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Survival & Restoration of Waqfs in Turkey

Something totally unexpected has happened in Turkey and despite everything said above, the waqfs have survived. We will now focus on these fascinating developments.

A number of factors have contributed to the survival and restoration of the Turkish waqf system. Foremost among these is the gradual weakening of the “Kemalist jacobinisme” and the rise of democracy as well as capitalist accumulation (Bilici, 1993: 420). The 1967 legislation, which allowed the waqfs to breathe again, was submitted to the parliament by Aydın Bolak, a Member of Parliament.


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Interviews conducted with Aydın Bolak and Rahmi Koç have revealed important hindsight concerning the birth of the 1967 legislation. A visit by the late Vehbi Koç, probably the greatest businessman Turkey ever produced, to the United States soon after the Second World War, appears to have been the new beginning (Kıraç, 1995: 81, 85). Vehbi Koç was already well aware of the traditional Islamic waqfs. His forefathers had established the Ibadullah vakfı in Ankara and his father had served as the trustee. Thus, well acquainted with the system, he was quick to appreciate the enormous strides made by the American trusts. The opportunity to observe these trusts functioning arose during business negotiations with the Ford Motor Company. When he visited a hospital run by the Ford Foundation for a check-up, he was convinced that the traditional Islamic waqf should be modernised.

By 1951 he began seriously to consider the idea of setting up a philanthropic foundation along American lines in Turkey. It was at this time that he began to “bang his head” against the French inspired Civil Law and its extension in waqf affairs, the 1935 Waqf Law. Soon it became obvious that a modernisation of the waqf system could only be realised by a completely new law. It was at this time that Vehbi Koç, together with Aydın Bolak, began a series of meetings with the greatest legal authorities of the country. The problem was referred to the Institute of Private Law at Ankara University, Faculty of Law, headed first by Professor Esener, and then Professor Tando an, where the complex legal problems of combining Islamic traditions with the latest developments in the West were discussed.

One of the most important items to be considered was the tax exemption to be granted to the waqfs as well as to those who made donations. When the draft bill was submitted, it encountered fierce resistance. The chief opposition came from Hikmet Çetin, at that time a young socialist at the Department of Finance. Çetin expressed his opposition succinctly: “the philosophy of central planning does not allow any person to perpetuate his name using revenue due to the state”. Notwithstanding such opposition, the reformers prevailed and the bill became law with full tax exemption granted.

The 13 July 1967 Law (number 903) which was amended several times, introduced the following:

  1. The will prescribed in the foundation document is not changeable.

  2. The Civil Tribunal is authorised to register the waqf and to give it a judicial personality.

  3. The word “establishment”, tesis, used exclusively in the Turkish Civil Code, is replaced by the word “vakıf” (Article 3).

  4. No waqf can be created that opposes the law or national interests, support current politics, a certain race or community.

  5. Providing that 80% of their revenues are reserved for public purposes, the waqfs can be exempted from taxation. This exemption can only be granted by the Council of Ministers (Articles 4 and 5).

  6. The control of these institutions is directly vested with the General Directorate of Waqfs.

  7. The annual profit of a waqf is to be added to the original capital of the waqf stated in the waqf deed and is reported at the beginning of each calendar year to the inspectors (Article 81).

  8. A multitude of persons, associations and even the state can create a waqf.

  9. A waqf is now allowed to establish a company and allocate the latter’s total profits, or a share thereof, to its own specific purpose.

  10. Establishment of a waqf has been simplified.

  11. Istibdal has been re-introduced (Article 80/a) and is applied subject to the decision of the court.

Some of these Articles deserve our further attention. Consider first item “c” where it is stated that the word “tesis” is substituted by the word “waqf”. This Article may appear bizarre. But such was the hostility of the republican government to the waqfs that it was prohibited to use even the word vakıf in the Turkish Civil Code and the Code of Commerce. Thus Article “c” once again legitimises the usage of this ancient term.

Item “e” rules that providing waqf reserves 80% of its revenue for public services, it can be tax exempted. The word ‘can’ is deliberately italicised here, for reservation of 80% of the revenue does not automatically ensure exemption, which must be approved by the Council of Ministers, in reality quite a difficult procedure.

Item “g” restores and breathes life into an age-old practice of the Ottoman waqf system. The practice of adding the annual profit to the original corpus of the waqf was observed so meticulously that it can be found in all waqf inspection registers from the sixteenth to the nineteenth centuries (Çizakça, 1995).

Items “h” and “i” are of such extreme importance for the future development of the waqf system that we shall comment on them separately below.

Item “k” is also interesting and indicates how modern lawmakers, aware of Islamic law, can re-introduce ancient Islamic principles in a far more direct and simple way. Indeed, as we have explained above in considerable detail, istibdal was a highly controversial issue among the classical Muslim jurists. Yet, the modern jurists who drafted the 1967 Law, circumvented these controversies and simply reintroduced this institution without any reference to the huge historical controversy. Article 80/A is very simple and can be translated as follows:

“properties of a waqf whose income does not suffice to meet its expenditure, or in case these properties do not yield revenue commensurate to their real value, may be exchanged with another more beneficial property (istibdal) or with cash (ibdal) “.

Returning now to the items “h” and “i” above, the idea to enable a waqf to establish its own company was actually clearly pronounced already in 1963 (Ballar, 2000: 663). In the 1967 Law the idea is repeated and confirmed in a highly cryptic style. Item 5 B/6 merely states that the net profit of a company, kurum, is paid to the tax exempted waqfs, in proportion to their contribution to its capital. Ambiguities have been eliminated by a decree published by the Ministry of Finance in the Official Gazette dated July 28, 1994. In the preamble of the decree it is stated offhandedly that the tax exemption granted to the waqfs is not granted to the companies that the former may establish, thus confirming that a company or companies can be established by a waqf. It is further clarified in Article V/3 that these waqf companies are subject to taxation and their accounts are to be kept separately from their waqf-founders. After these companies pay their taxes according to the prevailing tax law, their net profit is to be transferred to the founder-waqf (Yener, 1995: 249, 259-60). The previously stated Article 5B/6 of the 1967 Law, on the other hand, makes it clear that in case a company has been created by a multitude of waqfs, then its profits will be distributed to these waqfs in proportion to their original contribution to the company’s capital.

An infringement was introduced with the Corporation Tax Law No. 199 on the donations by outside companies, i.e., those not established by a waqf. The Law No. 199 limited donations to the tax-exempt waqfs by outside companies to a mere 5% of the latter’s profits. (Ballar, 2000: 461, 464). In the United States, by contrast, “the charitable contribution deduction for a corporation … ” is limited to 10% of the corporation’s pre-tax net income. For an individual the same ratio is as much as 50% (Salamon and Toepler, 1997).

To sum up, through a series of laws and decrees promulgated in 1963, 1967 and 1994 a vitally important process, supply side capital pooling among the waqfs, has been permitted. The reader will notice that we had referred to “supply side capital pooling” for the first time above when we were discussing the Ottoman cash waqfs. It will be recalled that these had pooled their resources and allocated a part of their annual profits to certain other waqfs. What Article 5B/6 has provided for is the modern version of this historical process.

The modern capital pooling differs from the historical one in the following:

  1. Whereas the historical process was practised among several cash waqfs, the modern one is practised with several waqfs purchasing (i tirak) the shares of a company.

b. Although in historical capital pooling the contributed capital was simply absorbed by the receiving waqf and never returned, in the modern one, since the receiving party, the company itself, is capable of regularly generating a profit, it returns a share thereof to its owners; the waqf(s).

All in all, businesses owned by waqfs are subject to the following general rules: they do not have separate legal status and are considered merely as units internal to the founding waqf; tax-exempt waqfs are not considered to be businesses because they are in possession of profit making enterprises, but waqfs that are not tax-exempt are considered to be businesses if they possess profit making enterprises (Ballar, 2000: 990).

To all this we need to add that companies also are authorised to establish their own waqfs. This is despite the fact that the pertinent Articles of the Turkish Civil Law (Articles 73 and 74) are silent on this issue. The authorisation is therefore based upon some general views expressed in Article 137 of the Turkish Trade Law. There is also a precedence; a waqf established by the mighty Bank (Ballar, 2000: 28-29).

Thus we have a situation whereby a waqf(s) creating its own company as well as a company creating its own waqf(s). In the former case, a waqf or waqfs pool their resources and create a company or companies. They also get a relative share of the profits according to their capital contribution. In the latter case, a waqf or waqfs are created by a company, which allocates a share of its profits voluntarily to these. The Diyanet Vakfı constitutes an example of a waqf creating a multitude of companies or providing equity finance to already established companies, while the Vehbi Koç Foundation is the best example of a huge conglomerate creating its own waqf. The waqf-company linkages are cemented at the Koç conglomerate by an exchange of executive officers: two persons appointed by the holding sit at the Executive Board of the Vehbi Koç Foundation and two persons appointed by the latter sit at the Executive Board of the holding. In addition to these two persons appointed by the holding, the following persons sit at the Board of Directors of the Koç Foundation: four family members, the CEO of the holding, two professors (one jurist), and the General Manager of I Bank. The Vehbi Koç Foundation specialises in education and has financed a highly ambitious school and a major university, while the Diyanet, like the Tabung Haji of Malaysia, is involved in the organisation of the annual pilgrimage to Mecca and is represented in 700 localities by 90.000 religious functionaries!

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 interest bearing loans, istiglal. Consequently, their income was limited to the “economic interest” that they had charged which always fell behind the market interest rate. In short, risk averseness of the founders and the trustees had condemned Ottoman cash waqfs to inertia. In the post 1967 Turkish Republic, however, waqfs have become direct recipients of companies’ realised profits. Thus, ironically, it is not the waqfs of Ottoman but rather of the staunchly secular Republican Turkey that effected, at long last, Imam Zufar’s teaching. On the near identity of equity finance and the historical mudaraba see; (Çizakça, 1996). This is not to say, however, that the modern Turkish cash waqfs completely operate through equity finance. They also purchase bonds and receive interest disregarding the Islamic prohibition. Actually, interest constitutes a major source of income. So much so that interest income diluted by inflation has been a cause of concern and the GDW has been urged to calculate and announce the real interest rate, i.e., nominal interest rate minus inflation (Ballar, 2000: 41).

Moreover, we can also interpret these waqf-company relations as the rebirth of cash waqfs. Thus, Ottoman cash waqfs destroyed in 1954 by being incorporated into the bank of waqfs, Vakıflar Bankası, have, like a phoenix, been reborn albeit in a radically different organisational structure and in a far more dynamic form. A recent decision declared by the General Directorate of Waqfs (GDW) on August 6th, 1999 has carried this process even further. The directorate has now permitted the waqfs to purchase shares of a company not even yet traded in the stock exchange. Purchasing such shares, moreover, has been left entirely to the discretion of the waqf managers. Reselling such shares, however, is more difficult and involves a complex procedure. This latest decision is an exciting development, which may pave the way for cash waqf-venture capital (mudaraba) linkages (Çizakça, 1998: 60-67).

The following excerpt dictated by the late Vehbi Koç, himself, in January 1969 and taken from the Deed of Trust of his foundation, The Vehbi Koç Foundation, explains why he had decided to establish his foundation as a cash waqf:

“Praise be to Almighty God, who with His Will enabled me to perform charitable works during my lifetime with pleasure, and granted me the means to continue performing ongoing charity after my death. In my belief that the Turkish Nation will continue to exist so long as the world endures … and my wish being to establish this foundation in perpetuity, I have based this endowment on a commercial entity that will be able to adapt itself to the requirements of the day rather than on properties dependant on economic conditions and natural disasters. I have chosen to set up this endowment with the shares of Koç Holding. These are made up of numerous commercial and industrial enterprises, and are therefore less subject to risks. This foundation that I have established by the Grace and Kindness of God, I entrust, first of all, to my heirs and to their succeeding generations, to my business colleagues and to the Government of the Republic of Turkey. I call upon all my heirs, my close acquaintances, my business colleagues, my fellow citizens who may be involved in this Foundation, and the officials who will assume its administration, to accept this endowment as a bequest made to the Turkish Nation, to protect it, and strive with their best intention to achieve its original aims. I request the auditing authorities of the State and, when necessary, its authorised agencies, courts and judiciary, never to depart from the dictates of their conscience when making decisions, lest this foundation suffers harm and be diverted from its aims. I have brought this enterprise into being as a result of lifetime effort and sincere desire. I pray that God will regard it worthy of His Protection and grant it success”.

The late Vehbi Koç’s personal statement reveals a number of important points on which we would like to comment. First, there is a deep sense of religiosity and gratitude to the Almighty for allowing him to continue being charitable even after his death. In other words, an awareness of the importance of sadaqa jariya and the Prophetic tradition mentioned at the beginning of this book. After this, he makes this endowment in perpetuity.

This is followed by an explanation of why he has decided to organise his endowment as a cash waqf rather than a real estate one. His decision was based on the concern that real estate waqfs may be vulnerable to economic conjuncture and natural disasters. Since the shares of his own holding are made up of numerous commercial and industrial estates, “they are less subject to risks”. Here we observe a profound understanding of the way a waqf functions. Vehbi Koç seems to have been fully aware of the vulnerability of real estate waqfs to economic conjuncture. Such vulnerability has been demonstrated by Suraiya Faroqhi using the seventeenth century records of Mahmut Pasha Vakfı (1995: 281-84).

Although there is no evidence as to how the Vehbi Koç Foundation would fare under similar conditions, theoretically, it may be argued that a conglomerate capable of penetrating into international markets should be better equipped in dealing with stagnation by diversifying its markets. Indeed, there are more than 100 companies in the Koç conglomerate with 40,000 employees and the total number of Koç Holding shares allocated to the foundation has been declared as 10,000. These registered shares each with a nominal value of ten million TLs, constitute 9.4 % of the total assets of the Koç conglomerate. In this way, the late Vehbi Koç has diversified the risks.

But, it should be noted that second generation members of the Koç family have continued to expand generously the assets of the foundation with further donations of their own. These individuals have donated a total of twenty-one funds. Consequently, the original 10.000 shares endowed by the late Vehbi Koç constitute now a mere 1.4% of the total assets of the foundation in book value. At the end of 1993 the book value of the foundation’s assets stood at $ 120 million with an approximate market value of $ 297 million. These increased to $ 187 million and $ 762 million respectively, primarily due to the superb performance of the Istanbul Stock Exchange in 1999. Although its endowment deed (Article No. 17) provides a minimum income (six million liras p.a. adjusted for inflation) to the future generations of the Koç family in case they need it, the Vehbi Koç Vakfi is only theoretically a family waqf. Its primary focus is charity and provision for the family is insignificant. Traditional family waqfs, which focus entirely on the provision for the family, though perfectly legitimate as far as the classical Islamic juriprudence is concerned, are prohibited by Article 322 of the Turkish Civil Law. This prohibition, a clear Western influence, is now seriously challenged for undermining the institution of family. Search for modernised family waqfs has started (Ballar, 2000: 310, 771-776).

The foundation is entrusted first, to the coming generations of his heirs, thus, this is essentially a family waqf in perpetuity, and then to the business colleagues and then to the future governments of Turkey. The business colleagues were probably included with the view that if the heirs prove to be incapable individuals, the colleagues who run the Koç enterprises should interfere and manage the waqf with proper business perspective. Their inclusion in the deed would certainly enable them to have a say in the waqf affairs. Inclusion of the government is also telling: Vehbi Koç had been an eyewitness to the great destruction of the Turkish waqfs by the state that took place between the 1930s and 50s. Perhaps, by entrusting his endowment to the future governments of Turkey, he wanted to impose a moral obligation to the state. Finally, he feels the need for the prayer that “God will regard it worthy of His Protection”.

We are given further important information pertaining to the investment of the foundation shares in the waqf deed. Article 7 of the Vehbi Koç Foundation Deed stipulates that all excess cash of the foundation that accrues to the waqf on an annual basis shall be converted into government bonds and kept as an emergency fund. These bonds shall be used when the Koç Holding exercises a capital enhancement. Should this process take place, the foundation shall participate therein, so as to maintain its relative share in the conglomerate. Should the emergency fund not suffice to maintain the foundation’s share in the conglomerate, the Board of Trustees can allocate 20% of the primary revenue of the waqf for this purpose. Should a process of capital enhancement not take place, the excess cash of the fund shall be invested in shares and bonds, preferably those of Koç Holding companies. We are informed, furthermore, that the waqf can also exercise istibdal subject to the approval of the Board of Trustees and the Court (Article 8).

Article 9 stipulates that a minimum of 80% of the total revenue of the waqf shall be allocated to social and cultural services. A maximum of 20% of the revenue shall be allocated to administrative expenses, emergency cash, and investments to buy properties for the waqf. It is well known that in history the trustees often usurped waqf revenues allocated for charity. Consequently, while in history charity/total expenditure ratio of waqfs has often declined, salary/total expenditure ratio has often either remained the same or increased at the expense of the former (Faroqhi, 1995: 285). Vehbi Koç seems to have been either aware of these historical tendencies or was able to envisage them thanks to his great business acumen. It is also possible that he may have been simply remaining within the boundaries set by item “e” of the 1967 Law in order to qualify for tax exemption, in which case the credit for this insight should go to the drafters of the law.

Finally, we are informed that the Vehbi Koç Foundation was granted tax-exempt status by the Council of Ministers on 28 December 1968. Thus, Turkey owes to Vehbi Koç, Aydın Bolak and to the brilliant jurists who helped them not only the great Koç endowment but also all the positive developments that took place in the waqf system after 1967.

A closer look into the balance sheet of another powerful foundation, the Diyanet Vakfı, confirms this newfound dynamism of the modern Turkish waqfs: in the year 1995, the total value of investment in the equity of affiliated companies constituted 5% of the total value of assets. The following year, this ratio nearly tripled and reached 14%. If we look directly into the investments in companies, we are informed that such investments increased by 960% between 1994-1995 and 664% between 1995-1996. In passing, it might be noted that in 1996 the total value of assets of this waqf was approximately equal to 94 million US dollars (Türk Diyanet Vakfi, Faaliyet Raporu, Bölüm II and p. 163.).

The reader may wonder about the actual impact of these innovations introduced by the Law No. 903 on the Turkish waqf system in 1967. Nothing illustrates this impact better then the actual number of waqfs endowed. From the beginning of the Republic in 1923 to 1967 when the new law was promulgated, a time span of 44 years, a mere 73 new waqfs had been established, whereas from 1967 until 1985, a time span of 18 years, one observes 1877 new waqfs. From 1986 to 1996 more than one hundred waqfs were established annually with the trend rising until it reached 439 new waqfs in 1996, a maximum (Aydın, Sa lam and et.all, 1999: 34).

Defining the “new waqfs” as those established after the 1967 Law, the number of these waqfs has been calculated as more than 4,000 (Büker, Aydın, Sa lam, 1998: 4 and Aydın, Sa lam and et. all, 1999: 33, 34).

One of the most significant contributions of the 1967 Law has been observed in the field of education. By 1998, altogether 16 waqf universities had been established. Some of these already enjoy an excellent reputation and are considered among the top universities of the country.

The new republican waqfs are also playing a key role in a major historical development. The Kemalist Revolution had created a territorial nationalism and had oriented itself entirely towards Europe to the total exclusion of Islam and the potential link with the Turkic world of Central Asia. All activities in the latter were suspect and repressed by the state. Since the Second World War, the links between Turkey and the Central Asian Turkic.

World had totally disappeared due to the Soviet sphere of influence, which had clearly demarcated the West from the Communist world. The good neighbourly relations between Turkey and the Soviet Union also severed links between the Turkic peoples.

After the 1980 military take-over, a group of pan-Turkist associations had transformed themselves into waqfs. Meanwhile, the structural changes in the Soviet Union have provided these institutions a heaven-sent opportunity to shift from passivity into activity in the field. With the establishment of the Anavatan Party in 1983 they were also provided with official state support. Certain ministries stemming from the pan-Turkist party of National Movement are now applying their ideology through the waqfs. These waqfs are now involved in researching the culture of Turkic peoples in Eastern Türkistan (West China), Crimea, Greece, Uzbekistan, Dagestan and Iraq. It is indicative of the support these waqfs are receiving from the state that the Waqf for the Voice of Eastern Türkistan has been granted, by the GDW the majestic mosque of Damat Ibrahim and its medrese in the heart of Istanbul as their centre of research.

The powerful Türkiye Diyanet Vakfi, mentioned above, was founded in 1975 originally to provide finance to religious personnel and to promote Islam throughout Turkey. Gradually, it began to reorient itself more and more towards “external Turks”. This reorientation was made possible by an amendment to the waqf’s endowment deed on September 13, 1993, which can be translated as follows:

“The waqf endeavours to contribute to the enhancement of the religious and cultural life of our kin and fellow Muslims abroad. It also provides financial support to individuals and institutions in this area. For this purpose, it builds mosques, cultural and Qur’an reading centres and grants scholarships to students from these countries” (Türkiye Diyanet Vakfi, Faaliyet Raporu, 1995-1997).

The waqf is known to have established printing houses in various Turkic capitals in Central Asia to print books in modern Turkish to unify the alphabet, to print and distribute the Qur’an and to provide thousands of scholarships to students (Turks from Turkey to the former Soviet Union and external Turks from there to Turkish universities so as to enhance linguistic unity and social understanding) (Bilici, 1992: 21).

Other late developments in the waqf system of the Turkish Republic may be summarised as follows: under the Republic, the GDW took over all the duties of the Ottoman Ministry of Awqaf. Article 77 of the Civil Law of Turkey maintains that a waqf must have a management board. Other organs such as auditing and shareholders’ assembly are left to discretion. The founder himself may be the director. Inspections are made to ensure the waqf conforms to the original purpose and an audit is done at least once every two years.

The Directorate takes 5% from the net incomes of all awqaf as supervision and auditing fees. There used to be an upper limit to this amount. But in 1992, it was removed in order to allow for the high rates of inflation. Moreover, should a waqf have branches in various towns, each branch is now obliged to pay this 5% (Ballar, 2000: 171). Implications of the change made in 1992 should be obvious: unless a waqf serving in a multitude of cities is prepared to pay a big chunk of its overall income to the directorate, it will simply be forced to scale down its activities. It is difficult to imagine a ruling more detrimental to the wide spread provision of charity.

The GDW operates under the Prime Minister. At the top there is the Awqaf Executive Board as appointed by the Prime Minister, then comes the General Director. There are 28 regional and municipal administrators. The Directorate has the right to invest its income in various sectors. For instance, it has a 55% share in the Sheraton Hotel in Istanbul. The Vakıflar Bankası established by the pooling of the capital of all the Ottoman cash waqfs, as mentioned above, is the biggest bank in Turkey with a capital of 45 million US dollars and has 300 branches all over the country. The bank generated a profit of $5 million in 1983. These profits are expected to be spent for the needs of the waqf properties. A matter of considerable inconvenience for the waqfs is the obligation that they must deposit their cash incomes either with the state banks or with the Vakıflar Bankası, despite the fact that these banks pay a lower interest than the private banks. Since all deposits in all banks are guaranteed by the state, this obligation has been the object of bitter and justified complaints.

The properties managed by the GDW that have survived from the Ottoman era are distributed as follows:

Waqf Properties in Turkey

TypeNumber of Properties
Mosques4,400
Dormitories500
Business centres453
Hotels/caravansaries150
Shops5,348
Apartments2,254
Other properties24,809
Total37,917

Source: IRTI/IDB, 1987: 116-117.

Thus these figures do not include the properties of awqaf established after the Republic in 1923. All the awqaf registered with the GDW must supply the following information:

  1. Founder(s)

  2. Aims

  3. Capital

  4. Sources of income

  5. The administrative organ

  6. An assessment of the principles on the allocation of the waqf properties in the event of the liquidation of the waqf

All the waqfs in Turkey are divided into 3 groups according to their dates of establishment:

  1. Those inherited from the Ottoman and Selçuk Empires

  2. New waqfs established during the Republican Era under the provisions of Law No. 903

  3. Those managed by the GDW

They are also classified into the following groups according to management criteria:

  1. Mazbut Vakıflar: These are managed by the GDW, which also appoints their trustees. Each one of these waqfs has legal personality

  2. Mülhak Vakıflar: These are managed by their own board of trustees and each one possesses legal personality. They have their own obligations, sources of income, and pay their own debts. These are divided into 3 further types. The majority are waqfs managed by the children of their founders; then there are the newly established waqfs, which are subject to Law No. 903, and finally, the waqfs of the minorities.

Tax liabilities of the awqaf are determined by tax inspectors on the basis of all legal records and book keeping. Waqf properties are supposed to be exempt from corporate tax, income tax, expenditure tax, property purchase tax, stamp duty, customs duty and inheritance tax subject to the conditions mentioned above. But in reality, the Finance Ministry grants tax-exempt status only very rarely (Saygın, 1998). This is attested by Aydın and Sa lam (1999: 33, 60); out of more than 4,000 new waqfs established during the Republican era, a mere 195 have been granted tax-exempt status.

A new Act was passed in 1983, which readjusted waqf property rents taking into consideration the prevailing inflation. The importance of this Act will be better appreciated when we examine the Malaysian waqfs below.

Unlike some branches of Islamic law, which emphasize the irrevocability of the waqfs, the secular 1967 Law allows a waqf to be liquidated. If the Board of Trustees is convinced that the purpose of the waqf can no longer be fulfilled, it can apply to the GDW and after getting approval, can apply to the courts for liquidation. The assets of the liquidated waqf are returned to the individuals named in the waqf deed. If there is no such statement in the deed, then the principle of cy pres is applied and the assets are allocated by the GDW to another waqf, which has similar goals. A waqf can also be liquidated by the state if its purpose is considered harmful. These harmful activities leading to the closure of a waqf are clearly stated in Article 74 of the 1967 Law. A waqf liquidating itself due to economic hardships, or being liquidated by the state due to the Article 74, are the only ways a waqf can be terminated.

Recent events in Turkey indicate that despite the positive developments described above, the age-old conflict between the state and the waqfs continues unabated. The explosion in the number of new waqfs has triggered, not surprisingly, a reaction. The National Security Council (NSC) has decided to have a bill drafted empowering the Ministry of Interior Affairs to close down any waqf, which deviates from its original purpose stated in its deed. The reaction of the Council is based upon reports that some new waqfs have been engaged in fundamentalist activities.

When questioned by the NSC why his office does not control such activities, the General Director of the Waqfs reiterated that he has 59 inspectors to control about 10,000 waqfs. In any case, it is interesting that the NSC has not demanded a complete destruction of the waqfs, as was the case during the early days of the Republic. Whilst this possibility still exists, the fact that the Council has exercised caution and demanded the closure of only those waqfs involved in fundamentalist and separatist activities, indicates that the generals have begun to appreciate the advantages that the waqfs can provide. It is possible that they may have been persuaded in this by the very waqfs they, themselves, have established. Three of these are among the top tax-exempt waqfs. The total assets of these, including the Waqf to Support the Police, reached a staggering figure of 22,000 billion TLs. in 1996, an amount twice as large as the assets of the largest waqf in the country, the Vehbi Koç Foundation (Aydın and Sa lam, 1999: 61).

One of these three, the Waqf for the Promotion of the Turkish Armed Forces

(WPTAF) is a waqf complex. Originally there was a waqf for each branch of the armed forces. After much dispute and in violation of the traditional waqf law, these waqfs were merged into one (Ballar, 2000: 533). The need for such waqfs emerged when the navy was desperate for amphibious vehicles for the planned invasion of Cyprus. Since NATO refused to provide these vessels, they had to be domestically procured. The WPTAF and its early versions mobilised the entire nation, which donated the funds needed for such equipment.

Actually, mobilising the nation for military needs is not new in Turkey. Earlier examples had been observed shortly before the First World War and during the construction of the Hejaz Railway. The latter was particularly remarkable in that not only Turks but also nearly the whole Islamic world donated (Usul, 1999).

A fascinating latest development in Turkey concerns the embracing of the waqf system by the secularists. A secularist group, which calls itself the “Third Sector Foundation, TÜSEV” and headed by the Koç and Sabancı families who have both established their own waqf universities, has emerged as an umbrella organisation representing seven hundred waqfs (Ballar, 2000: 925). TÜSEV argues that “in a society where there is no third sector organised by independent citizens, human rights and public welfare are doomed to remain under the supremacy of the first (public) and second (private) sectors” (Balo lu, 1996: 10).

This is, indeed, a fascinating development as it reveals the importance of the waqf system in yet another vitally important area: human rights. But waqfs can just as easily be used in order to curb human rights. Indeed, during the last decade of the twentieth century an unfortunate development has occurred. This is the involvement of certain waqfs in fundamentalist activities. Convinced that some waqfs provide finance to such activities, the NSC responded by returning to the traditional negative position. As a result, tax exemption privileges previously granted under the 1967 Law, have been abolished one by one and the donations to the waqfs are limited.

This negative policy culminated in the preparation of a draft bill in 1998 prepared by the Ministry of Justice, which aimed to re-write the entire Turkish Civil Code. The draft contains important infringements of waqf rights. To start with, it introduces the concept of sufficiency to establish a waqf: it is not anymore enough to allocate a property or cash as corpus. It is now required that this corpus should be “sufficient” for the purpose of the waqf with sufficiency being determined by the authorities in Ankara. More importantly, the draft authorises the Ministry of Interior to temporarily close down a waqf suspected of violating the law even without waiting for the final decision of the courts (Ballar, 2000: 1383-1391). These innovations, however, have been hotly contested by TÜSEV, which initiated many court cases. When these litigations did not yield any concrete results, TÜSEV appealed to the President of the Republic, Mr. Demirel. He reviewed the two bills abolishing the tax-exemptions enjoyed by waqfs, and returned them to the Prime Ministry with the suggestion that the tax-exemptions should be maintained and the 5% limitation imposed on donations be abolished (Balo lu, 2000: 16-17). The President has also been asked to veto the 1998 draft bill in toto.

Thus, for the first time in the long history of this institution, a waqf representing seven hundred others,42 has staged a challenge to those aiming to undermine the system in Turkey. These efforts, so far, have yielded mixed results: although the idea of subjecting the donations to taxation has not yet been abandoned, the rate of taxation applied in 1999 was zero percent (Ballar, 2000: 11, 925). Notwithstanding these mixed results, a powerful waqf representing hundreds of others, appears to be a more promising arrangement for defending the rights of the waqfs than traditional centralised organs, such as the CWA or the GDW, pretending to represent the waqfs but in fact totally subjugated to the whims of the state.

In conclusion; the extreme modernist view that a waqf is a purely religious institution totally unsuitable for modern life and therefore should either be eliminated or be completely “decontaminated” from its religious characteristics has been abandoned. If so, the credit for this should go to the designers of the 1967 Law. For, it was with this law that waqfs originating from the earliest teachings of Islam were incorporated into the secular Turkish Civil Law.

 

Source: Murat Cizakca, A History of Philanthropic Foundations: The Islamic World From the Seventh Century to the Present. Republished with permission.