adhere to Shariah principles;

3) Compliance with supplementary guidelines set by institutions like the Wakaf

Selangor Corporation.

The 2007 fatwa marked a watershed moment, not only legitimizing cash waqf

but also invigorating public interest and institutional support (Khan, 2019; Azman &

Mohd Manaf, 2018). The fatwa also serves as a guiding framework for various

stakeholders including government agencies, private institutions, and NGOs, ensuring

that initiatives align with Shariah compliance and contribute meaningfully to socio-

economic development (Khalid, 2020).

Further, the issuance of evolving fatwas continues to reflect the dynamic and

responsive nature of Islamic finance. Contemporary discussions involve allowing cash

waqf to fund qardul hasan programs and adopting blockchain technology for enhanced

asset management (Mohd Naim & Rahman, 2021).

By clarifying regulations surrounding cash waqf, fatwa bodies play an

instrumental role in mitigating potential misunderstandings and abuses, thus fostering

43
public trust in waqf institutions. This trust is critical for encouraging broader

participation and ensuring that cash waqf becomes an effective tool for community

welfare, notably in areas like education and healthcare (Ismail & Yaakob, 2020).

In sum, the role of fatwa in the evolution and administration of cash waqf in

Malaysia is indispensable. Through establishing clear guidelines and cultivating public

confidence, fatwas provide the structural support necessary for the sustainable growth

of cash waqf as a pillar of Islamic social finance..

2.6.4 Role of Islamic Financial Institutions in Managing Cash Waqf in Malaysia

Islamic Financial Institutions (IFIs) in Malaysia play a crucial role in the

administration and execution of cash waqf, ensuring a structured mechanism for the

collection, investment, and distribution of waqf funds. Beyond serving as facilitators

for fund mobilization, they are actively engaged in the structuring of products and

services that drive cash waqf programs. For instance, several Islamic banks have

developed systematic cash waqf systems that enable public donations conveniently and

transparently. Moreover, collaborations between Islamic banks and waqf institutions,

such as Yayasan Waqaf Malaysia (YWM), have become essential in managing

collected funds in line with donors' intentions (Abd Rahman & Awang, 2018).

By leveraging their financial expertise and institutional frameworks, IFIs

enhance the efficiency of cash waqf as a socio-economic development tool. Key roles

played by IFIs in cash waqf administration are highlighted below, along with notable

case studies.

44
2.6.4.1 Strategic Collection and Investment of Cash Waqf

A primary role of IFIs is to develop strategies for the organized collection of

cash waqf donations. This involves not only soliciting contributions but also raising

awareness within the Muslim community about the benefits of cash waqf. For example,

Bank Muamalat Malaysia Berhad has been at the forefront, championing cash waqf

through educational programs that highlight its community benefits (Zakaria & Muda,

2017). By promoting positive attitudes towards cash waqf, IFIs can increase donor

participation and secure consistent funding streams.

Additionally, IFIs are tasked with the prudent investment of cash waqf funds

to enhance returns while adhering to Islamic values. Investments may include equity

participation in Shariah-compliant businesses, property development, or financing

social enterprises. Effective investment strategies ensure a continuous income flow and

support the perpetuity of waqf activities. For instance, the Islamic Development Bank

(IDB) has successfully developed a waqf fund used to finance educational and

healthcare initiatives in member states, showcasing the sustainable benefits of waqf

investments (IDB, 2018).

2.6.4.2 Governance and Accountability

In managing cash waqf, IFIs also bear the responsibility of ensuring effective

governance and accountability. Robust governance frameworks not only secure donors'

trust but also ensure the impactful use of funds. IFIs implement strict reporting

procedures and supervisory tools to monitor the usage of cash waqf funds. The Waqf

Foundation of Malaysia, for example, enforces stringent accounting procedures and

regular audits to guarantee transparency in fund management (Mohsin, 2013).

45
 Moreover, IFIs engage in community outreach to demonstrate the tangible

impacts of cash waqf projects, fostering ongoing donor engagement. Sharing success

stories and measurable outcomes enhances project legitimacy and promotes a culture

of accountability within the Islamic finance sector.

Collaborative partnerships with government agencies, NGOs, and local

community organizations further strengthen cash waqf management. An example is the

collaboration between waqf institutions and the Malaysian government aimed at

revitalizing the waqf sector, focusing on infrastructure and social services development

(Mohsin, 2019).

Several notable projects have been undertaken to support the effective

implementation of cash waqf. The Waqf Fund program initiated by the Association of

Islamic Banks of Malaysia (AIBIM) brought together six Islamic banks and SIRCs

from ten states, establishing an organized system for cash waqf collection and

management. Additionally, technological advancements such as online portals and

mobile applications have facilitated easier public participation in waqf contributions

and fund monitoring (Norzilan et al., 2018).

A key example of innovation is the partnership between Bank Muamalat

Malaysia Berhad and the Selangor Waqf Corporation, which launched a cutting-edge

cash waqf system. This initiative enhances fund collection while providing

transparency and accountability. Integrating technology and fostering institutional

partnerships ensures the optimal potential of cash waqf as a vehicle for socio-economic

development (Ajlaa Ali & Markom, 2020).

Another notable project includes Maybank Islamic’s establishment of a RM20

million waqf fund in collaboration with the Islamic Religious Council of the Federal

46
Territory (SIRC). One of the key initiatives under this fund was the Terengganu

Culinary Academy, developed through collaboration with Yayasan Waqaf Malaysia

(YWM) and GIAT MARA.

Similarly, Bank Muamalat Malaysia Berhad (BMMB) collaborated with the

Selangor Waqf Corporation in 2012 to launch its own cash waqf system aimed at

promoting and enhancing the waqf practice. In Johor, cash waqf funds were utilized for

acquiring four double-storey shophouses in Nusajaya. Other significant projects funded

through cash waqf include the development of Hotel Grand Puteri in Kuala Terengganu,

Hotel The Regency Seri Wawasan in Taiping, Perak, and Hotel Pantai Puteri in Melaka.

Furthermore, the introduction of waqf sukuk represents a significant

advancement in the waqf sector. This innovative initiative broadens the scope of cash

waqf application while enhancing its financial sustainability.

International partnerships further expand the reach and effectiveness of cash

waqf. By engaging with global Islamic finance networks, IFIs can share best practices,

access new markets, and explore innovative funding solutions for waqf projects. This

interconnected approach broadens the global perspective on cash waqf, facilitating

knowledge transfer and collaboration across borders.

The role of Islamic Financial Institutions in managing cash waqf is thus

multifaceted, encompassing strategic collection and investment, robust governance and

accountability, and collaborative partnerships. As pivotal players within the Islamic

finance ecosystem, IFIs are well-positioned to maximize the potential of cash waqf for

sustainable socio-economic development. Their successful management of cash waqf

not only benefits local communities but also contributes meaningfully to broader

objectives of social justice and economic empowerment within the Muslim world.

47
2.6.5 The Role of Higher Education Institutions (Universities) in Managing cash
waqf in Malaysia.

Several public and private higher education institutions in Malaysia have

proactively established cash waqf schemes to finance their operational expenses and

provide financial assistance programs for students. Among the public universities

leading this initiative are the International Islamic University Malaysia (IIUM), the

National University of Malaysia (UKM), the University of Putra Malaysia (UPM), the

Islamic Science University of Malaysia (USIM), and the University of Technology

Malaysia (UTM) (Dzuljastri et al., 2016).

Similarly, private higher education institutions such as the Islamic University

of Malaysia (UIM), Bestari University College (UCB), and Baitulmal Professional

College (KPB) have also set up cash waqf funds as a strategic source of income to

finance scholarship schemes and institutional operations (Asharaf, 2019). These

institutions, both public and private, have been granted Special Mutawwali status by

the respective State Islamic Religious Councils (MAIN) to manage waqf funds. To

ensure proper governance, a Joint Committee comprising senior officers from MAIN

and the respective institutions has been formed to monitor and supervise the

management of each cash waqf fund.

Notably, IIUM and UPM have successfully invested portions of their waqf

funds to create continuous income streams, thus providing sustainable financing for

scholarship schemes and strengthening the financial autonomy of these institutions

(Dzuljastri et al., 2016).

48
2.6.6 Innovations in the Cash Waqf Model in Malaysia

Innovation in Malaysia's cash waqf landscape has accelerated significantly,

especially through the integration of technology and Islamic financial products. One of

the major initiatives is the development of digital platforms that facilitate the efficient

collection, management, and disbursement of cash waqf. Several Islamic financial

institutions have launched mobile applications, enabling individuals to make cash waqf

donations conveniently and transparently (Mohsin, 2013).

In addition, institutions such as Yayasan Waqf Malaysia have collaborated with

Islamic banks to introduce innovative financial products that integrate cash waqf

elements, such as waqf deposits that provide profit-sharing to depositors. The profits

generated are subsequently allocated to finance social and educational projects

(Rusydiana & Devi, 2018).

Another groundbreaking innovation is the implementation of cash waqf-linked

sukuk, which allows investors to contribute to social projects while simultaneously

earning returns on their investments (Nofianti et al., 2020). Waqf sukuk (Islamic bonds)

serve as a contemporary mechanism for generating waqf financing. Upon maturity, the

completed projects become designated waqf assets, ensuring perpetual benefits to the

community. This model has demonstrated notable success in countries like Singapore

and Saudi Arabia, where sukuk issuance has facilitated the development of waqf land,

leading to the restoration of historical mosques and modernization of aging commercial

properties (World Bank, INCEIF & ISRA, 2019).

Furthermore, waqf sukuk play a crucial role in financing public sector

infrastructure projects, such as roads, hospitals, and educational institutions. For

49
instance, under a Build-Operate-Transfer (BOT) framework for a toll highway project,

initial investments are repaid upon project transfer to the government, ensuring

continued benefit to the public. Revenue generated from such projects can be reinvested

to sustain or expand waqf initiatives, exemplifying a pioneering model that blends

economic efficiency with Shariah compliance (Abd Rahman & Awang, 2018).

The vital role of waqf as a social finance instrument continues to be reaffirmed

through these innovations, significantly contributing to both public and private sector

development. Moreover, during the COVID-19 pandemic, Islamic financial institutions

in Malaysia demonstrated the adaptability of cash waqf by rapidly deploying funds to

assist affected communities, underlining the instrument's relevance in contemporary

social contexts (Nofianti et al., 2020).

Digitalization has emerged as a transformative trend in cash waqf management.

The increasing use of fintech and crowdfunding platforms enables broader participation

and simplifies the donation process. According to the ISRA Report (2022), Islamic

fintech has opened new avenues for raising waqf funds, enhancing transparency, and

extending outreach to a more diverse donor base.

Overall, these innovations have significantly strengthened Malaysia's waqf

ecosystem, contributing meaningfully to national socio-economic development.

2.6.7 Challenges and Opportunities

The practice of cash waqf in Malaysia faces several substantial challenges that

could hinder its future development if left unaddressed. One of the foremost challenges

is the lack of comprehensive legislation. Waqf administration is governed by various

state-level laws, leading to inconsistencies and a lack of standardization across

50
jurisdictions. While some states have developed their own waqf laws, others still rely

on general legislation, creating uncertainty and inconsistency in waqf management

practices (Ismail et al., 2014).

In addition, the absence of adequate managerial capabilities among certain

organizations managing cash waqf is a pressing concern. Some institutions lack the

expertise and experience necessary to manage waqf funds effectively, leading to

governance deficiencies and a lack of transparency. These shortcomings can erode

public trust, a critical component for encouraging greater participation in cash waqf

initiatives (Fauzi et al., 2019).

Despite these challenges, significant opportunities exist for the further

development of cash waqf in Malaysia. Increased public awareness and financial

literacy regarding waqf mechanisms could make cash waqf a viable instrument for

funding a wide array of social, educational, and healthcare projects. Moreover, the

integration of blockchain technology could enhance transparency and accountability in

cash waqf management, thereby fostering greater community engagement and trust

(Gazali & Che Ismail, 2019).

Maximizing the potential of cash waqf requires coordinated efforts between

government agencies, Islamic financial institutions, and the broader society. The

government, in particular, must consider enacting comprehensive and standardized

waqf legislation, as well as implementing prudent management policies based on

international best practices. Such reforms would significantly enhance the credibility

and effectiveness of cash waqf as a social finance tool (Ajlaa Ali & Markom, 2020).

51
 Furthermore, addressing regulatory obstacles, improving public awareness, and

embracing technological advancements are crucial to overcoming existing barriers.

Research by Rahman (2023) indicates that a significant portion of the Malaysian

population remains unaware of the concept and benefits of cash waqf, underscoring the

urgent need for targeted educational campaigns.

Nevertheless, the prospects for cash waqf growth in Malaysia remain highly

promising. Government support, the advancement of financial technology, and the

incorporation of Islamic finance instruments such as sukuk and takaful can act as key

drivers of cash waqf expansion. By leveraging technology and increasing public

engagement, cash waqf can become a powerful catalyst for Malaysia's social and

economic development.

2.7 Syntesis of Literature

The thematic analysis done shows that innovation in cash waqf has experienced

considerable development due to digitalization and investment models that are

structured. The digitalization of cash waqf management has led to the creation of

different new technologies and platforms that enhance the collection process of waqf

funds and its management. For example, the Indonesian Waqf Board (BWI) launched

a scheme to construct internal digitalization, enhance nazir digitalization, and unify

waqf data to accelerate the development of the waqf digital ecosystem (BWI, 2021).

These actions are to increase flexibility and effectiveness in waqf management and have

a positive impact on the national economy.

Yet, regulatory hindrances and managerial practices are still the key challenges

in unlocking the full potential of cash waqf. In Malaysia, MAIN (Majlis Agama Islam

52
Negeri) is responsible for the administration of waqf, and there have been claims of

challenges associated with getting approval from MAIN for the execution of waqf

projects (Wahid et al., 2018). Further, inconsistency in operation and policing in waqf

institutions complicates the process of harmonizing and standardizing waqf

management at the national level (Ab Rahaman et al., 2016). These are factors that call

for immediate regulatory reforms to standardize waqf management procedures and

policies nationwide.

The research indicated that although the advent of financial technology (fintech)

and blockchain-based waqf management has increased operational efficiency, there are

still regulatory limitations to hamper broader usage. For instance, the implementation

of digital waqf platforms requires a change in the existing regulatory framework to

accommodate this emerging technology (Razak, 2024). In the absence of adequate

regulatory support, these developments may be faced with obstacles in their

implementation, thereby diluting the expected gains from digitalization of waqf

management.

Thus, a systematic method that includes technology innovations, regulatory

enhancement, and public engagement strategies should be applied to maximize the cash

waqf's role in Islamic financial institutions. Utilization of digital technology for waqf

management, for example, the utilization of social media as well as e-commerce

websites, can, to some extent, enhance outreach and simplify the contribution process

for waqf (Yayasan Waqaf Malaysia, n.d.). In addition, regulatory reforms that

encourage innovation and standardization processes of waqf management tadbir urus

will mitigate the problems and increase the lay people's trust in waqf institutions.

Effective mechanisms for involving the laity for better public awareness and

53
participation in cash waqf schemes will facilitate sustainability and long-term positive

impact.

2.8 Theoretical Framework

This study is grounded on three main theoretical foundations that collectively

support the exploration of cash waqf innovation within Islamic financial institutions in

Malaysia. These theories ensure that any innovation introduced is not only effective

and sustainable but also remains faithful to Islamic principles and socio-economic

objectives.

2.8.1 Islamic Social Finance Theory

Islamic Social Finance is based on the principle of redistributing wealth and

promoting social justice through mechanisms such as zakat, waqf, and sadaqah. Waqf,

particularly cash waqf, is viewed as a voluntary charitable endowment aimed at

financing social welfare initiatives sustainably. According to Mohd Thas Thaker

(2018), Islamic Social Finance offers an ethical framework for the mobilization of

resources towards societal betterment, aligned with the maqasid al-shariah (objectives

of Islamic law), including the preservation of faith, life, intellect, progeny, and wealth.

Cash waqf thus serves as a powerful instrument to support education, healthcare, and

poverty alleviation while ensuring that economic development adheres to Islamic

ethical standards.

2.8.2 Responsible Innovation Theory

Responsible innovation emphasizes the development of new products, services,

and systems in a manner that anticipates potential consequences, aligns with societal

values, and engages stakeholders in the innovation process. Stilgoe, Owen, and

54
Macnaghten (2013) argue that responsible innovation must be inclusive, reflexive, and

geared towards societal good. In the context of cash waqf, this theory underscores the

need for Islamic financial institutions to ensure that any technological or operational

innovations comply with Shariah principles, maintain transparency, and enhance public

trust. Innovations must not merely seek efficiency and profitability but must be

designed to fulfill social obligations and uphold the ethical integrity of Islamic finance.

2.8.3 Innovation Diffusion Theory (IDT)

Rogers' (2003) Innovation Diffusion Theory (IDT) explains how innovations

spread through social systems based on perceived attributes such as relative advantage,

compatibility, complexity, trialability, and observability. In the waqf sector, the

adoption of innovative cash waqf products by the public and stakeholders depends

heavily on their compatibility with Islamic values and their perceived ability to address

socio-economic needs. Understanding the diffusion process is critical for designing

waqf innovations that are widely accepted, such as fintech platforms for waqf

collection, waqf-linked investment accounts, and blockchain-based transparency

mechanisms.

2.8.4 Framework Integration

Integrating these theories provides a holistic framework for analyzing cash waqf

innovation. Islamic Social Finance Theory anchors the religious and ethical dimension

of cash waqf, ensuring that innovations align with maqasid al-shariah. Responsible

Innovation Theory ensures that the development of waqf products and services is

ethical, anticipatory, and stakeholder-driven. Innovation Diffusion Theory supports

understanding the mechanisms through which these innovations are accepted and

adopted by the Muslim community and financial institutions.

55
 Through this integrated theoretical framework, this study explores how Islamic

financial institutions in Malaysia can responsibly innovate cash waqf products,

ensuring that these innovations are sustainable, Shariah-compliant, and effectively

contribute to the socio-economic development of society.

2.9 Research Gap

Although numerous studies have examined the concept, management, and

challenges associated with cash waqf in Malaysia, significant gaps remain, particularly

concerning innovation and the role of Islamic financial institutions in cash waqf

development. Previous research, such as by Ajlaa and Rahman (2020), has highlighted

critical challenges in implementing cash waqf, including administrative inefficiencies,

limited public awareness, and fragmented regulatory structures. Similarly, Khamis and

Salleh (2018) focused on assessing the efficiency and transparency of cash waqf

management, identifying operational weaknesses within waqf institutions.

However, despite these valuable contributions, existing literature largely centers

on traditional waqf management and operational challenges rather than on innovations

in cash waqf practices. There is limited research specifically exploring how Islamic

financial institutions introduce innovative cash waqf products, leverage financial

technologies to enhance waqf operations, and navigate regulatory environments to

foster the sustainable growth of cash waqf schemes.

In addition, while various studies have examined public perceptions of waqf and

general management efficiency, few have systematically addressed how fintech

solutions, such as blockchain applications and digital fundraising platforms, can be

strategically integrated into cash waqf management to increase transparency,

efficiency, and public trust.

56
 Moreover, regulatory frameworks have often been discussed at a broad level

without an in-depth analysis of how inconsistencies between state religious councils

and Islamic financial institutions impact the scalability and modernization of cash waqf

initiatives. The absence of clear national standards for cash waqf innovation further

exacerbates the stagnation in product development and public participation.

Given these identified gaps, this study seeks to provide a focused examination

of cash waqf innovations specifically within Islamic financial institutions in Malaysia.

It aims to assess the types of innovative products introduced, the regulatory and

operational challenges faced, and the opportunities for leveraging financial

technologies to enhance cash waqf systems. By addressing these dimensions, the

research contributes to bridging the existing knowledge gaps and offers practical

strategies for advancing the role of cash waqf in Malaysia’s Islamic social finance

ecosystem.

2.10 Conclusion of the Chapter

The last section of this chapter emphasizes the significance of cash waqf as a

new Islamic financial product that can enhance social and economic development in

Malaysia. From the literature review undertaken, it is apparent that cash waqf

transformed from its traditional concept to a more liquid and flexible one, thereby

making it possible for greater individual participation in Islamic charitable deeds. The

involvement of Islamic financial institutions in the management of cash waqf is

essential, particularly in aspects such as fundraising, Shariah-compliant investment, and

distribution of returns for public welfare.

57
 Moreover, advancements such as digitalization and synergy with other Islamic

financial instruments have enhanced the efficiency of cash waqf as a tool for socio-

economic development. However, there are many challenges that need to be addressed,

such as a lack of standardized rules, poor public knowledge, and the need for

transparency in management. Therefore, an integrated approach with the government,

Islamic financial institutions, and society is important for ensuring that the benefits of

cash waqf are reaped to the fullest. Utilizing a suitable strategy, cash waqf can become

a sustainable financing mechanism that has a positive impact on education, healthcare,

and social infrastructure in Malaysia, as well as contributing towards the achievement

of goals pertaining to inclusive and sustainable Islamic economic growth.

58
 3 CHAPTER THREE

RESEARCH METHODS

3.1 Introduction

Research methodology serves as the backbone of any academic study, offering

a structured framework that ensures the validity, reliability, and academic rigor of the

findings. This chapter outlines the research procedures and methods employed in this

study, including the approaches to data collection, analysis techniques, and the overall

research design aimed at achieving the predefined objectives. Careful selection of

appropriate methods is essential to enhance the accuracy, credibility, and relevance of

the research outcomes (Creswell, 2014).

In line with the study's objectives, this research adopts a qualitative approach,

emphasizing thematic analysis through an extensive review of literature and document

analysis. The literature review enables a comprehensive evaluation of pre-existing

theories and concepts, while simultaneously identifying research gaps that form the

basis for advancing knowledge on cash waqf innovation in Malaysia. Meanwhile,

document analysis offers rich, detailed insights derived from secondary sources such as

academic journals, official reports, governmental policies, and publications by Islamic

financial institutions (Bowen, 2009).

Saunders, Lewis, and Thornhill (2019) identify four essential components of

research methodology: formulating research objectives, designing an appropriate

strategy, systematic data collection, and upholding the quality of research execution. In

this study, a qualitative methodology is employed to assess the various innovations in

cash waqf, regulatory challenges encountered, and strategies to enhance public

awareness and participation in cash waqf initiatives.

59
 To systematically identify and interpret patterns within the secondary data, this

research utilizes the thematic analysis approach outlined by Braun and Clarke (2006).

This method is particularly suitable for uncovering emerging themes related to the

implementation and innovation of cash waqf within Malaysia’s Islamic financial sector,

especially in regulatory and operational contexts.

A rigorous selection process guided the choice of secondary sources, ensuring

that only credible, relevant, and diverse materials were included. As Bryman (2012)

emphasizes, in literature-based research, the credibility and academic standing of

sources are paramount. Thus, this study incorporates journals and articles from

reputable academic databases such as Scopus, Web of Science, and Google Scholar, as

well as official reports from institutions like Bank Negara Malaysia (BNM) and various

State Islamic Religious Councils (Majlis Agama Islam Negeri, MAIN).

By adopting a methodologically rigorous approach and relying on authentic

secondary data, this research aspires to contribute meaningfully to the field of Islamic

finance. It specifically aims to provide a nuanced understanding of the evolving

landscape of cash waqf in Malaysia. This chapter proceeds to present a detailed

examination of the study design, data collection strategies, analytical methods, and the

steps undertaken to ensure the validity and credibility of the research findings.

3.2 Research Design

A research design serves as the conceptual framework that systematically guides

data collection, analysis, and interpretation within a study (Creswell & Creswell, 2018).

This research adopts a qualitative design utilizing a thematic literature review approach,

providing a comprehensive strategy to investigate innovations in cash waqf

management within the Islamic finance landscape in Malaysia.

60
 Rather than opting for methodologies such as phenomenology—which focuses

on lived experiences through primary data collection—or case study approaches that

center on in-depth examinations of particular institutions, this study specifically relies

on secondary sources. This choice is deliberate: a thematic literature review enables the

extraction of emerging themes across multiple institutions and regulatory

environments, offering a broad and comparative perspective.

As emphasized by Yin (2014), qualitative research design affords researchers

the flexibility to explore complex phenomena, particularly when grounded in secondary

data. In alignment with this, the present study systematically examines academic

papers, policy reports, and Islamic financial institution publications to uncover patterns,

identify key challenges, and evaluate strategic innovations in cash waqf practices.

Following Braun and Clarke (2006), thematic analysis was applied as the

primary method for identifying, analyzing, and recording meaningful patterns within

qualitative data. The structured process included: (1) gathering relevant literature, (2)

identifying significant and recurrent themes, (3) interpreting these themes through

various theoretical lenses, and (4) formulating strategic recommendations based on the

findings.

To reinforce the research's internal and external validity, source triangulation

was employed, as suggested by Lincoln and Guba (1985). This involved cross-

examining multiple credible sources—including government reports, peer-reviewed

journals, and Islamic finance policies—to ensure the consistency, reliability, and

authenticity of the extracted data.

Additionally, consistent with a deductive analytical approach, the study draws

upon pre-established theories and conceptual frameworks related to Islamic social

61
finance and cash waqf. These frameworks were systematically applied to the Malaysian

context, facilitating the focused exploration of how theoretical constructs materialize in

practice.

In essence, by grounding its methodology in thematic literature review and

document analysis, this study provides both a macro-level understanding of cash waqf

innovation and micro-level insights into specific regulatory and operational issues. The

chosen design allows for the generation of actionable recommendations that can inform

policymakers, practitioners, and stakeholders, thereby advancing the effective

management of cash waqf assets in Malaysia.

3.2.1 Justification for Using Qualitative Method

The adoption of a qualitative method for this study is strategically aligned with

the research objectives, which center on exploring innovations, regulatory challenges,

and strategic developments in cash waqf management by Islamic financial institutions

in Malaysia.

A qualitative approach, particularly through thematic literature review, offers

distinct advantages in capturing the depth, contextual richness, and nuanced variations

in the subject matter—elements that quantitative methods may not fully encapsulate

(Braun & Clarke, 2006; Nowell et al., 2017). Rather than seeking to quantify

phenomena, the qualitative approach facilitates the discovery of patterns, themes, and

insights embedded within diverse secondary data sources, including journal articles,

institutional reports, and policy documents.

Creswell and Poth (2018) note that qualitative research is particularly effective

when aiming to understand complex processes and institutional practices. In this

62
context, examining cash waqf through a qualitative lens enables a critical understanding

of how different institutions innovate, manage challenges, and interact with regulatory

frameworks.

Moreover, thematic analysis provides a flexible yet rigorous framework for

organizing data into coherent themes that directly respond to the research questions. It

accommodates the dynamic nature of cash waqf innovations—where new models,

technologies, and governance practices are continuously emerging—allowing the

researcher to integrate evolving insights without compromising methodological

integrity (Silverman, 2020).

Ultimately, the qualitative approach ensures that the study delivers a holistic,

context-sensitive, and theoretically grounded analysis. It generates meaningful

contributions to the body of knowledge in Islamic social finance, particularly by

offering in-depth academic reflections on the evolving role of cash waqf within

Malaysia’s Islamic finance ecosystem.

3.3 Data Collection and Scope

The data collection procedure adopted in this study involved an extensive

literature review and document analysis, with the aim of advancing a nuanced

understanding of cash waqf innovations within the Malaysian context. The use of desk

research allowed the researcher to draw upon a wide array of secondary sources that

have undergone academic scrutiny, thereby ensuring both the reliability and relevance

of the information analyzed (Bowen, 2009).

Through this approach, the study systematically traces emerging patterns and

trends in the operation and management of cash waqf, particularly in the domains of

63
regulation, innovation, and societal impact. The data sources employed encompass a

diverse range of academic literature, policy reports, institutional publications, and

industry-specific documents. Among these, academic journals served as a primary

resource for scholarly discussions on cash waqf management and innovation in

Malaysia.

To guarantee the quality and credibility of the data collected, reputable

academic databases such as Scopus, Web of Science, and Google Scholar were utilized,

providing access to peer-reviewed articles that meet high academic standards

(Creswell, 2014). Furthermore, research reports published by Islamic financial

institutions, waqf organizations, and government agencies such as Bank Negara

Malaysia (BNM), Majlis Agama Islam Negeri (MAIN), and the Islamic Research and

Training Institute (IRTI) were critically examined. Real-time online resources,

including official websites of waqf management bodies and Islamic financial

institutions, were also consulted to obtain up-to-date information regarding current

practices and policies related to cash waqf.

In addition, source triangulation, as advocated by Lincoln and Guba (1985), was

systematically employed by comparing observations derived from different types of

documents. This strategy enhanced the trustworthiness and consistency of the findings

by validating information across multiple credible sources, thereby strengthening the

rigor of the analysis.

To ensure the contextual relevance and academic integrity of the research, the

scope of data collection was deliberately confined to Islamic financial institutions

operating under the regulatory framework of Bank Negara Malaysia (BNM) and/or

institutions affiliated with the Association of Islamic Banking and Financial Institutions

64
Malaysia (AIBIM). Although a comparative analysis involving other jurisdictions such

as Indonesia, Turkey, or Saudi Arabia could have offered broader insights, this study

deliberately narrows its focus to Malaysia. This decision was made to enable an in-

depth, context-specific exploration that aligns closely with the objectives and academic

requirements of a Master’s level research project.

Therefore, the study concentrates exclusively on the innovations and cash waqf

practices of Malaysian Islamic financial institutions within the nationally regulated

environment, consciously avoiding cross-country comparisons to maintain coherence,

depth, and manageability within the research framework.

Table 3. 1 : Research Methodology table

Data Collection
Research Question Analysis
Methods
What notable cash waqf products • Documents
have been introduced by Islamic • Academic Thematic Analysis
financial institutions in Malaysia? Articles
What regulatory and operational
• Government
challenges are encountered by
Policies Content Analysis
these institutions in administering
• Reports
cash waqf?
What strategies can be proposed
to enhance cash waqf • Existing
Thematic Analysis
management and increase public Literature
awareness in Malaysia?

3.4 Trustworthiness and Validity of Data

Ensuring the trustworthiness and validity of data is crucial in qualitative

research, particularly when relying heavily on secondary sources. To achieve this, the

present study employed multiple strategies grounded in established qualitative research

standards.

65
 Firstly, source triangulation was systematically applied, whereby information

derived from various types of documents—academic journal articles, policy reports,

and institutional publications—was cross-validated and compared. Triangulation

enhances the credibility of research findings by minimizing biases that could arise from

dependence on a single source (Lincoln & Guba, 1985). This approach ensures that

diverse perspectives are incorporated, thereby strengthening the depth, robustness, and

reliability of the study’s conclusions.

Secondly, strict criteria for source reliability were enforced. Only data retrieved

from reputable academic databases such as Scopus, Web of Science, and Google

Scholar were utilized, prioritizing peer-reviewed articles known for their rigorous

academic scrutiny (Creswell, 2014). Furthermore, policy reports and institutional

documents analyzed within this study were sourced from authoritative bodies,

including Bank Negara Malaysia (BNM), Majlis Agama Islam Negeri (MAIN), and the

Islamic Research and Training Institute (IRTI), thereby guaranteeing that the data

reflect credible, official, and current information.

Thirdly, to further enhance the dependability and confirmability of the research,

a consistent and transparent method of document analysis was adhered to, following

best practices outlined by Nowell et al. (2017) for conducting rigorous thematic

analysis. The processes of data extraction, coding, and theme identification were

meticulously documented to ensure methodological transparency and to facilitate

potential replicability by future researchers.

66
 By integrating these validation strategies, this study ensures that the results

derived from secondary data sources are credible, dependable, and transferable.

Consequently, the research establishes a strong and trustworthy foundation for

analyzing innovations in cash waqf management within Malaysia’s Islamic financial

sector.

3.5 Selection of Literature Sources

The picking of literary sources in the present research involved careful regard

for numerous major considerations to uphold the validity, relevance, and reliability of

the data that was utilized. As per Creswell (2014), a good literature review ought to be

founded upon the choice of sources that are suitable for the research setting,

trustworthy, and have the ability to support a well-rounded understanding of the topic

of study. As such, in this research, the selection of literature was guided by the

following factors:

(1) Relevance

The resources utilised must be strongly linked to cash waqf innovation and waqf

management in Malaysia. The primary sources that underpin the analysis

employed in this research are policy reports, Islamic financial institution

publications, and scholarly journals (Saunders et al., 2019).

(2) Reliability

The sources utilized are from top-tier journals, reports by reputable agencies,

and books published by well-known publishing houses. Sources were chosen

from databases like Scopus, Web of Science, and Google Scholar to provide

assurance of the validity of the cited research results (Bryman, 2012).

67
 (3) Time Span

Sources utilized for this research are primarily within the period of the last 10

years to make sure that data utilized remains applicable to existing conditions.

Nonetheless, sources from earlier years are also utilized in the event that they

possess historical value that reinforces the implementation of cash waqf in

Malaysia (Yin, 2014).

(4) Diversity of Perspectives

The present study employs a multidisciplinary perspective in combining

different source materials such as scholarly papers, industry reports, policy

documents, and pertinent case studies. This strategy seeks to gain a deeper

understanding of innovations in cash waqf and their policy implications

(Lincoln & Guba, 1985).

By taking these aspects into account, this research guarantees that the literary

sources utilized are of high reliability and can be analysed systematically. Choosing

relevant literature is a crucial step in the formulation of the theoretical framework and

in validating the correctness of the interpretations provided in this study.

3.6 Reliability of Secondary Data

The credibility of secondary data sources utilized in the present research is

essential in sustaining the validity of the findings generated. In accordance with

Creswell (2014), the quality of research based on the study of literature heavily relies

on the choice of reliable data sources as well as verification approaches employed.

Thus, the current research employed a number of steps to enhance data reliability:

1) Data Triangulation

68
 The triangulation research approach was implemented by the comparison of

various sources of documents like scholarly articles, government reports, and

books by organizations that specialize in Islamic finance. This approach enables

researchers to examine the consistency of data among varied sources and

conclude that findings have a strong empirical grounding (Lincoln & Guba,

1985).

2) Source Credibility Evaluation

Each journal or report utilized in this research was evaluated according to the

publication source. Priority was placed on materials from credible journals (e.g.,

Web of Science and Scopus) and official institutional reports regarding Islamic

finance (e.g., Bank Negara Malaysia and Majlis Agama Islam Negeri). The

reason for this is avoiding the utilization of inaccurate or biased data (Saunders

et al., 2019).

3) Critical Analysis

Every document subject to analysis is closely examined for detecting any

possible biases or conflicts of interest that it might carry. According to Bowen

(2009), document-based research needs to take into account possible

institutional or methodological biases that might affect the conclusions drawn

from a given source.

4) Peer Review

To enhance the accuracy and objectivity of the analysis, the results of this study

were reviewed by waqf and Islamic finance scholars. Peer review helps to assess

the quality of data interpretation and guarantees that the analysis meets high

academic standards (Bryman, 2012).

69
 Through the undertaking of these methodological processes, the present study

attempts to ascertain that the secondary data utilized are of high reliability and can be

trusted to provide answers to the research questions. Further, this methodology also

aims at enhancing transparency and augmenting the credibility of the research in

investigating cash waqf innovation in the Malaysian setting.

3.7 Techniques of Data Analysis

The analytical methods adopted in this research employed the thematic analysis

model, a qualitative approach used for discovering, investigating, and describing

patterns within data (Braun & Clarke, 2006). This model was utilized to analyze the

various innovations introduced in cash waqf practices, as well as to recognize the

associated challenges and strategic approaches to cash waqf management in Malaysia.

In addition to thematic analysis, this study explicitly applies a deductive analysis

approach. Through the deductive method, the researcher evaluates secondary data

against pre-established theoretical frameworks relating to cash waqf innovation,

governance, and public engagement as identified in the literature review. By employing

this deductive approach, the study systematically assesses the extent to which practical

observations within Malaysia's cash waqf sector align with or diverge from theoretical

expectations, thereby facilitating a theory-driven interpretation of the findings.

The analysis process involved several critical stages. Initially, the data was

organized and synthesized by collecting and reviewing various materials, including

scholarly journals, policy reports, and documents issued by institutions involved in

Islamic finance. Each document underwent systematic reading to identify major themes

relevant to the research objectives (Creswell, 2014).

70
 Subsequently, data coding was carried out by categorizing information into

specific thematic groups. This coding process aimed to uncover recurring patterns

within the secondary data collected, particularly regarding government policies on cash

waqf, innovative management approaches, and the challenges faced in implementation

(Saunders et al., 2019). These categories were then subjected to further analysis to

establish meaningful connections and trends pertinent to the study.

To ensure the validity and credibility of this research, the following methods

were employed:

1) Data Triangulation

The triangulation technique was applied by systematically comparing findings

from multiple source documents. Utilizing various academic and policy sources helped

minimize bias and ensured the empirical robustness of the results (Lincoln & Guba,

1985).

2) Peer Review

The findings of the analysis were subjected to peer review by experts in the

fields of waqf and Islamic finance to ensure that the interpretations were objective and

academically sound. Peer review also served as an additional verification step to uphold

the study's academic integrity (Bryman, 2012).

3) Audit Trail

Throughout the entire analytical process—from data collection to results

interpretation—an audit trail was maintained to enhance research transparency. This

71
documentation allows for the analytical process to be traced and replicated by future

researchers, thereby strengthening the study's methodological rigor (Bowen, 2009).

Furthermore, the findings were interpreted within appropriate theoretical

contexts to ensure conceptual validity. By integrating a deductive analytical strategy

alongside thematic analysis, this study offers a comprehensive academic contribution

to understanding the effective management of cash waqf. Through this dual analytical

approach, the study aspires to provide deeper insights and formulate strategic

recommendations for enhancing the management and optimal deployment of cash waqf

assets in Malaysia.

3.8 Research Process Flow

The research process for this study was systematically structured to ensure the

coherence and integrity of the methodology. It began with the identification of the

research topic, followed by the formulation of research questions and objectives. A

thematic literature review approach was selected, and relevant secondary data sources

were collected and evaluated for reliability. The data were then thematically coded and

analyzed to synthesize findings aligned with the research objectives.

The overall research process is illustrated in Figure 3.1.

Identification of Formulation of Selection of Selection and
Research Topic Research Questions Thematic Literature Collection of
and Objectives Review Secondary Data
Methodology Sources

Drawing Thematic Analysis Thematic Coding Screening and

Conclusions and and Synthesis and Categorization Evaluation of Data
Recommendations for Reliability and
Relevance
Figure 3. 1 : Research Process Flow
Source: Author’s own work (2025).

72
 As depicted in Figure 3.9, the research process was designed to follow a logical

progression, starting from topic identification and culminating in drawing meaningful

conclusions and recommendations. Each stage was aligned with the study’s objectives

to ensure a robust and credible research outcome.

3.9 Conclusion Chapter

The methodology employed in this study has been elaborated in this chapter,

with an emphasis on a qualitative approach involving the review of literature and

thematic analysis. In pursuing an understanding of the cash waqf innovation in the

Islamic financial sector in Malaysia, comparative analysis is expected to be done on

different policies, practices, and models of management drawn from authentic sources.

The adopted research design highlights the significance of comparative

methodology and thematic analysis, which enables researchers to examine various

patterns and interdependencies in cash waqf management across various nations. Data

collection methods entailed a systematic review of literature that was based on the

credibility, transferability, reliability, and transparency of the sources to guarantee the

integrity of the study.

The analytical methods employed in this research are data triangulation, source

credibility evaluation, critical evaluation, and peer review, all of which are employed

to ensure the reliability of the findings. By way of confirmation that the data employed

were from credible academic journals, authoritative government reports, and Islamic

financial institution publications, the current study offers a sound basis for an

understanding of the issues and potentialities of managing cash waqf in Malaysia.

73
 Moreover, the application of comparative analysis also offers further inputs for

determining best practices from other nations that are replicable or adaptable in the

Malaysian environment. This research adds to the academic literature on innovation in

Islamic finance and offers evidence-based policy recommendations for policymakers

and concerned institutions for enhancing the efficiency of the cash waqf system in

Malaysia.

The following chapter will illuminate the findings of the analysis derived from

this study, such as principal findings applicable to innovations, regulatory issues, and

solutions for enhancing cash waqf management in Malaysia.

74
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