Technical Notes on Good Nazir Governance – September 2022

Technical Notes on Good Nazir Governance – September 2022  - Technical Notes on Good Nazir Governance September 2022 - Technical Notes on Good Nazir Governance – September 2022

A technical note is a short article giving a brief description of a specific development, technique or procedure, or it may describe a modification of an existing technique or procedure applicable to waqf.

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A technical note is a short article giving a brief description of a specific development, technique or procedure, or it may describe a modification of an existing technique or procedure applicable to waqf. The technique or procedure described should have practical value and should contribute to waqf management. A technical note is variously referred to as technical innovations or technical developments.

One of the most important aspects of waqf management is Good Nazir Governance (GNG). Corporate governance, including nazir governance, refers to “the exercise of ethical and effective leadership by the governing body towards the achievement of several outcomes including ethical culture, good performance, effective control, and legitimacy” (Governance Code for Islamic NPO’s, 2021). Given their reliance on public money or assets and obligations to manage their activities in line with Shari’ah principles and practices, Nazir should implement GNG.

As has been highlighted in Waqf Core Principles number 13, GNG is an element that affects the quality of the overall waqf system. The entire process of the waqf system started from the collection, management, development, and distribution until reporting process of waqf asset2 will be determined by the soundness of GNG. As the result, GNG will lead to a higher and better public trust that will optimize the potential waqf for the betterment condition of the society. Hence, the presence of a technical document translating WCP number 13 is extremely needed.

The literal meaning of the word waqf is “hold, confinement or prohibition” (Kahf, 2002). In Islamic economics, the term waqf is defined as “holding certain property and preserving it for the specific benefit of philanthropy and prohibiting any use or disposition of it outside its specific objective”. Hence perpetuity and the permanence of the stipulations of the waqf founder are the two major features of waqf. Waqf management includes waqf asset/fund collection, investment, development, management, disbursement, financial management, and risk management. The ICFA resolution stated, “Waqf management ought to be subjected to good governance practices, through Shari’ah Advisory Councils, good management, financial reporting and auditing.” (WCP, 2018).

Good Nazir Governance (GNG) should reflect maqasid sharia values including sharia-compliant aspects such as God-Fearingness, Degrees of Taqwa, and amanah (trustworthy). Maqasid sharia aims at realizing genuine human well- being in this life and the hereafter. It covers five main objectives that include protection, preservation, and promotion of faith (hifz al-din), life (hifz al-nafs), intellect (hifz al-’aql), wealth (hifz al-mal), and posterity/dignity (hifz al-nasl). Therefore, GNG should be interpreted as one of the effective means to realize the objectives of sharia.

Based on Governance Code for Islamic NPO’s (2021), Islamic governance principles consist of 10 main principles. These include accountability, trust (amanah), consultation (shura), ethical conduct, justice, truthfulness (sidq), social justice (al-adl wa al-Ihsan), excellence (ihsaan), and maqasid sharia (higher objectives of the sharia). Specifically, ethical conduct comprises several aspects that include fulfilment of promises and obligations, honesty, prohibition of deriving income from cheating, price manipulation, dishonesty or fraud and prohibition of bribery to derive undue advantage.

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