Cash Waqf: The Shi’ite Position
The Shi’ite position regarding the cash waqfs is revealed by a fatwa given by Sheikh ‘Abd Allah al-Mazandarani, the Celebrated Mujtahid of Karbala in 1907. Question:
“What does the great Hujjat al-Islam and the refuge of mankind, may his shadow extend, say in connection with the religious point in law that, if several persons form a joint-stock company and purchase a property at a fixed price and divide it into a number of shares of equal value, for instance some purchase 10 shares and some 20 shares and so on, each having a different number of shares, so that the annual profit may be divided proportionately amongst the share holders according to the number of shares they hold. To explain this point more clearly: hundred men purchased a bazaar, the total value of which is divided into 1,000 shares, of 100 rupees each, so that each share holder may receive the annual profit in proportion to the number of shares he holds. For instance Zayd has got ten … shares. Whether Zayd can make a waqf of his own shares, so that the principal may remain as it is and the income may be spent for a specific purpose. Whether such a waqf, according to the Shi’ah Law is valid or not? It is hoped that your holiness may write your opinion on this point based upon the trustworthy writings of the learned predecessors and endorse it with your seal.”
“In the name of God the Most High. The Shi’ahs in general and the majority of the Sunnis belonging to the four schools and others (with the exception of a few ordinary men whose views on the subject are out of the way) hold that Musha’ waqf is valid. Numerous authentic traditions from the imams, peace be on them, have been handed down respecting Musha’ charity, sadaqah, which clearly lay down that by sadaqah is meant either waqf itself or that waqf is the most obvious kind of it. Therefore, the validity of such a waqf on account of its being owned by a joint-stock company cannot be questioned (italics are mine). And as possession is the condition for validity of a waqf, therefore the donor must hand over the property either to him for whose benefit the waqf is made, or to the mutawalli, exactly in the same way as he would have done to a purchaser to whom he had sold his share. In the case of waqf he must give possession to the mutawalli. If he constitutes himself the mutawalli, he must act according to the deed of waqf and must consider his possession as that of a mutawalli and not that of an owner. If he has made a waqf of Musha’ property and given possession, the waqf is valid and binding. If he has not given possession, he may revoke the waqf during his lifetime. If the dedicator dies before giving possession, the waqf is null and void.”
God is the all knowing. 11 Shaban, 1325 A.H. Seal of the Mujtahid
“I certify the seal marked A on the margin of this paper to be that of Sheikh Abdullah Mazandarani, the celebrated Mujtahid of Najaf, who made the same in my presence this 28th day of September 1907.” Signed. M.H.M…. British Vice-Consul Karbala, 28th Sept., 1907.
The importance of this fatwa cannot be emphasised enough for, not only does it confirm the validity of cash waqfs for the Shi’ites as well, but it also informs us about what must have been an unusual way of establishing such waqfs in the year 1907, i.e., through joint-stock company shares. First, the reader may be taken aback by the idea of using joint-stock company shares as the corpus of a waqf. After all, joint-stock companies are known to be a western invention. Consequently, we face the problem of establishing a waqf with essentially a western financial instrument.
It is quite clear from the text of the fatwa that this did not bother the Hujjat al-Islam. This is due to the fact that he considered a joint stock company similar to a Musha’ waqf. Musha’ is the term used for properties that have not been divided among the various owners. A joint-stock company would indeed be considered as a Musha’ on the grounds that although its physical capital would be undivided, hence Musha’, its cash capital can be clearly divided into shares. Endowment of a property owned jointly by numerous individuals has constituted a lively debate among the jurists. The crux of the problem boils down to the conditio sine qua non of any waqf that only a privately owned property can be endowed. The problem of the jointly held property is that its true magnitude and boundaries is not known. Consequently, most jurists agree that before being endowed, the property must be divided among the owners and each owner’s share clearly defined. Endowment of a share is permitted only after this process. This is the reason why the Hujjat al-Islam has insisted that the founder “must hand over the property either to him for whose benefit that waqf is made, or to the mutawalli, exactly in the same way as he would have done to a purchaser to whom he had sold his share”.
As a final note it should be added that the waqf of movables had already been permitted by the Article 61 of the Iranian Civil Code (Lambton, 1991: 231). While the Islamic Republic has permitted waqfs whose capital, corpus, is constituted of cash and stocks. (Cabinet Decree no.95270, dated May 17, 1986, Article no.44)
Source: Murat Cizakca, A History of Philanthropic Foundations: The Islamic World From the Seventh Century to the Present. Republished with permission.