Awqaf: A 1,000-year-old blueprint for modern impact investing
Blog | The Social Impact Exchange Insights and Ideas Forum
Published on the 11 August 2025 by Tasnia Alam Hannan, Lecturer ʹڲƱ, CSI
With Australia’s responsible investment market reaching $1.6 trillion in 2023, I’ve found myself captivated by a financial model that is both ancient and surprisingly relevant.
As a Lecturer at ʹڲƱ Centre for Social Impact, and despite being a Muslim, I only recently discovered awqaf (singular: waqf), perpetual Islamic endowments that have funded hospitals, universities, and public infrastructure across the Muslim world for centuries.
During the Umayyad and Abbasid Caliphates (661 – 1258 CE), awqaf funded an estimated 60% of public services, from hospitals and universities to water systems and bridges, essentially creating the social infrastructure of Islamic civilization. Today, Istanbul’s Suleymaniye complex still benefits from its original waqf, sustaining education and community service after almost 500 years, while Cairo’s Al-Azhar University, founded in 970 CE (the world’s oldest degree-granting institution) continues to educate thousands via its historic waqf endowments. This enduring legacy shows how perpetual endowments link past commitments to present public good.
This gap in my own knowledge was humbling: how had I overlooked a system that quietly delivered public good for entire societies for centuries? It’s a reminder that sustainable finance solutions often lie in traditions we’ve yet to fully embrace in Australia’s diverse, growing impact ecosystem.
Three Principles for Patient Capital
What fascinates me is awqaf’s capacity to deliver enduring public benefits, funding schools and hospitals, without burdening state budgets. Awqaf offer three unique strengths for our impact investing landscape:
- Permanent preservation of principal: ensuring the original asset, be it land or cash, remains intact forever, unlike foundations that may spend down their capital;
- Perpetual social benefit: where only investment yields fund community needs, offering stability beyond typical 7–10-year fund lifecycles; and
- Value-based screening: rooted in Islamic principles, investments exclude harmful industries (gambling, alcohol), while requiring funds to drive community benefits, such as education or healthcare (much like ESG screening) but with a focus on lasting societal good.
In an era where investors and society seek both impact and longevity, awqaf provides a time-tested blueprint for patient capital.
Contemporary applications prove the model’s vitality. Malaysian university waqf programs have raised RM 500 million, and Indonesian cash waqf initiatives report 80% revenue growth for participating small businesses.
Australia’s untapped opportunity
This proven model remains underutilised in Australia. With our Muslim population exceeding 813,000, and over 90% expressing strong interest in Shariah-compliant investments, fewer than 20,000 participate. I see this gap as untapped social capital and an opportunity to deploy innovative social finance that could support affordable housing, community health centres, and social enterprises benefiting Australia’s diverse communities.
Awqaf Australia demonstrates the model’s viability, preserving donated capital while targeting approximately 9% annual returns, with profits continuously funding community grants. “Mainstreaming awqaf can unlock tremendous potential for Australian Muslims and broader communities, creating lasting social impact,” says Awqaf Australia’s Executive Director Mohamed Zaoud.
Australian philanthropy is advancing toward ethical, mission-aligned investing, with the Endowments for Impact initiative mobilising more than $50 billion in charitable assets, guided by the ethos that ‘all capital has impact’. This shift gained political momentum in 2022 when Labor committed to doubling philanthropic giving by 2030. This aligns strongly with awqaf’s centuries-old practice of excluding harmful industries while mandating active social benefit. Here, Islamic finance and impact investing converge powerfully: awqaf show how to structure capital as genuinely perpetual, transcending typical investment horizons.
This discovery challenged my assumptions about financial innovation. The questions now are practical: How do we bridge Islamic and mainstream investors? Which regulatory adaptations would enable perpetual endowments?
Sometimes the most radical innovation is learning from what has worked for a millennium.