Author: Mohamed Hamza Ghaouri, Intern at FINTERRA
The world is experiencing one of the harshest economic conditions due to a global pandemic. This presents a unique opportunity for Social Finance to step up and cater to the many around the world who have been hit hard with unemployment, evictions, hunger, etc. Accordingly, with the emergence of the United Nations Sustainable Development Goals (SDGs), the debate on the role of Islamic social finance (ISF) initiatives has intensified. In fact, Islamic social finance instruments, if mobilized effectively, have the potential to go beyond their traditional practice and solve some of the pressing socio-economic issues of the modern era.
Particularly, Waqf is considered as one of the most prominent ISF instruments, it is a truly beneficial instrument that can be utilized to address many societal issues faced across the globe, an all-inclusive Islamic social finance tool that is based on perpetual charity. Waqf institutions in the past have played a pivotal role in contributing to the sustainable benefit of society. Additionally, the modern concept of Waqf (Cash Waqf) has expanded the scope of Waqf since it allows the acceptance of Waqf in the form of cash and other movable properties.
The emergence of Cash Waqf has encouraged multiple fintech players, mainly crowdfunding platforms, to access the Waqf sector by collecting small Waqf donations from the crowd. With the introduction of Blockchain technology to anchor trust between donors and the huge Muslim population around the world, the Cash Waqf based blockchain has been considered to have a huge potential.
Leading this initiative is FINTERRA, a FinTech technology-based company, is providing blockchain-based Islamic Social Finance applications. With relevant regulatory compliance built into the products and services, it helps solve core challenges in unlocking and integrating options for Capital raise, Waqf management, and asset management while offering robust reporting capabilities.
Although contributing to the Waqf is much easier, transparent, and secure today than in the past, but small donations with an intention of pure charity is far from its real potential. In order to improve the collection and to further grow and develop Waqf, FINTERRA wishes to understand the level of awareness of the Waqf across the world, raise public awareness and investigate the willingness of Muslims to contribute.
In February, FINTERRA launched a global survey, which lasted for a month, and was able to collect information from respondents from 36 Muslim countries (Algeria, Morocco, Saudi Arabia, etc) and Muslim minority countries (Canada, Philippines, India, etc) from different parts of the world:
- Africa (Tunisia, Ghana, Guinea, etc)
- Australia (Australia)
- Central Asia (Afghanistan, Azerbaijan, Uzbekistan, etc)
- Europe (Germany, France, etc)
- Middle East (Jordan, UAE, etc)
- North America (Canada)
- Southeast Asia (Malaysia, Indonesia, etc)
The majority of respondents that have answered the survey are Male (68%) who are Single (51%) and between 25 and 35 years old (41%). On average, respondents have an acceptable education level while most of them (42.2%) have a master degree as the highest educational attainment.
Most of the respondents (46.3%) have a monthly income less than 500 USD, followed by those who have a monthly income ranging between 500 and 1,500 USD (27.5%), while the remaining respondents have a monthly income more than 1,500 USD.
Analysis of questions
The survey is divided into four sections designed in a way to understand the awareness level of respondents regarding Islamic social finance instruments generally and the Waqf particularly.
Section-1: we collect information related to the demographic profile of the respondents.
Section-2: we ask general questions to assess respondents’ level of knowledge regarding Islamic social finance instruments. Some questions were designed to see if the respondents can make the difference between the different instruments, the beneficiaries and the rewards of each of instrument.
Section-3: we put special emphasis on the Waqf instrument. After asking general questions about Waqf and Cash-Waqf, respondents were asked to rate their knowledge. Additionally, we have used a five scales Likert-type questions.
Section-4: was devoted to exploring past and potential future contributions to the Waqf. In this section, respondents were asked whether they have contributed to Waqf in the past and if they have any intention to invest in the future.
A vast majority of the respondents surveyed (72%) have heard of Islamic Social Finance and know at least its three main instruments Sadaqah, Zakat and Waqf and are aware of the difference between them. With a special focus on Waqf, 95% of respondents confirmed that they have heard of Waqf but only 62% of them are aware of how it works.
Most of the respondents argue that Waqf beneficiaries and Zakat beneficiaries are not same (63%), while 59% of respondents see that Sadaqah beneficiaries are different from Zakat beneficiaries. From the other side, a majority of respondents (76%) agree that Muslims around the world generally contribute less to Waqf compared to Sadaqah and Zakat.
The respondents were asked if they believe that Waqf, Zakat and Sadaqah have the same reward, the answers showed that only 48% of them believe that the reward of these instruments is different.
Most of the respondents believe that Zakat (63%) and Sadaqah (63%) have a hereafter reward only but regarding Waqf, 64% of respondents believe that Waqf can have a hereafter reward together with a return on investment.
When asked to evaluate their knowledge in area of Waqf, only 48% of respondents identified themselves as knowledgeable. Accordingly, only 46% of the respondents believe that Waqf is not a religious obligation while others see it as a religious duty. Whereas 45% of respondents only agree that Waqf can be dedicated to family members
A large majority of our respondents have a good knowledge of the Waqf; 71% of them believe that Waqf is not limited to immovable assets, while 73% agree that beneficiaries of Waqf can also be non-Muslims. However, only 44% of respondents agree that Non-Muslims can Make a Waqf donation.
By asking deeper questions, respondents showed a certain lack of awareness. Although 64% agree that Cash-Waqf is tolerable by the shariah, 40% of respondents were not sure if Cash-Waqf corpus should be preserved. Whereas, 28% of respondents see that Waqf properties can not be replaced, converted, substituted or exchanged, while 33% were not sure.
When it comes to the importance of Waqf in the society, almost all the participant agree that Waqf is an important instrument to achieve the objectives (Maqassid) of Shariah (82%) as well as having a contribution to socio-economic development (88%). They also agreed that Waqf has a great potential in reducing poverty (82%) and provide significant job opportunities (84%).
Questions related to the past Waqf behavior have revealed that, although respondents are aware of the importance of Waqf, 52% of them have never contributed to it in any form. Among the 48% that have contributed before, 45% have contributed during the past year while others during the past five years. Additionally, 34% of the respondents who have contributed to the Waqf have made Irregular contributions while others organize their contributions on a weekly, monthly or annually basis.
In our survey, we tried to explore the willingness of respondents to contribute in Waqf. The study shows that only 58% of respondents have the intention to contribute to Waqf and/or Cash-Waqf. Respondents who expressed interest in contributing on Waqf were asked what type of Waqf would they donate (movable, immovable), 68% of them have chosen to contribute in Cash-Waqf). Finally, they were asked how much would they contribute if they are given a Cash-Waqf opportunity; 81% have chosen to contribute an amount that range between USD 10 and USD 100.
Conducting this survey was motivated by the aim that Finterra has to utilize Waqf in a way that helps those in need. Following the principle of crowdfunding to raise micro-donations from the crowd and based on an innovative blockchain platform, Finterra has been, during the past few years, trying to mobilize Waqf to achieve multiple social and even environmental causes.
However, Finterra has faces many challenges in the collection of donations and small Waqf contributions. Despite the fact that donating has increased with the introduction of Blockchain which ensures transparency and traceability, Cash-Waqf contributions are still far from reaching their expected potential. As the statistics show, although the level of awareness among Muslims around the world is acceptable, most of them have never contributed and only half of them intend to contribute in the future. Certainly, some respondents have shown their willingness to make small contributions, but it remains very low. On the other hand, the obligation to preserve the Cash-Waqf corpus makes it difficult to efficiently allocate small and low donations, to meet the company’s financial needs and to make a sustainable impact.