Mechanism for determining the beneficiaries of unknown endowments in Saudi Arabia – Endowments Authority
In a significant regulatory step aimed at governing and enhancing the efficiency of the non-profit sector, the General Authority for Endowments in the Kingdom of Saudi Arabia clarified the approved mechanism for identifying the beneficiaries of unidentified endowments . This was included in the comprehensive guide issued by the Authority to simplify Sharia and regulatory provisions, reflecting a clear commitment to developing the legislative framework for the endowments sector.
The concept of anonymous endowments and the mechanism for dealing with them
The authority clarified that an endowment is classified as "of unknown beneficiary" when the endowment's origin is definitively established, but there is a lack of confirmed information regarding the endower's intention or an explicit stipulation specifying the beneficiary. In this context, the authority emphasized that dealing with such cases is not arbitrary, but rather subject to precise Sharia-compliant guidelines that ensure accountability and the fulfillment of the endowment's objectives.
The authority indicated that the banks are identified through meticulous tracking based on:
- Refer to historical documents and records.
- Based on evidence and prevailing custom at the time of the endowment.
- The supervisors' efforts are based on old records or reliable testimonies that may reveal the wishes of the donor.
If all means of investigation are exhausted and no evidence is found to suggest a specific intention, the proceeds of the endowment are spent on general charitable causes , as it is treated as a general charitable endowment, thus ensuring the continuation of its reward and benefit.
Historical context and the importance of regulating the sector
The endowment sector holds a firm place in Islamic and Saudi history. For centuries, endowments have been a fundamental pillar of social and economic development, contributing to the funding of education, healthcare, water provision, and the care of the needy. Over time, some older endowments have faced challenges related to the loss of endowment deeds or the disappearance of their designated uses, making the intervention of the General Authority for Endowments an urgent necessity to protect these assets from deterioration.
This regulation aligns with the objectives of the Kingdom's Vision 2030 , which places great importance on the non-profit sector and seeks to increase its contribution to the GDP. Regulating "unknown endowments" not only resolves a legal issue but also helps to unlock financial and real estate assets that were previously idle or underutilized due to a lack of transparency regarding their management.
Expected economic and social impact
This clarification carries significant developmental implications; redirecting the proceeds of anonymous endowments to "general charitable causes" means injecting new financial liquidity into sustainable community development projects. This measure ensures:
- Sustainability of charitable work: by transforming stagnant assets into productive assets that serve the community.
- Enhancing transparency: This reassures the community and new donors that there is a regulatory framework that preserves and efficiently manages endowments, even in the event of their being outdated.
- Supporting the most needy groups: by directing banks to vital sectors that serve the widest segment of beneficiaries.
In conclusion, the General Authority for Endowments affirms, through these guidelines and the ongoing awareness series, that the adopted model for managing endowments in the Kingdom takes into account the delicate balance between preserving the endowment’s principal and developing it for investment, and spending its returns in a way that achieves the noble Sharia objectives and enhances social solidarity.
