Cash waqf is considered to be a potential resource for funding social programs and endowment fund development in philanthropic and non-profit organizations. Cash waqf can also be a breakthrough in overcoming the problem of raising an endowment fund, which requires donations in large amounts and in the form of assets, such as land or buildings. Besides its large potential (IDR 188 trillion/year), cash waqf makes fundraising of waqf no longer exclusive, because it can be done by anyone, and there is no minimum amount to give. The management of waqf can be done through various Islamic banking investment products, capital markets, sukuk, and investment models in the real sector.
The April 2021 edition of Philanthropy Learning Forum discussed the prospect of cash waqf as a funding instrument for social programs and developing endowment fund with the topic “Cash Waqf as a Source for Program Funding and Endowment Funds for Philanthropy/Non-Profit Organizations“. The online discussion was broadcasted from Jakarta, Friday afternoon (30/4/2021). This collaboration event was held by Filantropi Indonesia with the Indonesian Waqf Education Foundation (YEWI) and Bank Indonesia, attended by philanthropic actors and non-profit organizations. The speakers in this forum: Roy Renwarin, CWP®, CWSTM, (Managing Director of YEWI Consultant & Endowment Planning Bureau), Riki Frindos (Executive Director of the Kehati Foundation), and Slamet Wahyudi, SE (Head Branch of BTN Syariah Yogyakarta).
Rizal Algamar, in his remarks as Chairman of Filantropi Indonesia Executive Board, stated that innovation and breakthroughs in developing a funding strategy are needed by philanthropic/non-profit organizations, in order to build institutional independence by optimizing the enormous potential of philanthropy in Indonesia. This effort is also to overcome the dependence of non-profit organizations on grants from donor agencies. “One option that could be developed is building an endowment fund,” he said.
According to Rizal, the development of endowments has been carried out by raising major gifts or mobilizing waqf in the form of assets such as land, buildings, and so on. However, this strategy is not easy to implement because only certain groups can make large donations or donate their assets. “Therefore, cash waqf can be a breakthrough in the development of an endowment fund as well as a source of funding for programs. Cash waqf can be a complementary instrument for collecting social funds in addition to donations (alms), infaq, grants, and corporate social funds that have been running so far,” he added.
Roy Renwarin, CWP®, CWSTM, Managing Director of the Consultant & Planning Bureau of the Indonesian Waqf Education Foundation (YEWI), said that the development of cash waqf is very prospective considering that the potential for cash waqf in Indonesia is quite high, with a value of up to IDR 188 trillion/year. With the right approach and raising strategy, it can transform into an endowment fund for social programs run by philanthropic or social organizations. Therefore, various innovations in raising cash waqf have been developed, especially through the use of digital platforms. “Through the passiamal.id platform, for example, it is easier for the public to raise, manage and distribute cash waqf as easily as online shopping or ordering an online taxi,” he said.
Riki Frindos then explained that Kehati Foundation also manages an endowment fund, called a Trust Fund. However, there are differences in the division of Trust Fund categories: sinking funds and revolving funds, where the elements of these funds become the benchmark for the use of funds within the institution. The funds originating from multilateral and bilateral donors will be managed effectively and with transparency. “There is a structure for the endowment fund management team at the Kehati Foundation, where the goal is for the funds to be well coordinated,” he said.
For the management, cash waqf can be carried out through Islamic financial instruments to provide optimal results which are then distributed to finance religious, educational, social, economic and health activities. One of them is through the Sharia Financial Institution – Recipient of Cash Waqf (LKS-PWU). This was explained by Slamet Wahyudi, S.E, accompanied by an explanation of 23 LKS PWU which are official and legal under Law no. 41/2004 Article 28. The management and development scheme for cash waqf can be divided into direct investment (real sector, productive land waqf) and indirect investment. “The benefits of cash waqf are enormous and can be felt immediately by mauquf ‘alaih. On the other hand, its utilization also has an impact on programs aimed at low-income community or even MSME workers,” he concluded.