The Koç Foundation of Turkey constitutes the best example for this type. Since the companies in question are incorporated, they can enjoy longevity for reasons explained above. It would be reasonable to assume that this longevity would be reflected on the waqf as well. The Koç Foundation spends 80 percent of its revenues for educational purposes and reserves 20 percent for property investment, administrative expenses and the emergency fund. The emergency fund is allowed to accumulate in order to ensure that the share of the waqf within the overall Koç conglomerate can be maintained. Put differently, when the conglomerate decides to enhance its overall capital, the foundation uses its accumulated emergency funds to participate in this capital enhancement by buying the newly issued shares so as to keep its share within the conglomerate constant.
A third alternative in creating a cash waqf has surfaced in Turkey as a response to the authorities’ insistence that the minimum capital necessary to establish a waqf must be about 500.000 US dollars. While the Kemalist bureaucratic establishment undoubtedly tried to impede the foundation of new waqfs with this new rule, philanthropists have responded to the situation by capital pooling. Recent research conducted with 452 waqf administrators has yielded that 92 percent of the waqfs sampled had more than one founder and the average number of founders was 35.6! Thus the new Turkish waqfs are rapidly becoming company like structures and are governed by Board of Governors. 43 percent of the trustees interviewed have stated that this new arrangement of multiple founders not only enables them to pool capital and thus meet the state’s minimum capital requirement, but it also enables them to pool labour, talent and intellectual capacity. New solutions, however, lead to new administrative problems. For one thing, the interviews have shown that although nearly half of the waqf founders interviewed contribute unequal amounts to the capital, in 85 percent of the multiple founder waqfs each founder has an equal say in the Board of Governors.16 This is where the new multiple founder waqfs differ from the incorporated joint-stock companies, where the voting power is proportional to the amount of shares held by each shareholder.
The importance of these innovations cannot be emphasised enough. This is because, for the first time in the centuries’ long history of waqfs we have this institution at last provided with the means to benefit from the dynamism of companies. It will be recalled that notwithstanding Imam Zufar’s prescription that cash waqfs should invest their capital through mudaraba, Ottoman cash waqfs had invested their capital by providing rent generating loans, istiglal. In the post 1967 Turkish Republic, however, waqfs have become direct recipients of companies’ realised profits. Thus, ironically, not the waqfs of, Ottoman, but of the staunchly secular Republican Turkey, actualised, at long last, Imam Zufar’s teaching 17! The following figure summarizes the observations made above.
Source: Murat Cizakca, Incorporated cash waqfs and mudaraba, Islamic non-bank financial instruments from the past to the future. Republished with permission.
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