# Proposed waqf crowdfunding models for small farmers and the required parameters for their application

Hassan Azganin (IIUM Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Salina Kassim (IIUM Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Auwal Adam Sa'ad (IIUM Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia, Kuala Lumpur, Malaysia)

ISSN: 1319-1616

Article publication date: 9 July 2021

Issue publication date: 30 September 2021

1954

## Abstract

### Purpose

Small farmers are considered one of the most affected communities worldwide due to poverty. Hence, this paper aims to study how the proposed waqf crowdfunding models are intended to provide alternative sources of funds for the waqf institutions and farmers.

### Design/methodology/approach

The present study employed a qualitative method by analysing the relevant literature on crowdfunding, waqf cash, waqf and agriculture, together with the primary sources of the Ḥadīth.

### Findings

This paper provides the conceptual framework of two waqf crowdfunding model (WCM) and the required parameters for their application. It is found that crowdfunding can bring immense benefits to the agriculture sector and farmers if it is integrated with waqf. This system will enable underprivileged farmers to meet their necessities and participate in their country's economic development.

### Research limitations/implications

Future research may consider a waqf crowdfunding integrated model targeting other businesses.

### Originality/value

This study provides the required parameters for the application of the proposed models. Four areas were analysed and discussed: the regulatory compliance parameters, the shariah compliance parameters, the risk management parameters and, finally, waqf governance parameters. To the best of the author's knowledge, this is the first proposed waqf and crowdfunding integrated model for agricultural financing.

## Citation

Azganin, H., Kassim, S. and Sa'ad, A.A. (2021), "Proposed waqf crowdfunding models for small farmers and the required parameters for their application", Islamic Economic Studies, Vol. 29 No. 1, pp. 2-17. https://doi.org/10.1108/IES-01-2021-0006

## Publisher

:

Emerald Publishing Limited

## 1. Introduction

In Africa, despite the fact that the poverty headcount ratio decreased from 53.3% in 1990 to 41% in 2013, the poor still live much further below the extreme poverty threshold compared to other regions (Union, 2017). The Islamic Development Bank (IsDB) reported that IsDB member countries are home to almost one-third of the world’s multidimensional poor people, where 504 million people live in multidimensional poverty (Alpay et al., 2016). The agriculture sector is one of the most powerful industries that have the potential to end extreme poverty and feed around 9.7 billion people by 2050. Growth in this industry is two to four times more effective in increasing incomes among the underprivileged population. Furthermore, this sector accounted for contributing one-third of the global domestic product in 2014 (World Bank, 2020). Since this is the issue, an alternative viable financing solution is required to enable small farmers to access funds, end poverty and address several other problems such as food security and hunger. In this sense, one of the main practised philanthropical concepts throughout Muslim history is waqf (Islamic endowment), which has contributed tremendously towards addressing economic and social issues in various sectors, including agriculture.

Waqf is a continuous charitable act that was established to serve different types of humanitarian purposes, such as community development, education, aid to the disabled and the poor and financing orphanages. Hasan (2006) affirmed the importance of waqf funds which have been successfully adopted and implemented in many social and human development-related fields, such as urban services, education, health and hygiene. With regards to the agriculture sector, no entity can deny its significance for its nation's livelihood. It can be a lucrative industry if it is cultivated with full dedication and commitment, considering the embedding of waqf assets (cash and non-cash waqf) and new financial technology solutions, such as crowdfunding.

The use of crowdfunding in the agricultural sector has attracted entrepreneurs and researchers worldwide. Tens of crowdfunding platforms have been established to provide fund seekers with seamless access to financial means. It is the fastest technological solution that can afford opportunities to waqf organisations to enhance their business process management and attract more waqifs. Yusof et al. (2014) argued that improved Internet banking facilities and young people of this generation, literate in information technology, are important factors in successfully promoting online waqf and motivating the users of Internet banking to give charity. The participation of this group would enable trustees to generate more funds in an Islamic way.

Thaker et al. (2018) proposed a developed “waqf crowdfunding model” (WCM) that has been found to finance the development of waqf lands and to solve the liquidity issue encountered by the waqf institutions. Similarly, Kuppuswamy and Bayus (2017) found that people participate in crowdfunding projects if they believe that their contributions will significantly impact beneficiaries' livelihood. Whereas other studies have revealed that project content and website quality are essential to attract users to online charities (Liu et al., 2017). Therefore, according to several studies, crowdfunding is an attractive platform for the crowd to contribute to and invest in due to the quality and efficiency of the online facilities.

This study focuses on donation-based crowdfunding instead of investment crowdfunding. This is due to the fact that an integrated cash waqf is a philanthropical act, where the donors or the waqifs are not expecting anything in return from the beneficiaries or business owners. Second, philanthropical crowdfunding platforms are successful and efficient in raising a larger portion of funds. LaunchGood is an example of a successful donation-based crowdfunding platform that has successfully raised $186 million in the last eight years since its establishment in 2013 [1]. The amount raised by LaunchGood is 33% larger than the amount raised by Ethiscrowd (investment crowdfunding), one of the leading real estate investment crowdfunding platforms established in 2014 [2]. ## 2. Literature review ### 2.1 Overview of Waqf Al-Zubidi (1965), in his book “Sharh Al Qamus”, defined waqf as the preservation or holding of a specific continuous charity to forbid any use or disposition of the asset outside the defined purposes to which the property is dedicated in such a way that it cannot be sold. According to Raissouni (2019), the contemporary definition of waqf is to stop or detain the original asset and the release of its profitable returns, or it is the Habs [3] of the waqf asset where the realised benefit is distributed accordingly among the beneficiaries. Waqf is considered as a pious endowment, which involves the dedication of an asset in perpetuity either for specific purposes (waqf khas) or for general purposes (waqf 'am) (Sait and Lim, 2005). The institution of waqf has played a vital role throughout Islamic history since the time of the prophet peace be upon him (PBUH) until today. This philanthropical act had a significant role in contributing to human civilisation, enhancing their educational and economic system and strengthening their religious practices. As an innovative idea in the early Islamic period of the prophet (PBUH) in al Madinah, he (PBUH) asked if there was someone who could buy the well of water known as Bi'r Rumah and declare it as a free drinking water utility for the public (Shirazi, 2014). Furthermore, he also advised “Umar Ibn Al Khattab to give his most valuable land in Khyber as waqf for the needy and the poor (Kahf, 1992). Another companion who practised waqf was Abu Talha. This companion owned a great property of palm trees in al Madinah. In spite of Baytuha”, which was his dearest property, as it was located in front of the mosque, he declared it as sadaqah for the will of Allah SWT (Mohsin, 2010). Furthermore, many actions have been taken by the prophet (PBUH) to eradicate poverty in al Madinah. Throughout Islamic history, the waqf institutions in Muslim countries succeeded in the accumulation of waqf properties. Regarding waqf agriculture, Kahf (2015) extracted the information from registers of awqāf of different countries and found that a large proportion of the cultivated areas are waq flands. The example of Turkey has been introduced in the paper as a country with one-third of the cultivated area being waqf lands, where the waqf revenues in the majority of the countries were most frequently spent on education in mosques, along with settling the teachers' and imams' salaries. Therefore, investing in waqf lands has largely enabled waqf authorities to generate significant returns in the agriculture sector. This statement is supported by Sadique (2010), who claimed that the investment of waqf properties through different financing modes could generate good returns for society. Hence, this enables waqf institutions to provide end beneficiaries with the required services and needs. From another perspective on the importance of investing waqf for agriculture, Shafiai and Ahmad (2015) claimed that rather than depending on banking facilities. which seem to be the only flagship of the economy to introduce specific financing services for farmers, the establishment of a waqf trust could be considered a possible alternative instrument to activate idle agricultural lands. According to the authors, the proposed solution may be established for two purposes. The first one is to create a waqf trust that can overcome the issue of idle lands, and the second one is to ensure that a waqf administration is serving the idea of agricultural development. ### 2.2 The legality of cash waqf Lahsasna (2010) defined cash waqf as a perpetual mobilisation of funds from donors to be invested in productive assets that provide revenues or usufruct for future consumption while taking into consideration the guidelines and policies given by donors as well as recipients. This is known as the conditions of waqif (Shart al Waqif) in Arabic. The most acceptable waqf is cash waqf, which is an endowment of certain amounts of money for investment; it is managed by a waqf manager (Mutawalli). Cizakca (1995) declared that cash waqf was widely used and considerably contributed to social development during the Ottoman period to such an extent that education, health care and community welfare were entirely financed by waqf. He further argued that cash waqf functioned mainly as a capital redistribution institution rather than a capital accumulation institution. The Hanbalite and Shafi'it from the traditional school of Fiqh argued that it is not permissible to dedicate money for waqf, referring to gold, silver, drinks and food. The use of money for consumption is the main adopted argument. As a result, the essence of waqf, which is a perpetuity, does not exist in this type of movable assets (Thamali, n.d.). Nevertheless, Imam Zufar approved all movable properties, including dinar and dirham, to be dedicated as waqf (Mohsin, 2010). Similarly, Imam Malik approved all types of movable properties, including food and money (Al-nuqūd), with the condition that the subject matter should be given as a free loan (Qarḍ Ḥasan) (Muafi, n.d.). Hamza (2017) highlighted in his paper the contemporary scholars' opinion on cash waqf. The fifteenth Islamic Fiqh Academy conference was held in Muscat (1,425 Hijri), where a common consensus was seen among the attendees on the permissibility of cash waqf, providing the following arguments: 1. The concept of money in today's world is different from what was practised in old times. 2. The permissibility of using cash waqf in Qarḍ Ḥasan and investments, which can be a direct investment or through the allocation of money from different waqifs (waqf founder) into the waqf fund pool or through the issuance of waqf, shares as a different option to encourage people to contribute. 3. Cash waqf should be perpetual, and its usufruct would be dedicated to society's welfare. They provided a comparative example between waqf of date palms and money, emphasising that if the former is permissible, then there is no issue with the latter. To elaborate, the planting of date palms will permanently provide fruits that are tantamount to cash waqf, where the profit will be generated from the investments, and money will grow. ### 2.3 Islamic crowdfunding: concept and principles Crowdfunding is defined in the Oxford Dictionary as “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet”. The World Bank (2013) described crowdfunding as an online platform for businesses and organisations to raise funds from a group of individual investors or contributors. The funds raised should range between$1,000 and \$1 million US dollars. Similarly, IOSCO (2015) claimed that it is a use of small amounts of money obtained from a large number of individuals or organisations to raise funds for the various projects listed in an internet-based platform. Islamic crowdfunding also shares the same definition as above, except that the latter considers Sharīʿah rules and principles in all its activities and operations.

The application of a crowdfunding solution is an untapped area in the context of waqf. Several studies found that crowdfunding platforms can address liquidity issues, specifically in the awqāf, as highlighted by Azganin (2019). The author selected a sample of 101 participants and interviewed fintech and waqf experts to examine the potential benefits of crowdfunding and blockchain in overcoming issues confronting waqf lands in Malaysia. The results indicated that adopting these technologies could enhance transparency and overcome the financial challenges faced by waqf institutions in Malaysia. Most crowdfunding businesses in the west are interest-based platforms. Hence, the need for a Sharīʿah-compliant crowdfunding platform is essential. Saiti et al. (2018) posited differences between conventional and Islamic crowdfunding, which are presented in the following table (see Table 1).

The agriculture field is a different sector, as it is very connected to the finance industry and contributes to most economies' GDP. However, most farmers encounter a lack of financing to develop and grow their small businesses. Anshari et al. (2019) affirmed that in most cases, farmers possess lands, but they do not have access to the financial means to cover their operational cost, although they do approach banks or investors to buy the mechanised materials and machines. Therefore, access to financing is one of the biggest challenges faced by the farmers, especially the ones running small businesses or lacking access to loan banking services.

Huang et al. (2018) found that crowdfunding solutions can play a vital role in funding micro, small and medium enterprises (MSMEs). MSMEs in China are representing the vast majority of businesses that have access to crowdfunding platforms. Lee and Chiravuri's (2019) study showed that project creators (entrepreneurs), who experienced a successful raise of funds via crowdfunding platforms, tended to explore other industries in the crowdfunding market and create projects which are higher in terms of the funding need. Thus, crowdfunding opportunities give more confidence to successful enterprises with higher chances to raise more considerable funds. From a humanitarian and risk-sharing perspective, crowdfunding platforms enable a risk-sharing practice between the project developers and the crowd-investors, who focus on fostering social impact (Pratono et al., 2020).

Agropay is a crowdfunding project which creates opportunities for all agribusiness actors who interact on a single platform. This platform provides specific functions for investors who can select from a wide range of agricultural projects accessible via smartphones, while the investment is made online. This platform creates competitiveness between suppliers and increases price competition, which further improves the sustainability of agriculture products. A similar digital marketplace model was presented before by Anshari et al. (2019). Their proposed fintech solution supports agriculture's sustainability and connects all users to a single crowdfunding and payment system-based platform, which promotes transparency, empowerment, resourcefulness and community engagement in agriculture.

Azganin (2019) sheds light on the challenges confronting the development of idle waqf lands in Malaysia and proposed a financial technology solution to overcome the mentioned issues. A semi-structured interview and survey were adopted to explore the extent of crowdfunding and blockchain application in the waqf development field. Although some legal and operational challenges were highlighted in the study, the results showed a possible significant impact of crowdfunding in raising funds and financing different waqf properties in Malaysia. Furthermore, the author found that the blockchain solution would potentially enhance the transparency element within waqf institutions.

Similarly, Thaker and Pitchay (2018) proposed a waqf crowdfunding model (WCM) to develop waqf lands in Malaysia, as shown in Figure 1. The study found that the model can help waqf institutions overcome the liquidity challenges and find alternative sources of funds through an online crowdfunding platform, which will ultimately finance different waqf land projects. The proposed model is unique, as it introduces the concept of cash waqf as an essential feature of the platform, in which the raised cash waqf is to be converted into illiquid assets such as hospitals and buildings.

Meanwhile, another waqf crowdfunding platform named “Hasanah Crowdfunding Model” [4] was discussed and analysed by Nasution and Medias (2020). The Wakaf Hasanah project has played a vital role in financing and developing various waqf projects in Indonesia. Fifty-three waqf projects have been financed through this platform, with a total fund of more than three billion rupiahs. According to this platform, and as illustrated in Figure 2, the parties involved are the project manager (nāẓir), waqf founders, and the platform operator.

Although the recent literature suggested crowdfunding as an alternative source of funds for various sectors, the different factors and parties impacting the actual application of these models in the industry need to be discussed, focusing on the essential role of the communities and the regulatory bodies in transforming theories into practice.

## 3. Methodology

This research is qualitative in nature and uses document research as the main source of analysing related papers, journal articles and other published sources. This method aims to analyse the theoretical data from primary resources, such as Ḥadīth, and secondary sources, such as books and other published articles. The research includes contemporary and classical Sharīʿah views on waqf, particularly cash waqf and Islamic crowdfunding, to identify and explore the themes related to the models which were used to formulate the conceptual framework of the new models. Based on a literature review procedure, this study explores and determines various important aspects of cash waqf and its possible integration with Islamic crowdfunding technology. The data analysis is done by adapting and reviewing the existing models, which are either impractical or lack important features necessary for successful implementation.

For the Sharīʿah basis analysis of waqf crowdfunding models and the parameters, the paper refers to waqf standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and few articles that highlight the Sharīʿah governance framework in waqf as well as Islamic crowdfunding. The following section discusses the conceptual framework of waqf assets and cash waqf crowdfunding models as a viable alternative financing solution for farmers.

## 4. Waqf and Islamic crowdfunding proposed models

Agriculture is the main backbone to achieve food security in a country, and its development relies on finding alternative modes of financing to help farmers manage their financing hurdles. Waqf asset and cash waqf crowdfunding models are introduced in this study to achieve the following two main objectives. The first one is to encourage people to donate cash for agriculture development purposes, whereas the second is to enhance farmers' performance to grow their businesses and multiply their revenue.

The waqf asset and cash waqf fund collection model uses an online platform (crowdfunding) that is accessible to every potential donor. The participants can choose between the numerous listed projects on the platform and donate to the ones of their preference. Besides, the payment gateway solution integrated into the model enables the users to participate via an online platform from any part of the globe.

### 4.1 Waqf asset crowdfunding model

In this diagram, the waqf institution plays the role of platform manager and creates various agricultural projects of movable and immovable assets in the platform. The donors choose agriculture projects of their interest and assist farmers in financing their businesses. Meanwhile, the profit generated from the projects is distributed between waqf institutions and small farmers based on an agreed portion (Refer to Figure 3).

#### 4.1.1 Diagram flow explanation

• Step 1: Farmers engage with the waqf institution (platform manager) to provide them with the required documents and project's details.

• Step 2: The waqf institution acts as a platform manager and conducts due diligence on different registered projects.

• Step 3: The waqif (donor) contributes cash towards movable and immovable waqf agriculture assets listed in the platform.

• Step 4: The waqf institution engages in an agreement, such us Salam, Istisnā', Hikr, or leasing and distribution of funds to farmers.

• Step 5: Profit payout/rental payment distribution to the waqf institution is carried out.

• Step 6: The waqf institution disburses the profit generated from agricultural projects to the beneficiaries.

### 4.2 Cash Waqf crowdfunding model

In this diagram, the waqf institution assigns a partnering fund manager to invest the cash waqf collected from donors. The profit generated from the listed pool of funds will be channelled to farmers, but prior to this, an investment agreement is to be agreed upon and signed between the waqf institution and the beneficiary. The cash waqf concept is utilized here to facilitate the financing of farmers (refer to Figure 4).

#### 4.2.1 Diagram flow explanation

• Step 1: The waqf institution manages the platform and creates an agricultural pool of funds in the platform.

• Step 2: The waqif/donor contributes cash waqf to the campaigns (pool of funds) listed in the platform.

• Step 3: On behalf of the waqf institution, the partnering portfolio manager invests the money raised from the crowd.

• Step 4: There is a regular profit payout from fund managers to the waqf institution.

• Step 5: The waqf institution distributes funds to the farmers and engages in an investment agreement.

• Step 6: The payouts gained from the investment with farmers are reinvested and managed by the fund manager.

The proposed models differ in terms of structure and the financing model. To illustrate, the first model (Figure 3) serves as a fundamental economic project where the finances are moving directly from benefactors to the beneficiaries to fund several listed agricultural businesses. Nevertheless, contributions in the second model (Figure 4) are kept with a partnering fund manager, who is assigned with the management of these funds. At the same time, profits generated from the investments are distributed to the platform operator, who will ultimately channel it to the farmers. Both models share the same purpose, which is to provide alternative sources of funds for the empowerment of small farmers.

## 5. Required framework for the application of the waqf crowdfunding proposed models

Crowdfunding is an alternative financing model that has been introduced in the market post-global financial crisis in 2008. Many entrepreneurs seek financing from these platforms due to the difficulties faced while requesting financing loans from banks. Developing economies tend to face more of such issues (Bruton et al., 2015). An end-to-end framework is required for the successful application of the previously discussed models. Thus, this paper suggests the parameters needed for different stakeholders and platform managers. This model's parties are waqf institutions, Sharīʿah committee, farmers or business owners and fund managers. The proposed parameters are divided into four sections, as illustrated in the following table (see Table 2).

## 6. Conclusion

Limited financial resources are one of the main challenges encountered by small farmers, which can be tackled using crowdfunding – an alternative financing solution that has been practised in different parts of the globe. According to various studies, this new innovative solution has successfully bridged financing between benefactors and fund seekers in multiple businesses and projects. Nevertheless, there is a lack of studies on using the waqf concept in crowdfunding to develop the agriculture sector. Less attention has been paid to offer a viable model that can overcome or address liquidity issues. Thus, this study was conducted to help enrich the literature by shedding light on the potential of crowdfunding as an innovative financial solution that can help small farmers and waqf institutions meet their financial needs. The focus was on developing two different waqf crowdfunding models and the required parameters for their application. The waqf asset crowdfunding model serves as a platform that matches waqifs with farmers looking for other funds sources. The waqf institution acts as a platform manager. It creates an underlying agreement with fund seekers, who will run the project and distribute profits based on a pre-determined portion.

Similarly, the cash waqf crowdfunding model is a platform ,which presents a pool of fund campaign for people to contribute towards. The platform raises cash waqf and assigns a fund manager to invest the money. Subsequently, the profit generated is channelled to farmers, who will ultimately run the project and share their profits back with the waqf institution. Finally, the pay-outs from farmers will be reinvested with the fund manager to grow funds.

The dedication of waqf assets is allowed according to several authentic Ḥadīths of the prophet (PBUH). Similarly, this study found that cash waqf is considered a permissible financing instrument that can be effectively utilised on its integration with crowdfunding. This paper's uniqueness lies in the proposed waqf asset and cash waqf crowdfunding models to facilitate the flow of funds from the group of waqifs to the waqf institution or the trustee (Mutawalli) and then to the final recipients of funds (farmers). Moreover, the required parameters and frameworks have been proposed to manage waqf movable and immovable assets effectively. Thus, this study suggests a sustainable and viable solution to address the financial issues faced by farmers. The models can serve as a real vehicle towards developing the agricultural sector through a viable online platform that encourages small and large donations among the global community members.

One of the limitations of this study is that it falls under the category of investment or charity-based crowdfunding. It does not explore the possible adoption of equity-based crowdfunding solutions (ECSs). Although the suggested parameters would be the same for ECSs, the financials, products' modules and projects' structures will be treated differently. Secondly, the primary focus of this study is on financing of agricultural projects. Hence, further research is required to explore the application of different crowdfunding modules in other sectors.

## Figures

Proposed WCM

### Figure 2

Hasanah crowdfunding platform

### Figure 3

The waqf asset crowdfunding model

### Figure 4

Cash waqf crowdfunding model

## Table 1

Conventional crowdfunding vs Islamic crowdfunding

TypeConventional crowdfundingIslamic crowdfunding
Reward-based crowdfundingMaterialismThe concept of al-Falah might be included together with the achievement of the materialism concept
Donation-based crowdfundingHumanitarianismThrough waqf, zakāh and sadaqah, whereas the ultimate goal is to achieve al-Falah
Equity crowdfundingAngel investors and venture capitalistBased on Islamic finance instruments, such as Mushārakah and Muḍārabah, Mushārakah-based crowdfunding is almost similar to equity crowdfunding. Nevertheless, the beauty of Muḍārabah-based crowdfunding is that the crowd investors provide total initial capital, while the company is responsible for managing business operations. The profit is shared in a pre-determined ratio, and the crowd has to bear the loss in case of a failure
Debt crowdfundingP2P lending based on interestSale-based contracts such us Murabaḥah, Tawarruq and Ijārah

## Table 2

Required frameworks and parameters for the implementation of the models

ParametersParameter description
Parameter 1: Regulatory compliance parameters1/1 – The legal procedure will be treated from two aspects: The crowdfunding licensing requirement and anti-money laundering (AML) financial crimes compliance
1/1/1 – In certain countries, the crowdfunding platform manager, which is the waqf institution in this case, must apply for a crowdfunding licence or money collection permit to start raising funds from the public
1/1/2 – The waqf institution must comply with the anti-money laundering and financial crimes acts, which can be realized through a “know your customer” (KYC) procedure, which needs to be run on the benefactors as well as beneficiaries
Abiding by local waqf regulations of project management, fund management and partnership engagement requirements with external bodies is mandatory. The waqf institution must ensure that all transactions and agreements are in line with these regulations Zetzsche and Preiner (2018)
Parameter 2: Sharīʿah compliance parameters2/1 – The investment activities of waqf assets and cash waqf fund management should be in line with the Sharīʿah principles. These activities can be attained through the following practices
2/1/1 – The waqf institution must assign an internal and external Sharīʿah committee that will be responsible for ensuring the Sharīʿah compliance of all transactions
2/1/2 – The Sharīʿah requirements and guidelines set by the authoritative bodies within a particular jurisdiction must be thoroughly practiced in order to protect waqf assets from losses. If there is no specific law in a country, the waqf institution must comply with the waqf standards issued by AAOIFI AAOIFI (2018)
2/1/3 – Regarding the cash waqf crowdfunding model, a Sharīʿah-compliant fund manager must be assigned to invest the cash waqf on behalf of the Mutawalli
2/1/4 – Concerning the waqf asset crowdfunding model, the Sharīʿah committee must check and review the following
2/1/4/1 – The fund collection procedure
2/1/4/2 – Determining the Islamic finance model or the underlying agreement is suitable for each project type (e.g. Salam, Istisnā', Hikr and leasing)
2/1/4/3 – Checking if the marketing words used in the content create any misrepresentation or misleading information for the crowdfunder/Waqif
2/1/4/4 – Ensuring the investment information received from the project owner or fund manager is accurate
2/1/4/5 – Reviewing the financials and any other related details needed to guarantee the full practice of Sharia principles Rosly (2010), Yuningsih and Muhammad (2020)
Parameter 3: Risk management parameters3/1 – The establishment of the risk management framework is required to maximise the waqf institution projects' success and ensure that the perpetuity element exists in all movable (including cash waqf) and immovable waqf assets. This part will be divided into two sections: The first one will discuss the general required parameters for the effective adoption and management of a crowdfunding platform for both models, while the second would shed light on the policies needed for each practical model
3/1/1 – General requirements
3/1/1/1 – The waqf institution must have a comprehensive risk management process to identify, measure, evaluate and monitor all types of risks related to managing the crowdfunding platform and projects
3/1/1/2 – The waqf institution needs to establish a comprehensive risk management policy to identify and mitigate the external macroeconomic environment risks affecting the raising of funds from local and international donors
3/1/1/3 – The waqf institution should understand and mitigate the possible risks associated with financial crimes and terrorism funds
3/1/1/4 – The platform manager must create terms and conditions sheet to be shared with and signed by the other party (waqif/donor). The related policies, such as disclaimer and indemnification. Most importantly, the agency agreement needs to be taken into account by the waqf institution, which acts as an agent on behalf of the waqif to manage the funds
3/1/1/5 – The business owners who seem to breach the terms and conditions of the underlying agreement should be blacklisted from requesting funds
3/1/2 – Specific requirements
3/1/2/1 – The waqf asset crowdfunding model
3/1/2/1/1 – To avoid abusing the financial crimes and fund terrorism acts, proper due diligence needs to be conducted on farmers or funds recipients
3/1/2/1/1 – There should be a periodic follow-up on the project progress and funds usage
3/1/2/1/2 – The waqf institution must perform Istibdāl on the waqf assets listed in the platform if it does not realize the purpose of waqf
3/1/2/1/3 – The waqf institution must conduct necessary due diligence on the beneficiaries receiving the funds. This procedure is crucial to avoid ineligible financing of the entities involved in illegal activities or abuse of funds
3/1/2/2 – Cash waqf crowdfunding model
Capital protection must be the first objective of the partnering fund manager to ensure that the perpetuity of the cash waqf is achieved
3/1/2/2/1 – An effective portfolio management practice is highly recommended by placing cash waqf in low-risk investment instruments, such as Sukuk funds
3/1/2/2/2 – The fund manager must be responsible for managing cash waqf funds and should be held accountable for any abuse or breach of the contract with the waqf institution Sulaiman et al. (2019), Lo (2001)
Parameter 4: Waqf governance parameters4/1 – Transparency is the key factor in the full protection of waqf assets, and the adoption of global governance principles is crucial to success (Daud, 2019)
4/2 – Accountability to the waqif/donors: Mutawalli must provide adequate information and project updates to donors. Moreover, the sharing of opinions and suggestions with the crowd is highly recommended to improve the services Siswantoro et al. (2018)
4/3 – The disclosure of the project details is essential for building trust with waqifs/donors and fulfilling the element of sincerity required by Allah SWT (Daud, 2019). The details include sharing information, such as farmers' profiles, targeted beneficiaries and risks associated with the projects' plans and campaigns' timeline
4/4 – The Mutawalli must be fully responsible and act professionally, showing Islamic behaviour principles
4/5 – The selection of farmers must be based on qualifications and experiences in the field. In the meantime, conflicts of interest, if any, should be disclosed to the board (Siswantoro et al. (2018)
4/6 – The waqf institution must create an internal corporate governance guideline containing severe punishments for those who are involved in corruption or misuse of funds
4/7 – The waqf institution is exposed to information asymmetry when dealing with fund managers or farmers. Hence, they must ensure that they receive accurate reports and project details
4/8 – The waqf institution must assign a new department that must be responsible for managing the crowdfunding platform. Moreover, the team should be experienced and qualified in handling funds collection and investment procedures
4/9 – The roles and responsibilities of the employees in the organisational chart must be clearly defined

Source(s): [6]: Author

## Notes

2.
3.

Habs is an Arabic word that literally means to hold, detain, or stop something from movement. Habs and waqf are used interchangeably. In fact, some countries like Morocco use the word Habs or Hubus instead of waqf.

4.

According to the Google play store, BNI Syariah, in collaboration with the nāẓir institutions, run the Wakaf Hasanah Program. The platform manages waqf projects where the distribution of waqf funds is done by transferring funds to each waqf project account no. and through all BNI Syariah e-Banking channels. Retrieved from: https://play.google.com/store/apps/details?id=id.co.bnisyariah.wakafhasanah&hl=en&gl=US

5.

The author created the models based on previous models and the literature data discussed in different articles.

6.

An intensive research and review of the literature have been conducted to explore the different factors affecting the implementation of the models and the possible requirements needed for successful project kick-off. The authors analysed the relevant literature to establish a unique and new framework for waqf and agriculture development.

## References

AAOIFI (2018), Waqf Governance Standard-Exposure Draft No. G3/2018 (ver.8.4), [online] available at: https://aaoifi.com/wp-content/uploads/2019/03/Waqf-Governance-Exposure-Draft-v-8.4-Final-for-Publishing-.pdf.

Alpay, S., Alkire, S., Hammock, J., Bello, A., Robles Aguilar, G. and Housseini, B. (2016), Multidimensional Poverty Assessment in IDB Sub-saharan African Member Countries, Oxford Poverty and Human Development Initiative (OPHI), Kingdom of Saudi Arabia.

Al-Zubidi, M.M.A.R.A. (1965), Taj al-’Arus Min-Jawahir Al-Qamus, Beirut, [The Bride's Crown of Dictionary], Tab'at Al Kuwait.

Anshari, M., Almunawar, M.N., Masri, M. and Hamdan, M. (2019), “Digital marketplace and FinTech to support agriculture sustainability”, Energy Procedia, Vol. 156, pp. 234-238.

Azganin, H. (2019), “Redevelopment of idle Waqf property through financial technology: case of Malaysia”, The International Revue of Entrepreneurial Finance, Vol. 2 No. 1, pp. 1-96.

Bruton, G., Khavul, S., Siegel, D. and Wright, M. (2015), “New financial alternatives in seeding entrepreneurship: microfinance, Crowdfunding, and peer–to–peer innovations”.

Cizakca, M. (1995), “Cash Waqf of Bursa, 1555–1823”, Journal of the Economic and Social History of the Orient, Vol. 38 No. 3, pp. 313-354.

Daud, D. (2019), “The role of Islamic governance in the reinforcement waqf reporting: SIRC Malaysia case”, Journal of Islamic Accounting and Business Research, Vol. 10 No. 3, pp. 392-406.

Hamza, S.H. (2017), “Al Haikalah Al Maliyyah Lilwaqfi Al naqdi [The financial structure of cash Waqf]”, Journal of University King Abdul Aziz, Vol. 30 No. 3, pp. 123-141.

Hasan, S. (2006), “Muslim philanthropy and social security: prospects, practices, and pitfalls”, Practices, and Pitfalls, pp. 1-14 (accessed 10 July 2006).

Huang, Z., Chiu, C.L., Mo, S. and Marjerison, R. (2018), “The nature of Crowdfunding in China: initial evidence”, Asia Pacific Journal of Innovation and Entrepreneurship, Vol. 12 No. 3, pp. 300-322.

IOSCO (International Organization of Securities Commissions) (2015), Crowdfunding 2015 Survey Responses Report, IOSCO, Madrid, available at: www.iosco.org/library/pubdocs/pdf/IOSCOPD520.pdf.

Kahf, M. (1992), Waqf and its Socio-Political Aspects, IRTI, Jeddah.

Kahf, M. (2015), Waqf: a quick overview, available at: http://monzer.kahf.com/papers/English/WAQF_A_QUICK_OVERVIEW.pdf.

Kuppuswamy, V. and Bayus, B.L. (2017), “Does my contribution to your crowdfunding project matter?”, Journal of Business Venturing, Vol. 32 No. 1, pp. 72-89.2.

Lahsasna, A. (2010), “The role of cash waqf in financing micro and medium sized enterprises (MMEs)”, Seventh International Conference–The Tawhidi Epistemology: Zakat and Waqf Economy, pp. 97-118.

Lee, C.H. and Chiravuri, A. (2019), “Dealing with initial success versus failure in crowdfunding market”, Internet Research, pp. 1-40.

Liu, L., Suh, A. and Wagner, C. (2017), “Donation behavior in online micro charities: An investigation of charitable crowdfunding projects”, Proceedings of the 50th Hawaii International Conference on System Sciences.

Lo, A.W. (2001), “Risk management for hedge funds: introduction and overview”, Financial Analysts Journal, Vol. 57 No. 6, pp. 16-33.

Mohsin, M.I.A. (2010), “Revitalisation of waqf administration and family waqf law”, US-China Law Review, Vol. 7, p. 57.

Nasution, A.D. and Medias, F. (2020), “Waqf financing model through crowdfunding platform: an Indonesian perspective”, Paper presented in the 1st Borobudur International Symposium on Humanities, Atlantis Press, pp. 661-665, Economics and Social Sciences (BIS-HESS 2019).

Pratono, A.H., Prima, D.A., Sinaga, N.F.N.T., Permatasari, A., Ariani, M. and Han, L. (2020), “Crowdfunding in digital humanities: some evidence from Indonesian social enterprises”, Aslib Journal of Information Management, Vol. 72 No. 2, pp. 287-303.

Raissouni, A. (2019), Waqf Endowment Scope and Implication, Rabat Morocco, ISESCO, p. 13.

Rosly, S.A. (2010), “Shariah parameters reconsidered”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 3 No. 2, pp. 132-146.

Sadique, M.A. (2010), “Development of dormant Waqf properties: application of traditional and contemporary modes of financing”, IIUM Law Journal, Vol. 18 No. 1, pp. 75-102.

Sait, S. and Lim, H. (2005), “Waqf (endowment) and Islamic philanthropy”, Un Habitat, Islam, Land and Property Research Series, Vol. 20.

Saiti, B., Musito, M.H. and Yucel, E. (2018), “Islamic crowdfunding: fundamentals, developments, and challenges”, The Islamic Quarterly Journal, Vol. 62, pp. 3-469, London.

Shafiai, M.H.M., Moi, M.R. and Ahmad, R. (2015), “The potential of waqf in activating idle agricultural land”, Jurnal Pengurusan (UKM Journal of Management), Vol. 44, pp. 141-147.

Shirazi, N.S. (2014), “Integrating zakat and waqf into the poverty reduction strategy of the IDB member countries”, Islamic Economic Studies, Vol. 130 No. 1155, pp. 1-30.

Siswantoro, D., Rosdiana, H. and Fathurahman, H. (2018), “Reconstructing accountability of the cash waqf (endowment) institution in Indonesia”, Managerial Finance, Vol. 44 No. 5, pp. 624-644.

Sulaiman, S., Hasan, A., Noor, A.M., Ismail, M.I. and Noordin, N.H. (2019), “Proposed models for unit trust waqf and the parameters for their application”, ISRA International Journal of Islamic Finance, Vol. 11 No. 1, pp. 62-81.

Thamali, M.A. (n.d.), Waqfu Al Nuqudi, Hukmuhu, Tarikhoho, Wa AghraduhuAhumiyatuhu Al Mu'assira, Istithmaruhu [Cash Waqf, its Legality, a Historical Background, its Importance and Investment], University Ommo Al Qura, Makkah.

Thaker, M.A.B.M.T. and Pitchay, A.A. (2018), “Developing waqf land through crowdfunding-Waqf model (CWM): the case of Malaysia”, Journal of Islamic Accounting and Business Research, Vol. 9 No. 3, pp. 448-456.

Thaker, M.A.M.T., Thaker, H.M.T. and Pitchay, A.A. (2018), “Modeling crowdfunders’ behavioral intention to adopt the crowdfunding-Waqf model (CWM) in Malaysia: the theory of the technology acceptance model”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 11 No. 2, pp. 231-249.

Union, A. (2017), Overview of Recent Economic and Social Developments in Africa I. Introduction, African union committee of experts, Dakar.

World Bank (2013), “Crowdfunding's potential for the developing World”, Info Dev Growing Innovation, Conference Version, P: 10, available at: https://www.infodev.org/infodev-files/wb_crowdfundingreport-v12.pdf.

World Bank (2020), “Agriculture and food”, available at: https://www.worldbank.org/en/topic/agriculture/overview#1.

Yuningsih, A. and Muhammad, R. (2020), “Shariah compliance analysis of islamic crowdfunding: case study of ethiscrowd. Com. IQTISHODUNA”, Jurnal Ekonomi Islam, Vol. 9 No. 1, pp. 75-90.

Yusof, M.F.M., Yusof, M.F.M., Hasarudin, M.H. and Romli, N. (2014), “Cash Waqf and Infaq: a proposed e-philanthropy in Malaysia”, Jurnal Kemanusiaan, Vol. 12 No. 1, pp. 1-10.

Zetzsche, D. and Preiner, C. (2018), “Cross-border crowdfunding: towards a single crowdlending and crowdinvesting market for Europe”, European Business Organization Law Review, Vol. 19 No. 2, pp. 217-251.

Cizacka, M. (1998a), “Awqaf in history and its implications for modern economics”, Islamic Economic Studies, Vol. 6 No. 1, pp. 43-70.

Ismail Abdel Mohsin, M. (2009), Cash Waqf: A New Financial Product, Prentice Hall.

Muafi, A.A.A. (n.d.), Waqf Al Nuqud Fi Al Fiqhi Al Islami, Dirassa Fiqhiyyah Muqarana Fi Daw'i Nussus Mazahib Al Fiqhi Wa Addilatihi Wa Maqasidihi Al Kulliyah [Cash Waqf in the Islamic Jurisprudence, Comparative Fiqh Study in the Light of Muslim Jurisprudence Fiqh of School and its Overall Objectives], p. 26, Shabakat Alukah.

Setälä, K. (2017), Crowdfunding in the Banking Industry: Adjusting to a Digital Era, Master thesis, Jyväskylä University School of Business and Economics.

UNDP (2019), “‘Crowdfunding’, financing solutions for sustainable development”, June, P: 4, available at: https://www.undp.org/content/dam/sdfinance/doc/Crowdfunding%20_%20UN DP.pdf.

World Bank (2017), “End extreme poverty, Boost shared prosperity”, available at: http://pubdocs.worldbank.org/en/908481507403754670/Annual-Report-2017-WBG.pdf.

## Corresponding author

Hassan Azganin can be contacted at: azganinhass@gmail.com