An Overview of the Experience
The waqf system is an integral part of the unique Turkish identity[i]. It is impossible to imagine the lives of Turks without endowments, as they are deeply embedded in their culture, inherited from their ancestors since their embrace of Islam. Throughout the Ottoman Empire, which lasted over six centuries [699–1342 AH / 1299–1924 CE], the Ottomans also contributed to strengthening the culture of waqf in Muslim societies during their rule[ii]. At that time, one-third of Turkey’s land was dedicated as waqf[iii].
Orhan Ghazi, the second sultan of the Ottoman Empire, is considered the first to establish the waqf system, which grew in harmony with the economic and political expansion of the state. When he ordered the construction of the first Ottoman school in Iznik, he endowed it with immovable assets such as real estate to cover its expenses. This model was emulated by other endowments established for various purposes. It became a cultural norm in the Ottoman Empire for a grand mosque in any city to include a school, a public fountain, a charity kitchen, and a library as waqf annexes[iv].
After the establishment of the modern Turkish Republic in 1924, following the fall of the Ottoman Empire, Muslim society was influenced by secularization, and some religious practices were restricted. However, the waqf system remained intact, though it was negatively impacted by the state’s transformation[v]. This was evident in the continued attention given to waqfs and the laws regulating them, as well as the rich Ottoman archives containing numerous documents on endowments across vast territories of the empire, particularly those related to the Haramayn (the Two Holy Mosques) and Jerusalem, whether in Anatolia or other Ottoman lands[vi].
Unlike many other countries, Turkey did not impose restrictive laws on waqfs that would hinder their developmental role. Instead, it exempted them from all taxes, leading to the emergence of numerous institutions serving the waqf sector and employing a large workforce. The first endowment foundation in Anatolia was established in 1048 AH. In 1924, the General Directorate of Foundations (VGM), then affiliated with the Prime Ministry, was entrusted with managing waqf assets and institutionalizing their administration. Today, VGM is one of the largest owners of immovable endowments after the General Directorate of State Properties, overseeing 20,252 registered waqfs and 41,720 pure waqfs remaining from the Republican era, which are used to fund social and educational needs in Turkish society[vii].
In 2008, a waqf law was enacted, granting legal and personal rights to endowments while exempting them from income tax, though they are subject to a 20% levy on revenue[viii]. Waqfs in Turkey are categorized into various institutional forms, including[ix]:
- Regulated Foundations (Mazbut Vakıflar): Established during the Seljuk and Ottoman eras, these are managed by VGM, with over 59,000 foundations.
- Annexed Foundations (Mülhak Vakıflar): Also founded in the Seljuk and Ottoman periods, these are managed by descendants of their founders under VGM supervision, totaling 256 foundations. Their total revenue in 2019 reached $17.5 million.
- Community Foundations (Cemaat Vakıfları): Charitable organizations established by various ethnic groups (Bulgarian, Armenian, Georgian, Chaldean, Maronite, Jewish, Greek, and Syriac) living in Turkey before the Republic. They are still managed by their communities under VGM oversight, numbering 167, with total revenue in 2019 amounting to $68 million.
- New Foundations (Yeni Vakıflar): Established under the Turkish Civil Code after the Republic’s founding, these are managed by their own boards under VGM supervision. There are 5,352 such foundations, with total revenue in 2019 reaching $3.7 billion.
Additionally, Istanbul hosts the Turkish Religious Foundation, which employs many researchers specializing in waqf issues and has published a 40-volume Islamic encyclopedia[xi].
Management of Waqf Assets
The General Directorate of Foundations estimates its assets at approximately $11 billion as of 2021, with total revenue reaching $152 million the same year. Most waqf investments revolve around real estate, banking, and affiliated commercial enterprises. VGM owns around 4,021 independent real estate units, including villas, apartments, shops, and offices. Due to its substantial financial resources, the directorate has invested over $1 billion between 2003 and 2020[xii].
One of the strongest banking institutions under VGM is Vakıf Katılım, established in 2015 with a capital of $300 million and operating 104 branches across Turkey[xiii]. VGM is also a major partner in the interest-free Kuwait Turk Finance House (Kuveyt Türk), holding 18.7% of its assets, equivalent to approximately $200 million[xiv].
In agricultural investment, VGM manages olive production in Ayvalık, established in 1940, producing 200 tons of olive oil and 100 tons of olives annually, along with other agricultural products. It operates 11 specialized agricultural stores nationwide[xv].
Currently, VGM owns around 65,000 waqf properties across Turkey, including 9,000 cultural endowments. Over the past 18 years, it has reclaimed more than 5,000 cultural assets[xvi]. Its museums and movable cultural assets are recorded at 176,691 items, while its libraries hold approximately 34,396 rare manuscripts and printed works. VGM fully owns Fatih Sultan Mehmet Vakıf University and Bezmialem Vakıf University (specializing in health sciences). The full extent of waqf assets is immeasurable, especially since some, like the Sultan Ahmed Mosque and Hagia Sophia, are UNESCO World Heritage Sites.
With such a large budget, VGM significantly contributes to societal development, particularly in education. It provides:
– A monthly stipend of $10 to 15,000 primary and secondary school students.
– $42 per month to 5,400 university students.
– $85 per month to 600 foreign students.
– $148 per month to 4,400 needy individuals[xvii].
Prospects of the Experience
The Turkish waqf experience is one of the most pioneering in the Muslim world, with deep historical roots that have profoundly influenced Turkey and neighboring regions, especially during the Ottoman era. The General Directorate of Foundations has played a key role in preserving these assets, particularly in reclaiming confiscated endowments, reviving neglected ones, and developing them through investors. Since 2003, VGM has developed 208 waqf assets[xviii].
Thanks to continuous legal improvements since 2008, the number of new waqfs has risen from 4,443 in 2008 to 4,867 in 2014, averaging 70 new foundations per year[xix]. This growth is reflected in education, where private (waqf-affiliated) universities are funded by endowments, donations, student fees, and conditional government support based on performance.
By 2012, Turkey had 62 waqf universities[xx]. For example, Bilkent University reported $202 million in revenue in 2007:
– 47% from student fees.
– 18% from research and government grants.
– 4.5% from dormitory rentals and small donations.
– 30% from the university’s waqf fund.
Only 2.5% of expenditures went to scholarships, benefiting 3,000 out of 12,000 students[xxi].
Despite these achievements, the Turkish experience has faced challenges due to secularization. For instance, waqf funds were initially placed in the interest-based VakıfBank (Turkey’s fifth-largest bank)[xxii], which contradicts Islamic principles. However, this was later rectified by establishing an Islamic bank (Vakıf Katılım). Additionally, subjecting waqf assets to taxes has reduced their investment efficiency.
Overall, the Turkish experience stands out, with waqfs playing a genuine role in societal and economic development. Key strengths include:
– The success of waqf universities.
– Supportive legislation.
– Continuous investment in waqf properties.
– A focus on educational spending.
– Strong institutional management.
– The entry of Islamic banking, enhancing funding and development.
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