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Waqfs: Iran

According to Moussavi, the earliest mention of the word, waqf, in Shi’ite sources was when this word appeared as an appendage to the chapter on charity (al-sadaqa) in Mufid’s al-Muqni’a. It is noteworthy that there is no chapter on waqf in Kulayni’s al-Kafi although a fair portion of this book is devoted to charity. The legal rules of waqf occupy a small portion of Tusi’s writings where he discusses the role of the jurisprudence in terms of the hakim who should supervise religious endowments in the absence of an appointed superintendent (al-nazir). By the time of ‘Allama Hilli, the question of waqf was expanded to several chapters, one of which was devoted to the administration. Thus, as in Sunni Islam, among the Shi’ites also the development of the waqf law was a relatively late development.

The ulema benefited from the waqf as trustees and supervisors and were therefore, naturally concerned with the development of foundations. But this concern was not confined to the ulema; the state also instituted the office of sadr to control both religious endowments and institutions of learning. This office, which had existed since the Timurids, flourished under the Safavids and was divided into general and sub-sadrs. In Tadhkirat al-Muluk, the famous Safavid book of government organisation, the task of this office is the appointment of judges and managers of the endowments, which demonstrates the significance of the administration of the pious foundations for the state. A slightly different definition of the office of sadr can be found in ‘Al amara-yi Abbasi:


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“The office of sadr is in charge of the well-being of the sayyids and beneficiaries of khums, by administering, registering pious foundations (awqaf) and disbursement of funds for religious learning” (Moussavi, 1996: 228-230).

In Tadhkirah al-muluk, there are also references to the daftar-i mawqufat, an endowments bureau, and its director was called vazir al-awqaf. He was authorised by the Safavid monarchs with broad powers to supervise the dispatch of the accounts by the mutawallis, the auditing of such accounts, the registration of the properties, etc..

We are fortunate that, thanks to Mawlawi and his colleagues, we are well informed about a particularly important waqf, the Astan-e Qods-e Razawi located in Mashad. Their work on this famous waqf, with an annual budget of some $2 billion, can introduce us to the Iranian waqf system (Mawlawi, et.all. 826-837; Kazemi, 1996: 142).

The Astan-e Qods-e Razawi is the complex of buildings surrounding the tomb of the Imam Ali al-Reza at Mashhad, the present day administrative centre of Khorasan. Before the Imam, the Abbasid Chalif Harun al-Rashid was buried here. Actually, the Imam is buried in the precincts of the Caliph’s tomb. After Sübüktigin of Ghazne destroyed the tombs, Mahmud of Ghazne had them rebuilt later in 1009. The first endowment to the foundation that we know of was made by the governor of Nisapur who donated a village. Over the centuries many landed properties were endowed to these complexes. But due to the repeated invasions from Central Asia by O uz Turks, Mongols and Uzbeks, all the waqf deeds are lost. Only from the Safavid times onward have the title deeds been preserved.

The shrine’s waqf endowments include agricultural real estate as well as the non-agricultural. The former includes 500 villages and farms. The shrine also receives rents from shops, baths, bazaars etc.. The agrarian holdings are disbursed all over Iran. The shrine has recently expanded its holdings by selling gold objects to the Central Bank of Iran and buying more land. These gold objects were gifts given by the pious Muslims to the waqf. Important revenue is also earned through the shares in the Mashhad spinning mill, sugar factories, baking factory, cold storage facility, fruit processing complex. These shares were recently purchased for the shrine. We had seen above that Sheikh had given a fatwa ‘Abd Allah al-Mazandarani, the Celebrated Mujtahid of Karbala in 1907: through which investment of waqf funds in joint-stock companies was permitted. Thus, we are observing in the case of Astan-e-Qods waqf the actual application of this principle. The economic and legal implications of the investment of waqf funds in joint-stock companies have already been explained above. It should suffice to assert here that this flexibility allows the merger of two powerful institutions, waqf and joint-stock companies. The Astan-e Qods-e Razawi case illustrates that such mergers, previously observed in Turkey and Sudan, are also possible and well established in Iran.

Concerning the expenditures of the waqf, we are informed about the following expenditure items. It is important to take note at this point that the Astan-e Qods is not just one waqf but a conglomerate of waqfs. This is revealed by the fact that each one of the following expense items is financed by a number of waqfs.

  1. Illumination of the chapel. Candles used to be so expensive that a number of waqfs were established for this purpose.

  2. Furnishing and carpeting (Special endowments were also established for this purpose).

  3. Repair and upkeep of the buildings.

  4. Material assistance, food, shelter etc., to the poor pilgrims.

  5. Provision of food and medicine for the poor (numerous further endowments).

  6. Salaries of the cleaning and maintenance personnel, khuddam. Many endowments were made for this purpose as well.

  7. Mending the books in the library.

  8. Procurement of legal relief for the poor.

  9. Rearing of abandoned children and the provision of nurses for them.

  10. Education

  11. Most recently, a portion of the endowment funds have been reserved for the pensions of the martyrs who fell during the revolution or the war with Iraq.

In addition to the above items, which constitute regular expenditure, the waqf was also involved in major projects. The Shah Reza hospital in Mashhad, for instance, was constructed in the year 1935 and has been maintained ever since with funds from the shrine’s endowments. In 1975 it was handed over to the Ferdawsi University with an annual budget of 200 million tomans. Now, the hospital is called the Imam’s Hospital, after the revolution in 1979.

During the Safavid period the endowments of the complex were administered, as usual, by the trustees, mutawallis. But during the Qajar period with new endowments constantly being added, it became necessary to create a hierarchy among the trustees. A mütevelliba ı was appointed who became the chief of all the mutawallis. During the Pahlawi reign, the shah was the nominal custodian who run the affairs of the shrine through an official. After the revolution the shrine is entrusted to the leading clergy of the city of Mashhad.

Concerning the problem of centralization in Iran; the origins of government administration of the awqaf can be traced back to the action of the Buyid ‘Azud ud-Douleh (d. 372/982) who interfered with the waqfs of the Sawad, by appointing over them inspectors and comptrollers and paying their beneficiaries a fixed wage. Another similar case was the seizure by the Buyids of the estates, which had been made into awqaf by the Ash’ari Arabs of Qumm for the benefit of the imams (i.e. the descendants of Ali who, according to the Shi’ites, succeeded him as the leader of the Muslim community) and their descendants.

There was, in all probability, a considerable area of waqf land in the Selçuk empire, but it had not by any means reached the extent it later did under the Safavids. A certain measure of control appears to have been exercised over the awqaf by the state, which was in keeping with the general religious policy of the Selçuks. (Lambton, 1991: 27-28).

What really distinguishes the Selçuks, however, is the extent to which they have utilised the waqf as an instrument of public policy. It may seem strange that the waqf, an institution of private law and established with purely private wealth, can be used for public policy implementation. But this could happen, as it often did, when the founder was an important political figure and wished to glorify his name. Particularly if such a person was, say, a grand vizier, his private wealth could not really be separated from the public funds at his disposal. This is because, this person could channel the taxes due to the state to his waqfs, with the full approval of the Sultan. In this way, the boundary between the waqf pure and simple and public investments became blurred.

Nizam al-Mülk, the Selçuk grand visier under Alp Arslan, provides an excellent example. He had embarked on a systematic policy of establishing colleges, madrasas. So far, eleven of them have been identified all organised and financed as waqfs. Apparently, Nizam al-Mülk exercised tight personal control over them and was directly involved in the appointment of professors. The total revenue generated by the properties endowed for his waqfs reached 600.000 dinars. But the bulk of this amount was provided by the one-tenth of the state revenue that accrued to him thus confirming the argument made above about the uncertain boundary between the private and public resources (Arjomand, 1998: 116).

The Mongol invasion under Cengiz Han that began in 1219, and culminated in the establishment of the lhanlı state by Hülagu, led once again to a process of centralisation. All the existing waqfs were subjected to a central bureau, which made the utilisation of waqfs for public policy even more pronounced under the lhanlıs. This process was carried further by Nasreddin Tusi. A philosopher and an astronomer, Tusi was put in charge by Hülagu of building an observatory and appointed as head of the waqf bureau of the empire. Beginning with Ghazan Han, lhanlı rulers, themselves, began to create extensive waqfs.

The Safavids tried to organise the ulema into a state-controlled bureaucracy. The sadr liased between the Shah and the religious establishment. He was initially responsible for the ritual cursing of the first three Caliphs; his duties were gradually enlarged to the appointment of judges and teachers and to the administration of endowments. The Divan Beyi’s office was created as a high court of appeal, and he was raised to a status equal to that of army generals, thus bringing the administration of law under direct government control. The Shahs also controlled the religious establishment by the provision of land and endowments to support religious activities. The Safavids endowed additional waqfs for the Astan-e Qods-e Razawi in Mashhad and for the shrine of Imam Riza’s sister, Fatima, in Qum. Grants of land called soyurgal were also made to eminent religious families, and were allowed to pass from generation to generation immune from taxation. The religious elite thus became part of the Iranian land-owning aristocracy (Lapidus, 1993: 296).

Some of these waqf lands had belonged to the Safavid family as private property before they became the rulers of Persia. The greatest accession to lands of this class probably took place during the reign of Shah Abbas, in the year 1015/1606-07 or 1016/1607-8, when he decided to constitute all his private estates, ‘the just value of which was 100,000 tumani shahiyi ‘iraqi, together with various buildings in Isfahan and the neighbourhood into a waqf for the twelve imams and Muhammad and Fatimeh, the wife of Ali b. Abu Talib. He vested the office of administrator in himself and thereafter in the reigning monarch. According to the terms of the waqf deed, its revenue, after the deduction of the dues of the trustee, mutawalli, was to be expended at his discretion and according to the exigencies of the time (Lapidus, 1993: 112). This is an extra-ordinary and most flexible condition, as most founders determined the expense structure of a waqf themselves.

In addition to the increase in the area of waqf land brought about by the action of the ruling house, there was also a tendency on the part of private individuals to transform their property into waqf. The reasons for this were not different from anywhere else; they were purely pious motives, fear of confiscation, and tax rebates, maintaining the family lands intact and avoidance of the fragmentation of land etc. Lambton, based upon Chardin, has argued that if wrongly-acquired land was constituted into a waqf, or so constituted under a false title, this title became valid after one year of uninterrupted possession, and could not thereafter be disputed. In view of the wholesale confiscations of the similarly constructed waqfs observed in the Ottoman lands, we wonder, why such gayri sahih awqaf in Iran should enjoy more protection. In short, Chardin’s argument should be taken with a grain of salt.

Trusteeship appears to have been highly profitable. Lambton has observed that these offices tended to be concentrated in the hands of a few individuals who accumulated vast fortunes. Shah Abbas II redistributed these offices in an attempt to break up the large fortunes.

Apparently, long term leases, a major problem for waqfs everywhere, were observed in Iran as well, where they were held by their owners on a 99 years’ lease. During this long period the tenants could settle and dispose of the land as they pleased. On the lapse of 99 years, a new lease for the same period was issued on payment of one year’s revenue. On some lands a small annual tribute was also fixed. Thus we have a situation whereby small annual rents are combined with a long-term lease, reminding us of the Ottoman icareteyn waqfs (Çizakça, 1995: 320- 323; Kreiser, 1986). Although a more thorough comparison between the Ottoman icareteyn and the Iranian long term lease cannot be attempted here due to lack of data, we suspect that the latter, like the former, must have been initiated due to the need to have the tenant restore the waqf buildings

After the Safavids, Nadir Shah accepted the throne in 1736. His reign was marked by a massive attempt at centralization of waqf property. In the last year of his reign he promulgated a decree for the resumption of wrongfully acquired waqfs, the extent of which, it will be remembered, had greatly increased in Safavid times. As a result of this decree, a considerable number of gayri sahih waqfs were taken over and incorporated into the estates of the Shah; reminding of us those often observed centralization processes elsewhere in the Islamic world. Thus the relative protection enjoyed by these wrongfully acquired waqfs under the Safevids disappeared under Nadir Shah.

However, where the benefactors of a waqf and the mutawalli were powerful, they did not in fact surrender the waqf, although it became registered in the land register of Nadir Shah, the raqabat-i Nadiri. Other trustees fearing that the waqf under their charge would be confiscated, did not produce their waqf deeds, and this gave an opportunity to others to register these properties in their own names. Since all waqfs were supposed to have been confiscated, the officials could not reject such demands for registration on the grounds that the land was waqf. In addition to the concealment of the true ownership of waqf properties induced by Nadir’s attempt to resume all waqf property, there was a further difficulty in ascertaining the true ownership of many waqfs in the Isfahan area owing to the fact that the Afghans burnt the registers of waqf property during the sack of Isfahan. Nadir died, however, before full effect could be given to his decree. His successor, ‘Ali Quli ‘Adilshah, revoked the decree and returned some of the confiscated estates, thus centralization was once again followed by restoration and decentralization. However, Sir John Malcolm, writing at the beginning of the nineteenth century, states that these lands were never fully restored. In any case, there seems little doubt that in the troubled years between the end of the Safavid dynasty and the establishment of Qajar dominion much waqf property was resumed by the state or converted into private property. For example, the revenue of the shrine of the Imam Riza from its endowments, which at the end of the Safavid period amounted to 15,000 khurasani tumans or 300,000 rs., had fallen by 1821-2 to some 2,000-2,500 khurasani tumans, or 40,000-50,000 rs (Lapidus, 1993: 132).

Thus, after the Afghan invasion, the accession of Nadir Shah and assumption of power by the Qajars (1722-1785), a serious decline in the Iranian waqf system can be observed. Information on waqf administration under the Qajars is scarce. It can only be said that the clergy was able to restore the institution after its eclipse throughout the eighteenth century. Indirect evidence suggests that the waqfs had improved particularly in the regions of Isfahan and Azerbaijan and that at the beginning of the twentieth century the waqfs were still run by a Department of government.

In 1911 an attempt was made to rationalise the administrative structure of the waqfs. But the most significant changes in the legal status of the waqfs were introduced, as elsewhere in the Islamic world, by the Civil Code. The Civil Code of 1928 contained a number of Articles with reference to the waqfs. The legal position as regards waqfs was set out in a Subsection of Section 2, Chapter 2, of the Civil Code.

The Civil Code, recognises two kinds of waqf: charitable and family waqfs and permits a property to be endowed only where it can be exploited without detriment to its existence, whether it be movable or immovable, held as joint property in undivided shares (musha’) or separately (mafruz) (Article 58). Moreover, a waqf is considered to be a binding contract and cannot be revoked (Article 61). The settlor can appoint a nazir (or overseer) over the mutawalli to approve and take cognisance of his actions (Article 78). Thus these conditions laid down in the Civil Code do not differ from the basic teachings of classical Islam and lead us to the conclusion that as far as waqf affairs are concerned, Islamic principles were by and large incorporated into the Civil Code.

The Civil Code does not lay down any definite share as the right of the administrator. Article 84 merely states that if no share has been laid down by the settler, he can take from the proceeds a share to recompense him for his work.

Once the proceeds of the waqf and the share of each of the beneficiaries have been defined, the latter can take possession of their respective shares, even if the administrator has not given (them) permission (Article 85). We can clearly observe a Western influence here. For, giving beneficiaries such rights facilitates a transformation from waqf to private property, a process much preferred by the Western powers.

Unless the settler otherwise stipulates, expenses for the repair of the endowed property and matters necessary for the exploitation of the waqf have priority over the claims of the beneficiaries (Article 86). The reader will note that this corresponds to one of the Hanafi “ten-conditions”, mentioned above.

Concerning istibdal, while Articles 88-90 of the Civil Code permit sale only if the exploitation of the land is rendered impossible or likely to become so, the prevailing view among modern jurists is that exchange or sale is permissible if this results in the acquisition of a better property (Lambton, 1991: 233).

Alienation of the property on a long-term lease, discussed above, is not expressly forbidden by the Civil Code. Consequently, where waqf land is required for some public development project, or in some cases merely for private purposes, it is sometimes let on a 99 years’ lease..

The 1934 Law introduced certain changes into the administration of awqaf. According to this law, all the waqfs, which had no administrator, were placed under the Ministry of Education and Awqaf, though the Ministry was at liberty to leave the waqf in the hands of whoever was its overseer at the time. According to Article 2, in the case of charitable waqfs with administrators, the Ministry of Education and Awqaf exercised supervision. Note 2 to Article 2 excepted from this provision the awqaf of which the reigning monarch was the administrator. In the case of family waqfs, the Ministry was not to intervene except in the case of sale, when its sanction was required. In Article 9 it was laid down that the Ministry was to receive a fee of 10% of the net income of a waqf for its administration unless special terms for administration were laid down in the deed of settlement. In the event of supervision alone being exercised, the remuneration of the Ministry was to be 5%. An exception was made in the case of awqaf constituted for the benefit of hospitals and schools; the Ministry was to levy a mere 3% for administration and 2% for supervision.

In some cases waqf land is worked directly, but more often it is leased. In such cases the administration of the land does not materially differ from that of a large landed property which is let. In either case a third party is interposed between the peasant and the owner of the land or the administrator of the waqf. Often it is the mutawalli himself who rents the property: in other words he pays a fixed sum to the foundation and keeps the remainder of the profits from the land thus, in fact, functioning as a risk taking entrepreneur.

The general tendency is for the waqf properties to be let on terms advantageous to the lessee; this is especially the case when the lessee is the trustee, mutawalli, himself. There are many instances of lessees of waqf properties who have succeeded in making large profits. The sub-letting of waqf properties is not uncommon. Although Lambton is silent on this, it is quite possible that in addition to sub-letting, sharecropping is also practised.

As stated above, considerable areas of the country are waqf. The most important group, both as regards extent and income, are the above-mentioned waqfs belonging to the shrine of the Imam Riza of Mashhad. The office of the administrator of these waqfs was vested in the reigning monarch. This is also the case with the waqfs of the Sipahsalar and Shah Chiragh mosques in Tehran. Ten per cent of the revenues of these go to the trustee, mutawalli. The properties, which constitute these waqfs, used to be exempt from taxation on the grounds that the income of the monarch was not taxable. The taxation policy prior to the grant of the Constitution was such that waqf lands were subject to taxation unless granted immunity by a special decree or farman. Waqfs not directly linked to the ruling monarch used to pay taxes in the same way as other landed property.

Formerly, under Riza Shah and in the early years of Muhammad Riza Shah’s reign, the shrine properties in Khurasan were let to a company, known as the Shirkati Filahati. This arrangement was apparently unsatisfactory. The rent is said to have been comparatively low and not to have been paid in full. The company was dissolved in 1948 and the various properties were leased to different groups and individuals. In some cases, notably Kashmar and Turbati Haydari, the shrine properties were rented by local landowners. A small company known as the Shirkati Kishavarziyi Riza, was formed from the remnants of the former Shirkati Filahati; this company rents some 20 of the shrine properties in the neighbourhood of Mashhad, including Turuq, Shadkan, Mihrnakan, and Khiaban.

In addition to the waqfs of Imam Riza, there are various other waqf properties in Khurasan. For example, in Kashmar the waqf of the brother of Imam Riza, known as the Baghi Nizar , also owns property, mainly in the form of shares in the irrigation canals, qanat, which flow through the garden of the shrine. This qanat is divided into twelve shares, of which four are waqf. The annual rent per share in 1940 was 200,000 rs. ( approx. 1,176 pounds sterling).

Isfahan was formerly, especially in the Safavid times, an important centre of waqf property. Although the majority of this has disappeared or been usurped, a considerable amount nevertheless remains. Similarly, some of the awqaf of the Chahar Bagh madrasah or college, in Isfahan, were usurped by private persons. These properties, however, were recovered by the madrasah after litigation.

In keeping with the world-wide trends of the thirties, the parliament passed the Law of Endowments in 1934. It broadened the jurisdiction of the Department of Endowments, which was already incorporated within the Ministry of Education. Thus, as in Turkey, in Iran also the Ministry of Education gained a paramount role in waqf affairs in this period. This affected the madrasah system and a period of intervention, subsidisation and direct control over an increasing number of religious schools began. This state of affairs continued until the end of the reign of Riza Shah Pahlawi.

The 1934 Law and the Administrative Statute of 1935 allowed the Department of Endowments to initiate litigation against mismanaged waqfs. In effect, this enhanced the power of the state with respect to awqaf. During the Afshar (1732-1750) and Qajar periods, also, state as well as private absorption of waqf property was observed, so that the post 1934 developments do not constitute a sudden departure from the past. Nevertheless, the legal changes of the mid 1930s were important instruments in the policy of a consciously secularising dynasty.

The basic features of the 1934 Law and the Administrative Statute of 1935 were as follows:

  1. All public endowments judged to have no administrator or an unknown administrator, were to be directly administered by the Endowments Department of the Ministry of Education.

  2. The department was empowered to exercise full supervision. Further to this, the Department of Endowments had now the right to request registration, contest registration, initiate court proceedings as plaintiff and enter the court as a third party on behalf of a litigant.

  3. Istibdal was permitted subject to the approval of the Department of Endowments.

  4. The Department of Endowments was also empowered to legally proceed against corrupt administrators

  5. If a waqf failed to produce the original deed of endowment, it was to be administered directly by the Department of Endowments and the latter was to receive for this service 10% of the net revenue of the waqf. This percentage was reduced to 3% in the education and health sectors.

  6. The Department of Endowments was also empowered to approve or reject the budgets submitted by the trustees of the endowments.

  7. It was promulgated that the revenue of those waqfs whose original purpose was unknown, or, where the proceeds could no longer be used for the purposes originally stipulated were to be disposed of. The disposal was to take place as follows: for the construction of secular primary schools 40%, purchase of school supplies for the needy children 10%, the Red Lion and Sun society 20%, public education 10%, publication of “useful” books 10%, unanticipated expenses 10%.

  8. The Department of Endowments was empowered to identify a property as a foundation or private property.

  9. The Department of Endowments could determine if an endowment has an administrator or if the position was vacant

  10. The Department of Endowments could determine if an administrator was unknown (by rejecting the credentials submitted to it)

  11. The Department of Endowments could appoint temporary or permanent administrators Through these powers the government took over a number of religious schools and could therefore discipline the administrators, teachers and the students.

To recapitulate, it can be seen from the foregoing that the institution of awqaf in Iran had survived largely in its ancient form, although it has been brought under some measure of state control. But a drastic change was on the way: On 27 January 1951 it was reported in the British press that the Shah had ordered all the crown lands he had inherited from his father to be distributed among the peasants. It was prescribed that the lands should be sold on favourable long-term conditions and that the money received be spent on productive purposes and on the formation of agricultural companies to benefit the peasants. The annual revenue from these lands, which included some 800 villages, was alleged to exceed 500,000 pound sterling. It is interesting to observe that such a procedure violates not only Islamic law but also appears to be contrary to the provisions of the Civil Code, since the land had in the meanwhile been made into waqf (Lambton, 1991: 257). In short, as in Egypt, a massive conversion of waqf property into private property was being envisaged.

The Endowments office which eventually replaced the Department of Endowments, released some statistics for the year 1964: The total annual income of all types of awqaf was “an astoundingly low” $3.6 million. Since no other data exists, a comparison with earlier times is not possible. Much was no doubt lost due to embezzlements. Even more importantly, all the restrictions presented above may have curbed Iranians’ enthusiasm for establishing new foundations. It is significant that not many new foundations were endowed in the two decades after the Second World War. Further details of the statistics released by the Endowments Organisation are presented below: Total waqf properties: 73,694 riyals

Total Income of Properties: 275,458.362 riyals Total number of religious schools: 214 or 236 Total number of students and teachers: 13,016

Total stipends distributed to the students and teachers: 11 million riyals.

The statistics also reveal severe misuse of awqaf funds. Consider the following: Manucher Azmun, the director of the Endowments Organisation in the seventies had made the following grants of land from the properties under his control: Large tracts of land to various singers, 81,000 sqm to Farah Diba, 3,350 sqm to the Lions Club, 230 hectares to an individual, 750 hectares (7.5 million sqm) to a person … etc., etc. (Akhavi, 1980: 55-58, 132-133).

Thus, it may be argued here that the Kemalist centralization in Turkey was reflected not only in Egypt, as we have observed, but also in the Pahlawi Iran. Just as in Turkey, in Iran also, during the 1930s the waqfs were brought under the state control and their income was channelled, under the best circumstances, to secular schools. But much more tragically, with the waqfs under state control, these institutions were at the mercy of unscrupulous officials who did not hesitate to distribute waqf properties to totally unrelated and undeserving individuals for personal gain. Such policies aiming at the destruction of the waqf system also triggered reaction in Iran. But whereas the reaction in Turkey was relatively conciliatory and found early expression in the 1967 Law, in Iran it had to wait until Khomeini and came with an explosion. Let us now focus on the post-revolutionary Iran.

An interview made with Hojjatoleslam Imam Jamarani, Director of the post-revolutionary Awqaf and Charity Organisation has revealed that the so-called, Mudiriyet al-awqaf, Waqf Directorate, enjoys an independent status and is in charge of examining and supervising the administration of the waqfs. Apparently the categories of waqfs observed in Turkey; those directly managed by their own trustees, mutawallis and others whose management was taken over by the Waqf Directorate, also exists in Iran. While Jamarani has pointed out the misuse and embezzlements of the waqf properties, he has expressed his awareness that the state, in the past, has been as guilty as the unscrupulous trustees, mutawallis. As Jamarani reports, in post-revolutionary Iran the right of the founder to determine the purpose of the waqf is strictly observed. Any attempt to change the conditions stipulated by the founder is considered to be in violation of the Shari’ah.

Realising the importance of educating the public on the significance of the waqf system, it is envisaged that waqf management courses will be offered at universities. When Islamic rule was introduced, it was noticed that rents collected from the waqf properties were about 1/10th or even 1/20th of the prevailing market rates. A law, therefore, has been promulgated to adjust rents to the market rates. Moreover, middlemen, relics of the tax-farming age, who specialised in the collection of waqf rents, have been replaced by the Awqaf and Charity Organisation. Now the latter collects rents from the tenants directly. But this appears to be a relic from the age of centralization for, Jamarani has not clarified whether this rule applies only to those waqfs whose management has been taken over by the Waqf Directorate or also to those managed directly by their own trustees, mutawallis. The former is obviously the more likely alternative because the latter could involve a change in the stipulations of the founder and violate the Shari’ah.

Islamic Republic has made a genuine effort to regain those waqf properties sold illegally, during the Shah’s regime. The Islamic Parliament, Majlis, promulgated a law nullifying all the illegal sales of waqf property effected by the previous regime and cancelling their ownership. Jamarani claims to have regained about 80% of such illegally sold waqf property. These properties have now been rented out. The revenue generated by them together with the other revenues of the directorate have been allocated to a massive restoration effort.

The revolutionary government has been very active in establishing new and powerful waqfs. For instance, several major waqfs were established by the state to commemorate special historical events and disseminate the revolution’s message. Two of these, Bonyad-e Panzdah-e Khordad (Fifteenth of Khordad Foundation) and Mo’asseseh-ye Nashr-e Asar-e Hazrat-e Imam Khomeini (Organisation for Publication of Imam Khomeini’s Works) are noteworthy for the size of their resources and revolutionary activities. It was the former institution, established to commemorate the 1963 uprising led by the late Imam Khomeini, which offered a sum of $2 million to anyone who managed to assassinate Salman Rushdie. This waqf also sponsored some 471,886 households in 1991 (Kazemi, 1996: 144). The latter bonyad (waqf) receives funds from the government, Shi’ite khums payments and other private donations from the pious.

The largest waqf established after the revolution is the Bunyad-î Mustaz’afan, which took over the confiscated properties of the Pahlawi family. According to its 1986 annual report, the foundation employed 42,095 persons and produced 136.7 billion rials worth of goods and services, equal to 14% of the total production by large industrial units in the country. The number of large industrial units controlled by this bunyad was 113. The waqf continued to grow over the years: by 1992 it has been reported that the total annual budget for the foundation was about $10 billion. Already in 1983 the organisation’s director could claim that “the organisation is one of the largest conglomerates in the world and the largest Islamic entity in Iran” (Amirahmadi: 235).

Although most of the post-revolutionary waqfs have been established by the state with confiscated property, there are also some important waqfs established by private individuals. One of these is the Sazman-e Eqtesad-e Islami (Islamic Economic Organisation) founded by the bazaar merchants. This organisation was involved in financing certain commercial ventures and particularly in the import business during the Iran-Iraq war. The loanable fund of this private waqf has reached in 1987 the staggering figure of 50 billion rials, roughly equal to 5% of the country’s total liquidity (Amirahmadi: 236). It is most interesting that even in the Islamic Republic the usual strains between the state and private foundations can be observed. The Sazman-e Eqtesad-e Islami, for instance, has been charged with corruption, misuse of public funds and interference with government policies.

All in all, there is a complex relationship between the waqfs and the government in the Islamic Republic. Although these bonyads were envisaged as separate entities, most of them are dependent on the government for large portions of their annual budgets. They were allocated some 20,000 million rials from the public budget in 1980, which increased to 230,000 million by 1987 (Amirahmadi: 235). In return for this financial support, they are governed by the key members of the ruling elite and clerics, their leadership is appointed by the president and confirmed by the spiritual leader of the regime. The linkages between them and the state are such that some of them have been incorporated fully in the executive branch. This sort of outright absorption has naturally removed all pretences of autonomy for these foundations. In short, with their very corpus being constituted by confiscated property provided by the state, post-revolutionary waqfs in Iran have become extra-ordinarily dependent on the state and differ from all the other waqf forms we have studied until now. Notwithstanding this dependency, however, it is quite clear that the post revolutionary waqfs have become powerful organisations. They control huge sums and extend patronage in ways that rival the state. Post revolutionary Iran, in short, has emerged as a unique economy dominated by powerful state controlled waqfs.

Thanks to the efficient co-operation of the Iranian authorities, it has been possible to obtain the current laws and regulations pertaining to the waqf system in the Islamic Republic of Iran. Thus we are in a position to appraise the system under the Islamic Republic. The earliest regulation we have is a decree (no. 630) promulgated on November 28th, 1984 by the Council of Ministers. This is the so-called By-law of the Law of Cancellation of Selling Deeds of Bequeathed Properties, Water and Land. In chapter two of this by-law, the

Department of Endowments is empowered to prepare a list of all waqfs whether administered by their own trustees, mutawallis, or without any “guardians”. The purpose of this inquiry was apparently to find out whether any istibdal transaction has occurred without the permission of the religious authorities. Should such a transaction have occurred without religious sanctioning, the committee should declare its “discretion”. If the new owner accepts the decision of the committee, the deed will be cancelled. If, however, he objects to this decision, then the case will be referred to a civil court whose judgement will be definitive (Article 2, section B). Unauthorised istibdal transactions are thus either directly cancelled or subjected to litigation. In the former case, the occupant is given the opportunity to lease the premises (Article 3).

Next we come to those estates endowed by the previous regime to the agricultural ministry. There is a problem about the lands the deposed Shah wanted to distribute to the peasantry as private property. More accurately, it is the lands governed under the Law of Improvement of the Public Bequeathed Villages and Farms (23 April 1971) that are being considered here. First, it was declared that, in the case of those foundations controlled by the Ministry of Agriculture whose deeds of ownership have not already been sold to the peasants, such deeds shall be cancelled (Article 5, Section A).

If in case a trustee appeals to the Department of Endowments with all the valid evidence requesting the cancellation of such a transfer of ownership, possession deeds in the name of the endowment shall be issued (Article 5, Section B). After the execution of affairs according to sections A and B, the Department of Endowments shall prepare leasing contracts for the occupied endowments. In short, the waqf status of the distributed lands shall be restored and the occupants will become tenants again.

But then, we are left with the difficult problem of what happens if an occupant has already made a personal investment in the endowed property. It is promulgated that all such constructions and developments shall be considered as the private property of the tenant who has made the investment. It is also promulgated that separate contracts shall be concluded with them for these premises (Article 7). In passing, it might be noted that this arrangement was known as the so-called “mukataalı Vakıf” in the Ottoman/Hanefite usage and is still valid in Turkey (Döndüren, 1998: 77). Concerning those endowed properties already sold off to the occupants, the cash amounts deposited at the Taavone Keshvarzi Bank in a government account shall be proportionately credited to the accounts of each endowment (Article 11).

The next Article explains that for the period that has passed from the time of sale to the new leasing contract (to be issued by the Islamic Republic) a rental fee shall be calculated and cleared by the payments already made by the occupant farmers. If it is observed that the farmers still have debts, the difference shall be calculated and received in cash or by instalments from the farmers and be credited to the endowment.

Concerning the endowed waters, it is promulgated that if they have been sold without any religious authorisation, they shall be cancelled (Article 13).

Article 14 ensures that should a waqf be in a dilapidated state, the Department of Endowments should take the necessary measures to repair these premises in conformity with the original wishes of the founder.

The last Article of the by-law specifically states that, the above mentioned, Astan Ghods-e-Razavi and other well-known waqfs are also governed by the same rules.

The crux of this by-law appears to be the restoration of waqf property by the new Islamic regime, to put an end to the istibdal transactions or at least to subject them to careful scrutiny by the religious authorities and to convert such sales into lease contracts. Thus the tenant farmer who became private owner of land under the Shah, once again assumes his original status of a tenant farmer.

This by-law was soon followed by a more comprehensive bill, which was approved on December 22, 1984. The first Article of the new law declares that the Iranian waqfs shall from now on be administered by a new department called; Pilgrimage, Endowments and Charity Affairs Organisation. In Article 2 it is explained that the bequests organisation shall be separated from the Prime Ministry and shall be handled by the Ministry of Islamic Guidance.

Article 3 is very important in that it confirms that each endowment has a legal entity and its trustee shall be considered as its representative. The importance of this Article will be appreciated better when compared with the present situation in Malaysia, to be presented below, where the status of the trustee has been completely obliterated or when compared with Turkey of 1954 where all the Ottoman cash waqfs were deprived of their legal personality and their cash capitals were pooled to a bank.

Article 6 is also familiar with the traditional forms in that it assigns priority to the maintenance of the endowment over all other expenditures. It will be recalled that the same condition, known as I’tâ - hirman, can be found also among the ten conditions of the Sunni (Hanafi) waqfs.

Article 7 is a precautionary measure against possible misuse by the trustees and gives the power to dismiss such persons to the department. It is also promulgates that under certain circumstances, the department can also act as the trustee and that unscrupulous trustees shall be held responsible for the compensation of the amounts embezzled. Furthermore, such trustees shall also be made subject to criminal investigation and, if found guilty, shall be punished.

Article 8 promulgates that revenues of endowments whose expenses are not specified and others purely endowed for charity purposes, can be spent on research, propaganda and publication of Islamic culture.

In a note attached to this Article, we find another universal feature of the waqf system that if the income of a waqf cannot be spent for the specific purpose of the founder, it should be spent for a purpose nearest to it. When we turn our attention to India just below, we will see that this principle is known in India as the doctrine of cy pres and has been imported from the English Law of Trusts.

Article 11 regulates the fees to be paid to the trustees and to the supervisors. These fees shall be paid in accordance with the amount stated in the endowment deed or where there is no stipulation, then the amount to be paid shall be calculated in proportion to the net income of the endowment. This is a very important contribution to the waqf system. For, we are observing for the first time, at least to this author’s knowledge, that the trustee, mutawalli, is being paid not a fixed salary but a proportion of the net revenue generated by the waqf. It goes without saying that this system would have very important repercussions for the efficiency of waqf management. Undoubtedly a trustee would do his utmost to enhance the revenues of the waqf, if he were informed that his income would be proportional to the net revenue he generated. Research comparing the relative efficiencies of waqfs paying fixed salaries versus those that pay proportional salaries should yield interesting results. We hypothesise that the latter would be substantially more efficient in view of the fact that the well-known agency problem would have been addressed.

On May 12, and 17, 1986 two cabinet decrees were announced. One pertained to the development of waqf lands leased to third parties. It promulgated that if the land of a waqf is leased for development, the fair value of this land shall first be assessed by the experts of the Ministry of Justice, then, 30% of this value, in addition to the current rental fee, shall be obtained from the developer as royalty. In the contract the purpose of the development shall also be clearly stated.

Should the lessee who has obtained the right to develop the land wish to transfer this right to another person, he is obliged to pay an amount equal to 15% of the difference between the present value of the land and that at the time of the original contract, as the royalty transfer fee in favour of the endowment. In case the lessee erects numerous buildings on the land of a waqf, the construction price of each unit is to be calculated according to the Law of Possession as will the relevant royalty.

Article 3 introduces the concept of key money. If the property is let for business purposes, local experts shall calculate this key money, which shall be received in favour of the endowment at the time of contract. The next Article deals with procedures to be followed should the tenant wish to transfer his tenancy rights to another person. In such a case, the original tenant, after obtaining the approval of the trustee as well as the Department of Pilgrimage, Endowment and Charity Affairs, must pay to the waqf’s account 10% of the total key money. All the key moneys as well as royalties are to be considered as revenue of the pertinent waqf. When the rights of the lessee are inherited by his primary legatees, the latter shall not be subjected to the payment of any royalty.

The second Cabinet Decree dated May 17, 1986, deals with the administrative organisation of the pilgrimage, hajj, endowments and charities affairs. A note to Article 3 is particularly interesting in that it grants autonomy to the mosques, theological schools and takyas and prohibits the Department from interfering in the internal affairs of these institutions. Thus, after about 200 years’ of government interference in the autonomy of waqfs, all over the Islamic world, in Iran full religious freedom has been ensured and the government control over the waqfs is effectively curbed. Article 4 clearly specifies that the government can interfere in the waqf affairs only under the following conditions:

  1. If the trustees refuse to register the endowments

  2. In case of istibdal or transforming the nature of an endowment from the original purpose of the founder.

  3. Long term leasing. This is limited to a maximum of ten years unless approved by the Director of the Department (Article 11, section D). Thus long term leasing which could be extended to 99 years in pre-revolutionary Iran has been reduced to a maximum of ten years. In this way, the Ottoman invention of icare-i tavile leading to the icareteyn has been effectively prevented in the Islamic Republic. Article 11, section E promulgates that when waqf properties are to be leased, this should be done through public auctions and the bidders should submit a guarantee of 10% of their bid. It is also promulgated (section F) that the minimum rental amount should be published in the tender announcement. Auctions are not demanded for small waqfs, with revenue less than RIs 200,000 or for leasing to government organs. All the moneys received at the auctions are to be deposited at the account of the pertinent waqf (Article 18). At this point the reader may wonder about the legality of auctions from the Islamic point of view. It has been shown that auctions not only have been sanctioned from the earliest times of Islam and therefore constitute established custom, but that they also function as the primary instrument of resource allocation in the absence of an official rate of interest (Çizakça, 1989).

Article 19 recognises the following expenditure categories for waqfs:

  1. Maintenance expenditure

  2. Repairs

  3. Taxes and all other dues, fees and charges etc.. Thus we are given the first hint that Iranian waqfs do not enjoy tax exemption. More precise information on taxation matters is provided below.

Article 20 promulgates that each waqf shall prepare an annual budget with 5 copies, which shall be sent to the Department and other governmental bodies.

Another traditional feature is observed in Article 23, which promulgates that; all the profits of the previous year shall be entered into the budget as net income of the following year.

Articles 24-28 concern various measures adopted in order to supervise the waqfs and avoid embezzlements. These Articles reveal the establishment of a serious process of inspection.

Article 33 regulates the fees that should be paid by the waqfs for supervision and custodianship. The Article stipulates that such fees should be paid according to the waqf deed, if such a clause exists in the deed. If it does not, then the guardianship fee should be calculated so that it is equal to 10% of annual net income and supervision fee at 5% of the same net income.

Note number 3 of Article 33 states that the net income of a waqf will be equal to 80% of the total income. Thus we are informed that the total revenue of an Iranian waqf is subject to a 20% deduction covering fees and taxation. Article 48, however, provides relief by stipulating that should a waqf desire to be exempted from direct taxes, it needs to obtain the approval of the Department. Thus, tax exemption is possible. That public endowments whose revenues are spent for charitable and pious purposes will be granted tax exemption is also confirmed by a circular of the Department (Article number 3, no date) but, this privilege was to become effective on 21 March 1989.

Article 35 informs us that there is a separate Department of Financial Affairs of Endowments. This Article stipulates that all the waqfs are to send their monthly balance sheet of the journal and general ledger including the evidences to this department.

Article 43 provides us with further information concerning istibdal transactions. It is stipulated here that provided that the sale is legal, the proceeds are to be deposited in a bank in the name of the endowment in question. Any sale transaction pertaining to waqf properties are subject to the approval of the Director of the Department (Note to Article 43 above).

The next Article is a most interesting one and refers to the cash that is obtained as a result of istibdal transactions. It will be recalled from above that a fatwa given by Sheikh ‘Abd Allah al-Mazandarani, the Celebrated Mujtahid of Karbala in 1907 had permitted establishment of a waqf with stocks and shares. Based upon this fatwa we had come to the conclusion that cash waqfs were permitted in Shi’ite law. This conclusion was first confirmed by the investment portfolio of the famous Astan-e-Qods waqf. Further confirmation can now be found in Article 44, which stipulates that:

  1. Istibdal revenues can be used to purchase stocks and bonds

  2. These papers are to be considered as the waqf itself and shall not be considered negotiable. Negotiability shall be allowed only when another istibdal transaction takes place.

Consequently, when ibdal/istibdal converts a waqf into cash, the cash that is obtained is considered as the waqf itself, thus once again confirming the legality of cash waqfs. The note to this Article stipulates that when such shares are bought, the Department shall keep in a special register the list and specifications of these stocks and bonds as well as the shares of the endowments.

Thus, here we have a possible solution to the confiscated assets of the waqfs of Singapore. It will be recalled that the state of Singapore, facing an acute shortage of land, had applied an obligatory ibdal by converting real estate assets of some of the local waqfs into cash and depositing this compensatory cash into the banks. As a result, and for all practical purposes, these Singaporean waqfs ceased to exist. Article 44 is relevant here since it stipulates that the cash deposited into the banks constitutes the waqf itself. If a similar law would be promulgated in Singapore, the cash in the banks would continue to survive as cash waqfs.

Article 45 introduces in modern Iran what we have called above as supply side capital pooling among the waqfs. It will be recalled that Ottoman cash waqfs often pooled their resources and contributed to each other. This is now possible in Iran because, subject to the approval of their trustees, where the amount of cash obtained by applying istibdal does not suffice, this Article permits a joint purchase. The Article further stipulates that the Department may facilitate such transactions by purchasing the property itself and then divide it among various endowments according to the capital contribution of each. In short, Article 45 allows for joint purchases subject to the approval of the trustees.

We have seen above, how in Turkey, it had become possible after 1967, for a waqf to establish its own joint-stock company in order to benefit from the latter’s realised profits. We attached a lot of importance to this development on the grounds that such arrangements enabled the waqfs to expand their revenues by sharing in the dynamic expansion of companies. Article 50 allows for the same developments in Iran by stipulating that the trustees of waqfs as well as the Department itself may establish companies for the purpose of maintenance and development of their properties. Thus the dynamic potential of such transactions have been recognised in Iran as well. Furthermore, in Iran, when such companies owned by waqfs realise profits, these profits have been granted tax exempt status providing they can prove that the share holders do not use the profits for their own personal ends.

 

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