Waqf: a model for modern Islamic philanthropy and long-term impact

Many Muslim philanthropists, business owners and investors are looking to deploy wealth not only for financial return, but also for lasting social impact and spiritual legacy. That means tackling entrenched problems such as poverty, housing insecurity and unjust debt, while also funding long-term work that is often hard to support, including institution-building and community advocacy. Charities are also looking at waqf as a way to build financial sustainability and fund ambitious long-term projects. It is in these contexts that waqf is attracting renewed attention.

The waqf (Islamic endowment) has been a central pillar of Islamic philanthropy for over a thousand years. Al-Azhar University in Cairo has been supported through waqf funds since its founding in 975 CE. A waqf is a powerful expression of faith and generosity, enabling individuals, families, businesses and charities to dedicate assets in a way that provides lasting benefit for others.

Can you set up waqf funds in the UK?

A similar concept, known as charitable permanent endowment, has existed in the law of England and Wales for centuries. This allows Muslim donors and businesses to structure their charitable giving so that their donations are held in perpetuity to support their chosen charitable causes. The initial capital donation cannot be spent, but must be invested and used to generate a regular income to be used for charitable purposes. The capital will continue to be invested over time, ensuring that the donation continues to benefit communities for many years to come.

How do we establish a waqf fund?

Establishing a waqf fund involves making a charitable donation which is subject to binding restrictions on spending the capital. For larger donations – or donations made by businesses (corporate waqf) – this may involve establishing a completely new charity, registered with the Charity Commission. Or the donation can be made to an existing registered charity, on the basis that it will be ring-fenced and held as a waqf fund.

The terms of the gift – set out in a waqf fund deed – will make it clear that while the income will be used for charitable purposes the capital must be invested and held in perpetuity. Often waqf funds are structured on the basis that the capital, and capital growth, can never be spent (except using certain statutory powers which may require Charity Commission consent).

Sometimes there is flexibility to spend capital in some circumstances, for instance by allowing a small proportion of the capital to be spent each year. There is significant flexibility to structure the restrictions in line with the donor’s wishes.

Once the fund has been established – which need only involve a small up-front donation – there’s flexibility for the original donor to make additional contributions over time. Others – such as family members, employees, other members of the community – may also be able to contribute.

Since the waqf fund is charitable, donors can take advantage of the tax exemptions and reliefs available on charitable donations.

How is the waqf fund managed?

The fund will be managed by a board of charity trustees, often chosen by the original donor. The trustees will decide how the fund is invested, and how the income will be spent. They may be supported by an advisory board – which might include family members or business employees – who can advise on all aspects of the fund’s administration. The deed will often specify that the fund must be run in accordance with Shariah principles, in accordance with the advice of a Shariah expert. It will typically allow the trustees to delegate investment management – perhaps to a dedicated investment committee or an external investment manager – who will report regularly to the trustees.

The fund must be invested in a balanced way – to ensure that it generates sufficient income to be spent on charitable causes today – but also retains its capital value over the long term for the benefit of future beneficiaries. There may be scope to invest the fund in land used for charitable purposes – such as a mosque – or in social investments which benefit the community.

How we can help

Get in touch with Augustus Della-Porta and Alice Faure Walker, our lead advisors on waqf funds, if you have any questions. If you are interested in finding out more about waqf funds, we will be running a masterclass to be held later in the year – register your interest to receive more information.

We help philanthropists, families, businesses and existing charities in the Muslim community to navigate the legal and regulatory issues involved in the establishment and management of waqf funds. We were proud to advise National Waqf on the launch of its governance pack supporting the establishment of waqf funds in 2026. Find out more here.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice on which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please contact the Bates Wells team if you require further information.