Monday, January 22, 2018 - 6 Jumada al-Ula 1439

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Home » Fatwas » Financial Transactions » Endowments

Establishing cash endowments and channeling their proceeds

What is the legal ruling for establishing an endowment and pledging the proceeds to the Model Azhari Institute for Outstanding Students (preparatory and secondary divisions) at Tafhanat al-Ashraf, Meet Ghamr, Daqahliyya Governate? The purpose of this endowment is to spend from its proceeds on education expenditures, lodgings, educational tools and uniforms of the students. The institute offers free board and education.


Maliki scholars cited in their books the permissibility of cash endowments. Al-Kharshi says in Mukhtasar Khalil: "The stance of the school is the permissibility of making endowments of unidentifiable property such as foodstuff and currency as expressed by the words of al-Shamel who, after citing scholarly opinions on its permissibility, cited opinions on their dislike and on their forbiddance stating that the latter are the weakest opinions. Their validity is evidenced by the words of the author in the chapter on zakat: 'Zakat is paid on a property and its financial proceeds were pledged as an endowment for lending people.' " Al-Shaykh Ali ibn Ahmed al-Sidi al-'Adawi said in his commentary on Khalil: "Cash money is permissible to be settled as endowments for lending people and for other purposes."

It is known that the aim of Islamic law in regards to endowments, is the retention of property by suspending disposal of it and the perpetuity of its benefit for as long as possible. The Malikis found certain benefits in establishing cash endowments. They argued that because the sum itself is legally retained, it is permissible to establish cash endowment for lending since the endowment is legally existent although the property is not physically present. Citing al-Laqani, Shaykh al-Sidi al-'Adawi said in his commentary on Khalil: "An endowment is the retention of property that can be benefitted from while the property itself remains or does not, but is legally existent such as dirhams and dinars" i.e money. Al-Dusuqi said in his commentary on Al-Sharh al-Kabir:
"The returned loans replace the endowed capital."

If a modern jurist were to look into the concept of cash endowments and the channeling of their financial proceeds, he will notice the actualization of the reason the Malikis maintained their permissibility although they deemed them disliked. This stance of the Malikis may be due to the possibility that the borrowers might not return the loans. However, by observing the current stable and codified financial scene, we find that such endowments endure for up to fifty years or more, thereby realizing the relative retention required by Islamic law, allowing us to maintain their permissibility and channeling their proceeds which are the subject of the question.

Related links
» Changing an endowment
» Substituting an endowment
» Changing a condition made by the endower
» A Question about Rentals and Payments
» Assigning part of an endowment for a purpose other than that stipulated by the endower