The Endowment of Sukuk and the Sukuk of Al-Waqf

Modern financial engineering has created a reciprocal relationship between the institution of waqf, which is driven by altruistic motives, and investment sukuk, which are motivated by profit. This paper examines the dimensions of this relationship and concludes that there is no Shariah objection to endowing investment sukuk, provided that the nature of the underlying assets they represent is taken into consideration. It further shows that the securitization process can contribute to activating mechanisms for channeling funds in support of charitable waqf purposes. On the other hand, the study discusses the major theoretical and practical challenges facing waqf administrations in seeking financing through the securitization of waqf assets or by guaranteeing them, while remaining cautious about sukuk holders gaining ownership or security interests over these assets. The paper concludes with several recommendations, some relating to the contractual foundations of financing through investment sukuk, and others concerning the broader implications of such practices in financial markets—issues that prudent Shariah policy should not overlook.
Keywords: Islamic Waqf, Investment Sukuk, Waqf Institutions, Securitization