How to Better Finance Our Mosques

Rakaan Kayali

Mosques constantly have to raise money, whether it’s through organizing a fundraising dinner or using their wall space for advertisements or just asking their congregants for donations, it is a continuous time and effort consuming endeavor.

On the other hand mosque goers are frequently being asked for money whether it’s to maintain or expand their own mosque, or to build or expand a new mosque in some other city. This has the effect of consuming much of what the average mosque goer sets aside for charity which could have been used to support other causes, and also I would argue, interferes with the spiritual experience that one is aiming to have when they visit a mosque.

Finding a better system for funding mosques is tricky because of the need to balance a number of considerations including:

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  1. The independence of the mosque. So the mosque’s imams and staff can act freely, think freely and speak freely uninfluenced by outside agendas

     

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  3. The financial viability and sustainability of the mosque’s operations

     

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  5. The experience of mosque goers. So they are able to have a spiritual experience when they go to the mosque that is unsullied by frequent asks for donations

     

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  7. The nonprofit status of mosques

There are a few different approaches mosques can consider when trying to satisfy their funding needs, so let’s evaluate the merits of these different approaches to see if we can identify the approach which fares the best:

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  1. They can solicit funding from certain governments. In my estimation this is by far the worst of all the options because it will compromise the independence of the mosque’s staff and speakers

On a macro level, this has the dangerous effect of causing people to lose faith in religious institutions because they rightly see these institutions as simply a means for governments to effect public opinion and undoubtedly in many parts of the world this is exactly what religion is used for. It also retards meaningful scholarship on the part of imams and scholars because they no longer address or speak freely about the issues which affect their congregations. Rather, they speak about the topics that please whichever sponsoring government they rely upon.

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  1. Other than getting money from a government, mosques could consider obtaining financing through engaging in business activities. This too is far from ideal as the mosque may lose its nonprofit status and whatever tax exemption this designation afforded the mosque. Additionally, it requires a great deal of time, effort and expertise to set up a profitable business let alone a business that can finance the activities of an entire mosque with its profits. Considering most new businesses fail within the first 5 years, the mosque is more likely to lose its money going down this route than it is to make any

     

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  3. The third option is what most mosques do now and that is to just ask their congregations for the money they need. This has the drawback of requiring constant fundraising the effects of which we’ve highlighted earlier

     

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  5. The fourth option, is the one I would like to focus on, which is the use of what is known in Islamic parlance as الوقف Al-Waqf. It is also sometimes referred to as  صدقة جارية Sadaqa Jariya

Waqf Endowments

Waqf is an asset or group of assets that are set aside, not to be touched, the income or benefits from which are to be spent in perpetuity in service of a certain cause or a certain class of people.

The primary difference between a normal donation (Sadaqa) and Waqf is that a normal donation is intended for direct consumption whereas Waqf is not consumed but rather preserved and only the benefits or income from the committed asset is consumed.

Think of Sadaqa as being a single fruit intended for consumption whereas Waqf is a fruitful tree that bears fruit many times over its life.

Throughout Islamic history, Waqf has played a prominent role in Islamic society. At one point during the Ottoman empire, it is estimated that 20 percent of all agricultural land was designated as Waqf. The income generated from this land was used to finance a whole host of  activities from building schools to taking care of the elderly to helping the poor with their marriage expenses.

Today, many of the world’s most prominent universities rely on Waqf (in English it’s called an Endowment or Trust) to finance their operations such as Harvard, Princeton and Yale to name a few.

So why not use Al-Waqf to finance our mosques? Assets would be set aside, not to be touched, and only the income from these assets can be used to finance the mosque’s activities. One possible asset class that can be used for Waqf is cash which can be pooled and designated for investment and only the income generated from the core invested amount is used to finance the mosque’s operations.

So instead of the process of spending on the mosque being something like this:

Donations → Expenses

The process would be:

Donations → Endowment Fund (to establish the fund) → Expenses

This approach has a number of advantages:

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  1. The mosque staff gain a relatively steady stream of passive income which frees them up to focus on other activities that are of benefit to their congregations

     

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  3. Over the long run mosque congregations will be asked less frequently for donations, improving their mosque experience and freeing up their funds to support other causes

     

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  5. It keeps the mosque in control of its own destiny and preserves its independence

     

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  7. It has many advantages over operating a business including:
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    1. Diversification: When you’re investing you can diversify your holdings by investing in tens or hundreds of companies instead of just one or two businesses. Owning a business affords the mosque almost no diversification.
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    3. Time commitment: The mosque doesn’t have to worry about managing the businesses they own shares in. Whereas if they owned a business they would have to perform all the business functions themselves from management to marketing to accounting etc
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    5. Liability: There is no liability when owning a portfolio of stocks. However, when you own a business, liability becomes a huge concern
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    7. Liquidity. When you own shares you can sell them whenever you want whereas when you own a business, selling may take months and you’re likely to lose money if you’re in a hurry

First Steps

When setting up an endowment, the first step is to determine the size of the endowment. It doesn’t have to be large and can be a modest amount. Typically you want it to be at least 3 times the size of the mosque’s annual expenses. You also want to get some professional management for the endowment and who knows you might find someone from the mosque’s congregation that has expertise in the area and is willing to commit some of their time and knowledge to help the mosque set up their fund.

To start the endowment, you will have to concurrently raise money for two purposes. The first is to cover the immediate needs of the mosque, and the second is to raise the core capital to establish the endowment. My hunch is that most Muslims will find the idea of contributing to a mosque’s endowment appealing because their donations will work for the mosque not just once but many times and for years to come. The prophet peace be upon him said:

When a person dies their good deeds end except from three sources: An ongoing charity, or knowledge they’ve left behind which is useful to others or a pious child who prays for them.

So let’s give the Muslim community a chance to have their good deeds live on even after their death and put our mosques on solid financial footing by establishing endowment funds that can potentially provide for our mosques for years to come. I think it makes all the sense in the world to do so.

Disclaimer

4 Comments

  • AbdulRasaq O.O. Bashorun

    Good article. I have been educated. Jazaaka Allah khayran

    • admin

      Hello AbdulRasaq,

      Please let us know if you have any questions, we’re always happy to help!

      Thanks,

  • Muhammad Khan

    How can Wahed be used for establishing an endowment fund? Can Mosques and charities setup an account with Wahed?

    • admin

      Dear Muhammad,

      Thank you for reaching out!.

      Please schedule a time with our Financial Advisor here https://calendly.com/saad_wahed/ so we can answer any questions you may have. Simply select a time slot that fits your schedule, provide your info, and they will be in touch.

      Best,
      Team Wahed

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