The Ministry of Endowments launches a regulatory guide that defines the pillars of endowment and permits the use of money and shares

In a strategic move aimed at strengthening governance in the non-profit sector and developing its legislative framework, the General Authority for Endowments a guide to the fundamental pillars of endowments. This step aims to regulate endowment practices in accordance with Sharia and legal frameworks, aligning with the objectives of the Kingdom's Vision 2030, which seeks to increase the non-profit sector's contribution to the gross domestic product.

The context of development and the importance of endowment organization

Throughout Islamic history, endowments (waqf) have been a fundamental pillar of economic and social development, contributing to the building of civilization by funding education, healthcare, and social welfare. In the modern era, the importance of this new guide lies in shifting the role of endowments from traditional practices, often limited to real estate, to broader investment horizons that include modern financial instruments. This will enhance the sustainability of charitable organizations' financial resources and ensure the continuity of their benefits.

The four pillars of a waqf: conditions for its formation and validity

The authority confirmed in its guide that an endowment is not legally or religiously valid unless four essential elements are fulfilled, namely:

• The endower: He is the one who establishes the endowment, and it is required that he has full legal capacity and complete ownership of the money, and that he is acting of his own free will and not under duress.
• The beneficiary: This is the entity that benefits, whether it is a specific entity (such as children) or a general entity (such as the poor and students of knowledge), provided that it is an entity that is permissible according to Sharia.
• The formula: It is the word or action that indicates the establishment of the endowment, and it is the cornerstone of documentation, whether it is explicit, such as saying "I have endowed this," or implicit, such as building a mosque and opening it to the public.
• The endowed (original): The money that is held in trust, and it is required that it be owned, known, and that it be something that can be used while its substance remains.

A paradigm shift: Stopping cash, stocks, and modern assets

In a development that aligns with modern financial systems, the guide explicitly permits the endowment of cash and shares . The authority clarified that cash endowments are achieved through investment, growth of the principal, and distribution of the proceeds, thus opening the door to investment endowment funds. The authorization also extends to endowing shares in companies, movable assets, and usufruct rights, granting endowers greater flexibility in diversifying their endowment portfolios and mitigating the risks associated with relying solely on real estate.

Documentation and governance: a guarantee for the sustainability of the impact

The guide emphasized the importance of officially documenting endowments with a notary public and registering them with the General Authority for Endowments. The significance of these procedures lies in protecting the endowment from future legal disputes and ensuring the precise implementation of the endower's conditions. The guide also clarified the fundamental differences between endowments and other entities such as charitable organizations and non-profit companies, stressing that endowments are distinguished by the characteristic of "dedicating the principal and dedicating its benefits," which grants them permanence and financial stability.

This regulation comes to confirm the role of the General Authority for Endowments in supervision and control, protecting unknown endowments, and holding trustees accountable in case of negligence, which enhances confidence in the endowment sector and encourages businessmen and members of society to contribute to this vital sector.