Islamic finance prepares new rules for charitable funds
31 May 2016
Islamic finance institutions are set to present formal guidelines for Muslim charitable institutions later this month, as the industry looks to develop a more efficient use of their assets, says Reuters
Islamic endowments (awqaf) and alms-giving (zakat) have been in existence for centuries and hold billions of dollars which are aimed at supporting charitable causes around the globe, however they are often criticised for being poorly managed.
A set of guiding core principles for zakat has now been completed and will be unveiled at an upcoming United Nations summit to be held in Istanbul. Similar rules for awqaf are also in development. It is hoped to establish a number of core principles to strengthen the professional management of such entities and the associated audit function.
Reliable statistics are scarce, but awqaf are believed to hold large portfolios of real estate, commercial enterprises, cash, equities and other assets, with some estimates as high as $1 trillion worth of assets held globally.
In Indonesia alone, registered land from awqaf stands at 1,400 square kilometres with an estimated market value of around $60 billion, according to the country's Ministry of Finance.