The value of the awqaf sector: What the numbers don’t say!

DR HISHAM DAFTERDAR

DONATED assets are the backbone and lifeblood of awqaf organisations.

The term ‘awqaf’ refers to assets that are donated by individuals or organisations for charitable, social and environmental purposes. Without donated assets, awqaf cannot be established.

Assets benefit not only the recipients of awqaf services but they also bring a sense of fulfilment and spiritual rewards to the donors.

Awqaf assets come in various forms including buildings, land and agricultural properties; religious and heritage assets such as mosques, shrines (maqams), museums and their contents; liquid assets such as cash and securities; and intangible assets such as copyrights, intellectual property and goodwill. There are also digital assets such as cryptocurrencies, e-books, videos and tokenised assets.

The conditions of perpetuity and inalienability governing awqaf assets have led over the years to a significant accumulation of societal wealth, as evidenced by the growing number, size and influence of awqaf organisations worldwide.

Despite this remarkable growth, the true value of the awqaf sector remains a big question mark. The absence of available statistics or a centralised database makes it difficult to assess the value of the sector. Many awqaf organisations fail to keep thorough records or offer transparency regarding their assets and financial status. Many countries are struggling just to identify their awqaf, let alone determine their value.

The valuation of awqaf assets is essential for ensuring the sustainability and growth of these endowments and in preserving the cultural heritage they represent.

While awqaf assets are not intended to remain idle, their size and market values can be significantly affected by prolonged periods of idleness, lack of development or disrepair. Despite these challenges, awqaf assets are distinctive in many ways and constitute a significant portion of Islamic capital wealth.

Determining the market value of the global awqaf sector, is a complex and challenging task. Precise figures are difficult to come by, so we have to rely on rough estimates.

With the assistance of artificial intelligence (AI), we gain some insight into the value of the awqaf sector on a global scale. According to the UBS Global Wealth Report of 2023, the total global wealth is estimated at US$454.4 trillion. Major religions around the world collectively own approximately 20% of this wealth which amounts to about US$90 trillion. Of this, Muslim awqaf and charitable organisations hold 5.8%, totalling approximately US$5.22 trillion. The Islamic Development Bank and the World Bank estimated awqaf assets at US$1.0 trillion. Other sources offered more conservative estimates, placing the value of awqaf assets between US$100 billion and US$1 trillion. The wide range of estimates underscores the complexity and uncertainty surrounding the valuation of the awqaf sector.

What is estimated is just a slice of the awqaf sector’s value. Awqaf’s worth cannot be accounted for by just valuing assets. While the values of awqaf properties are indeed important, the impact and benefits that awqaf provides to society are immeasurable and far surpass the market value of awqaf assets. Unlike commercial assets, the value of awqaf assets is not solely financial. Awqaf assets have irreplaceable cultural and religious significance that transcends monetary values. Awqaf assets have a vital role in promoting Islamic culture and preserving Islamic heritage and traditions.

Accurate valuation of assets is essential for strategic planning as it enables organisations to assess their financial health and make informed decisions regarding development and operations. However, for awqaf, there are many other valid reasons why it would be beneficial to value assets. Proper valuation maximises financial potential, ensures transparency, prevents corruption and inspires trust and confidence among donors and beneficiaries. When the public has a greater understanding of the value of a waqf organisation, they’re more likely to support it, not only through monetary donations, but also through volunteering and fundraising.

Valuing awqaf can never be neutral or objective due to their spiritual, social and economic significance. The widely accepted wisdom ‘what gets measured gets managed’ may not quite apply to awqaf. Not everything that matters to awqaf can be measured. Awqaf assets are considered a sacred trust making it difficult to assign a monetary value as their worth may vary significantly based on intangible factors. Valuing awqaf assets is a multi-dimensional process that takes into account not only the financial value of the asset, but also its social, cultural, religious and historical significance. The ubiquitous free services rendered by volunteers and pro bono service providers make the value of the sector even tougher to assess.

Awqaf is too deeply ingrained in our faith to be measured in monetary terms. The impact of awqaf on the well-being and quality of life of individuals and communities is invaluable and cannot be accounted for solely on the basis of financial values. Crunching numbers may provide insight into the financial health and efficiency of an organisation, but for awqaf, the numbers alone cannot speak for themselves.