Using Waqf as Social Safety Net & Funding Public Infrastructure

Shaikh, Salman Ahmed (2015): Using Waqf as Social Safety Net & Funding Public Infrastructure. Published in: WAQF IQLIMI 2015, USIM Conference Proceedings

Abstract

This study explores the economic potential of the institution of Waqf in funding necessary social and public infrastructure and to act as a permanent social safety net. In section 2, we explain the motives behind charitable giving in the real world. We discuss the factors identified in the empirical literature and experiments. We also explain the need for reinforcing incentives in order to increase the scale of charitable giving as a personal choice in a non-economic pure altruist sense. In section 3, we discuss the reinforcing incentives for charitable giving in Islamic worldview. In section 4, we explain the importance of the institution of Waqf in overall Islamic redistribution framework. We explain how the institution of Zakat, Waqf and inheritance laws together act as redistribution devices and social safety nets in an Islamic economy. Finally, in section 5, we discuss the application of Waqf in contemporary policy framework.

• Item Type: MPRA Paper
• Language: English
• Keywords: , Charity, Warm Glow, Welfare, Social Mobility, Microfinance, Poverty
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions > I22 - Educational Finance ; Financial Aid; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements

References

Abdul Rahman, R., & Dean, Faisal (2013). “Challenges and Solutions in Islamic Microfinance”, Humanomics, 29 (4), pp. 293 – 306.

Alam, Nafis (2010). “Islamic Venture Philanthropy: A Tool for Sustainable Community Development”, Social Sciences Research Network, Working Paper No. 1565859.

Alpay, Savaş & Haneef, M. Aslam (2015). “Integration of Waqf and Islamic Microfinance for Poverty Reduction: Case Studies of Malaysia, Indonesia & Bangladesh”, Kuala Lumpur: SESRIC & IIUM.

Andreoni, James (1989). “Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence”, Journal of Political Economy, 97 (6), pp. 1447 – 1458.

Andreoni, James (1990). “Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving”, Economic Journal, 100 (401), pp. 464 – 477.

Andreoni, James (1995). Warm-glow versus Cold-prickle: The Effects of Positive and Negative Framing on Cooperation in Experiments”, The Quarterly Journal of Economics, pp. 1 - 21.

Andreoni, J., & Bernheim, B. D. (2009). “Social Image and the 50–50 Norm: A Theoretical and Experimental Analysis of Audience Effects”, Econometrica, 77(5), pp. 1607 – 1636.

Aziz, M. R. A., Johari, F., & Yusof, M. A. (2013). “Cash Waqf Models for Financing in Education”, 5th Islamic Economic System Conference (iECONS2013).

Becker, Gary S. (1974). “A Theory of Social Interactions”, Journal of Political Economy, 82, pp. 1063 - 1093.

Becker, Gary S. (1976). “The Economic Approach to Human Behavior”, University of Chicago Press: Chicago.

Chapra, M. Umer (1999). “Islam and Economic Development: A Discussion Within the Framework of Ibn Khaldun’s Philosophy of History”, Proceedings of the Second Harvard University Forum on Islamic Finance: Islamic Finance into the 21st Century, Cambridge, Massachusetts, Center for Middle Eastern Studies, Harvard University, pp. 23 – 30.

Crumpler, H., & Grossman, P. J. (2008). “An Experimental Test of Warm Glow Giving”, Journal of public Economics, 92(5), pp. 1011 – 1021.

DellaVigna, S., List, J. A. & Malmendier, U. (2009). “Testing for Altruism & Social Pressure in Charitable Giving”,National Bureau of Economic Research, Working Paper No. 15629.

Feddersen, Timothy & Alvaro, Sandroni. (2009). “The Foundations of Warm-Glow Theory”, Working Paper.

Habib, A. (2007, March). “Waqf-Based Microfinance: Realizing the Social Role of Islamic Finance”, International Seminar on Integrating Awqaf in the Islamic Financial Sector, Singapore.

Haneef, M. A., Muhammad, A. D., Pramanik, A. H., & Mohammed, M. O. (2014). “Integrated Waqf Based Islamic Microfinance Model (IWIMM) for Poverty alleviation in OIC Member Countries”, Middle-East Journal of Scientific Research, 19(2), pp. 286 – 298.

Harbaugh, W. T. (1998). “What do Donations Buy? A Model of Philanthropy Based on Prestige and Warm Glow. Journal of Public Economics, 67(2), pp. 269 – 284.

Hassan, A., & Shahid, M. A. (2010). “Management & Development of the Awqaf Assets” Seventh International Conference-The Tawhidi Epistemology: Zakat and Waqf Economy, UKM.

Kuran, Timur (2001). “The Provision of Public Goods under Islamic Law: Origins, Impact, and Limitations of the Waqf System”, Law & Society Review, 35(4), pp. 841 – 898.

List, J. A. (2011). “The Market for Charitable Giving”, The Journal of Economic Perspectives, 25(2), pp. 157 – 180.

Lilley, A., & Slonim, R. (2014). “The Price of Warm Glow”. Journal of Public Economics, 114, pp. 58 – 74.

Mayr, U., Harbaugh, W. T., & Tankersley, D. (2009). “Neuroeconomics of Charitable Giving and Philanthropy”, Neuroeconomics: Decision Making and the Brain, pp. 303 – 320.

Mirakhor, Abbas & Askari, Hossein (2010). “Islam and the Path to Human and Economic Development”, New York: Palgrave Macmillan.

Mohammad, M. T. S., Iman, M., & Hamid, A. (2006). “Obstacles of the Current Concept of Waqf to the Development of Waqf Properties and the Recommended Alternative”, Malaysian Journal of Real Estate, 1(1), pp. 1 – 95.

Mohammad, M. T. S. H. (2011). “Towards an Islamic Social (Waqf) Bank”. International Journal of Trade, Economics and Finance, 2(5), pp. 381 – 386.

Morduch, Jonathan. (1999_. “The Microfinance Promise”, Journal of Economic Literature, 37(4), pp. 1569 – 1614.

Morduch, Jonathan&Barbara, Haley (2002). “Analysis of the Effects of Microfinance on Poverty Reduction”,NYU Wagner, Working Paper no. 1014. New York: New York University.

Mosley P & Hulme D (1998). “Microenterprise Finance: Is there a Conflict between Growth and Poverty Alleviation?” World Development, 26, pp. 783 – 790.

Naveed, Arif & Ali, Nizam (2012), “Clustered Deprivation - District Profile of Poverty in Pakistan”, Social Development Policy Institute (SDPI).

Obaidullah, Muhammad (2008), “Role of Microfinance in Poverty Alleviation”, Jeddah: IRTI

OECD (2011). “Divided We Stand: Why Inequality Keeps Rising”, OECD Publishing.

Piketty, Thomas (2014). “Capital in the 21st Century”. New York: Belknap Press.

Pingali, P. (2002). “Reducing Poverty and Hunger: The Critical Role of Financing for Rural Development, Food & Agriculture”, International Conference on Financing for Development.

Romer, Paul M., (1986). “Increasing Returns and Long-Run Growth”, Journal of Political Economy, 94 (5), pp. 1002 – 1037.

Saad, N. M., & Anuar, A. (2009). “Cash Waqf & Islamic Microfinance: Untapped Economic Opportunities”, Islam and Civilisational Renewal (ICR), 1(2), pp. 337 – 354.

Sadeq, A.H.M (1987). “Economic Development in Islam”, Journal of Islamic Economics, 1(1), pp. 35 – 45.

Sadeq, A.M. (2002). “Waqf, Perpetual Charity & Poverty Alleviation”, International Journal of Social Economics, 29(1/2), pp. 139 – 151.

Sen, A. (1983). “Poverty and Famines: An Essay on Entitlement and Deprivation”. Oxford University Press.

Shirazi, N. S. (2014). “Integrating Zakat and Waqf into the Poverty Reduction Strategy of the IDB Member Countries”, Islamic Economic Studies, 22(1), pp. 79 – 108.

Sulaiman, M., & Zakari, M. A. (2013). “Efficiency and Effectiveness of Waqf Institutions in Malaysia: Toward Financial Sustainability”, 9th International Conference on Islamic Economics and Finance, Istanbul, Turkey.

Sulaiman, M., Adnan, M. A., Nor, M. M., & Suad, P. N. (2009). “Trust Me! A Case Study of the International Islamic University Malaysia’s Waqf Fund”, Review of Islamic Economics, 13(1), pp. 69 – 88.

Zarqa, Muhammad Anas (1988), “Islamic Distributive Schemes”, in Munawar Iqbal (Editor), Distributive Justice and Need Fulfillment in an Islamic Economy, The Islamic Foundation, Leicester, pp. 163 - 216.