Raising money for mosques or finance our mosques is not easy in most Muslim minority countries.
Mosque staff, may Allah reward them for their effort, are constantly having to raise money, whether it’s 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 one aims 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:

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.
2. The financial viability and sustainability of the mosque’s operations.
3. 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.
4. The nonprofit status of mosques.

Approaches to Finance Mosques

There are a few different approaches mosque’s 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:

Government Sponsorship

Mosques 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 parts 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.

Business Activities

Mosque’s could consider obtaining financing through engaging in business activities. This too is problematic 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 it’s money going down this route than it is to make any.

Soliciting Donations

Mosques can do what they do now which is simply to just ask their congregations for the money they need. This has the negative effect of requiring constant fundraising, the drawbacks of which we’ve highlighted earlier.

Al-Waqf

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

Al-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 Al-Waqf is that a normal donation is intended for direct consumption whereas Al-Waqf is not consumed but rather preserved and only the benefits or income from the committed asset is consumed.

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

Throughout Islamic history, Al-Waqf has played a prominent role in Islamic society. At one point during the Ottoman empire, it is estimated that 20% 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 Al-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 can 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 Al-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 → Investments → Investment Income → Expenses

This approach accomplishes a number of things:

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.
2. Over the long run it means mosque congregations will be asked less frequently for donations. Improving their mosque experience and freeing up their funds to support other causes.
3. It keeps the mosque in control of its own destiny and preserves its independence.
4. It has many advantages over operating a business including:
   1. Diversification: When you’re investing you can diversify your holdings by investing in tens or hundreds of companies instead of just 1 or two businesses. Owning a business affords the mosque almost no diversification.
   2. 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.
   3. Liability: There is little to no liability when owning a portfolio of public stocks. However, when you own a business, liability becomes a huge concern.
   4. 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 on the sale if you’re in a hurry.

When setting up an endowment, the first step is to determine the size of the endowment. Some sources claim the endowment should be at least 3 times the size of the mosque’s annual expenses but I think if you want to ensure longevity for the endowment it should be at least 10 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.

When you start with your endowment, you will have to start raising money for two purposes. The first is to cover the immediate needs of the mosque, and the second is 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 for years to come. The prophet peace be upon him said:

Conclusion

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

So, let’s give our mosque congregants a chance to have their good deeds live on even after their death and put our mosques on solid financial footing by using endowment funds to finance our mosques. I think it makes all the sense in the world to do so.