Overview, Zakat and Waqf
Throughout Islamic history, zakat and waqf have played an essential role in the development of society; whether using zakat to eradicate poverty, or using waqf to create public services and infrastructure, the two concepts are as relevant today as they were a century ago. However, for some reason, the understanding and perception of zakat and waqf are different. There is a need for the Muslim community to have a better understanding of zakat and waqf to fulfill their payment obligations in zakat, as well as to realize the potential of waqf, in particular, that involving the socio-economic situation of a region or state.
The objectives of the Islamic financial system emphasize socio-economic justice and the equitable distribution of income and goods as one of the fundamental goals of the financial system. In this context, an unfair distribution means that wealth is concentrated only among the wealthy. For example, Allah (Exalted be He) says in the Qur’an:
From the Islamic point of view, wealth belongs to God, and this wealth is entrusted to individuals who play their role as vicar. At the same time, part of the donated wealth belongs to others, such as the poor. Charities, such as charitable giving by the rich to the poor, are not seen as a favor or gift from the wealthy, but more specifically, the rights of the poor. Concerning these “rights,” Allah (Exalted be He) declares in the Koran:
“And over the property of which there is a definite right [Zakat] ۞ for the beggar and the underprivileged; (Quran 70, verses 24-25)
Thus, zakat and waqf play an essential role in the redistribution of Islam, benefiting not only from the reduction of poverty but from the strengthening of the social structure of a society, demonstrating the importance of the concept of Islam.
The third pillar of Islam, zakat, refers to a part of the wealth of the wealthy, reaching the rate of compulsory nisab  prescribed by Islam to be distributed to eligible beneficiaries.
The practices of the time of Prophet Mohamed (prayers and blessings on him) and the four caliphs were the basis of the implementation of zakat today. Unfortunately, the power of zakat as a mechanism for the well-being of the community has encountered many obstacles throughout history. For example, after a period of four caliphates, the internal crisis led to the collection and distribution of less and less organized zakat, some encouraging the direct payment of zakat to beneficiaries. In the 19th century, colonialism influenced the role of Muslim nations in the collection and distribution of zakat in certain countries, so that only the government continued to play a role in the group and delivery of zakat, limited to cattle, agriculture, and zakat. However, behind the time barriers of the past, the twentieth century saw the renewal of the role of zakat. Some governments were playing a leading role in the collection and distribution of zakat in their respective countries.
The different types of Zakat
Zakat charity is different from zakat property. Charity Zakat is imposed on people or individuals, not on the property when Muslims fast during the month of Ramadan, those who can pay zakat al Fitr to share happiness with the poor and to purify themselves.
With the existence of various types of wealth, the form of Zakat associated with goods must also be identified.
An example of the type of property that can be accepted as a charity is paper money. At the time of Prophet Mohamed (prayers and blessings on him), gold and silver were considered a currency, in the form of dinars and dirhams. In recent years, paper money had become accepted, whereas before, the concept was something foreign. It should be noted that at the start of the production of paper money, experts in Islamic law considered it non-tithe or payable if it could be replaced by gold or silver. However, the economy of that time used paper money, which had the same function as gold and silver in ancient times. Therefore, it is reasonable to allow for paper money.
In the contemporary era, new types of property are becoming more and more important, so some scholars have argued that these types of property should be considered:
- Assets, property, and assets (cash, precious metals, savings books, bank deposits),
- Bank securities (stocks, bonds, treasury bills, investment funds),
- Crops and livestock,
- Salaries and fees,
- Bonuses, gratuities, and bonuses,
On the other hand, your private house or your car is not subject to Zakat.
The need to increase public understanding and knowledge about Zakat is just as important as maximizing the amount of Zakat collected. Very few succeed in identifying nisab for ownership of Zakat.
In addition to information, transparency in the collection and distribution of Zakat is crucial. In general, a high level of knowledge helps to reassure the payer of the Zakat on the effectiveness of the zakat mechanism. This can then increase the amount of funds and help by dissuading individuals from making payments directly to charity recipients, and therefore better organizing the distribution.
Like zakat, waqf (plural awqaf) is one of the means of giving in Islam. However, unlike zakat, waqf is voluntary. The waqf means “… hold certain goods and keep them for the limited benefit of certain philanthropies and prohibit any use or disposal of them outside their specific objective”. A waqf has a specific nature and is reserved for its benefit, and its use is prohibited outside the specified objectives. This term means a ban on selling or replacing something that is signified in waqf; when a good is given, it must be maintained.
On a spiritual or religious level, the waqf is a particular type of gift because of its continuous form (sadaqah jariyah), which is highly recommended to Muslims as Prophet Mohamed (prayers and blessings on him) advised:
The Messenger of God (prayers and blessings be upon him) said: When a child of Adam dies, his act ends, except for three things: a sadaqah continues, a knowledge that benefits (others) and a just child who prays for him/her. (Reported by Tirmidhi, Abu Dawud, Nasa’ I and Ibn Majah)
The terms of waqf are stated as follows
Eternal: In the waqf, donated goods (mawquf) must be kept and used only in the context where the rental income is intended to help the needy. The perpetual characteristics mean that it is necessary to prioritize the benefits of the waqf to maintain the waqf in the first place, before paying the salary of the manager of the waqf and the allocation to the beneficiaries of the waqf as indicated in the agreement.
Permanent donation: When the waqf is given, the donor (waqif) cannot end the contribution. Besides, the property (mawquf) cannot be included in any heir will, given as a gift or sold to another party. Indeed, from a legal point of view, it is well known that ownership of the property no longer belongs to waqif. At the same time, certain parts of the contract emphasize that the property is given to the beneficiaries, even if the property is incomplete and that they are not authorized to sell or provide the capital. In addition to the permanent form of waqf, temporary waqf is also accepted. The donation can be separated into a permanent and temporary donation.
Ability: Waqf donors (waqif) must be legally able or legally qualified to perform a waqf.
Charity: The Waqf is for charitable purposes following case law and the wish of the donor.
Benefit: The beneficiaries of waqf must be alive.
One of the different characteristics of waqf, compared to zakat, is the flexibility of the contract according to the wishes of the donor who can determine its destination and its conditions.
In general, most of the awqaf performed were religious, mainly related to mosques and other religious purposes, in contrast to the socio-economic aspects related to residential and commercial purposes. If we want to play a significant role in eliminating poverty and developing infrastructure suitable for public use, it becomes essential to inform the public about the options of waqf in a socio-economic context.
PROMOTE AND EXTEND THE FIELDS OF ACTION
The term zakat is often associated with traditional or historical zakat, such as zakat and gold zakat, compared to contemporary forms, such as stock trusts and employee savings.
Therefore, it is essential to determine whether contemporary forms of wealth, such as stock market trusts, employee savings, and takaful savings, are subject to zakat; for the primary purpose of fulfilling his obligation as a zakat payer, following the objective of charity.
This directly offers the opportunity to increase the size of the charitable fund to run programs suitable for charities. In addition to the need to achieve the objective of zakat, the importance of analyzing the zakatability of contemporary forms of assets also lies in the concept of justice.
Explore the types of Awqaf that have socio-economic aspects
The general public is more familiar with the religious types of awqaf, such as mosques and donations of holy books, compared to the awqaf, which contain socio-economic aspects.
Although religious importance is essential, a lack of knowledge and identification of the types of philanthropy or socio-economic investment requires special attention. The waqf contains flexibility in terms of the beneficiary of the waqf. This includes poor orphans, the needy, but also civil society.
Besides, flexibility also exists in terms of the purpose of the waqf. The waqf for an asset depends on the intention of the waqf, such as the eradication of poverty, educational grants for orphans and others. Another inherent flexibility resides in the given objects or corpora, which are not limited to a single asset; it can be classified as temporary waqf or permanent waqf. The properties mentioned above of waqf is a sadaqah jarriya, that means that if the socio-economic form of waqf can be explored, there are potential benefits beyond social needs, for financial results, such as producing jobs and withdrawing income from the assets of the waqf. Indirectly, this proves that the waqf is a socio-economic element used to develop the public infrastructure that is usually managed on government property. In the face of growing economic pressures and falling oil prices on the international market, the involvement of these types of agents in developing infrastructure will play a more critical role in the economy and infrastructure of countries. As noted above, this infrastructure can include the construction and maintenance of roads, schools, libraries, and others, depending on the needs of the community and the country.
Therefore, like the study of the zakatability of contemporary forms of assets, there is a need for relevant institutions, such as scholars and academics, to provide advice and additional information on aspects of waqf, in particular. mainly that linked to the socio-economic issues of the countries.
Ultimately and without a doubt, in Muslim history, zakat and waqf have played an essential role in society, in the eradication of poverty, in the development of public facilities. To strengthen their part, we are faced with the challenges of improving the understanding of zakat and waqf, as well as exploring the zakatability of contemporary assets and improving socio-economic elements, especially in an international context of more and more difficult.