Essays on the Demand for and Supply of Cash Waqfs in the Muslim World

Abstract

I address two broad questions regarding cash waqfs, which are Islamic law-sanctioned crowdfunding-style platforms established to provide public goods and services in the Muslim world. First, why do Muslims want to contribute voluntarily to cash waqf programs? Second, what explains the existence of different types of institutions that offer cash waqfs across different Muslim-majority states? The second and third chapters address the first question and how trust motivates donors to contribute to cash waqf programs. In the second chapter on Malaysia, I show that when donors have options over contributing to a public and private version of the same good, the preference for the latter is motivated by generalized trust in unknown others. Donors who trust strangers believe that others would also prefer the better quality private good option, especially when the quality of the pre-existing public good option is widely known to be substandard. In the third chapter on Pakistan, I show that when donors have the option of contributing to cash waqf programs offered by for-profits and non-profits, those who opt to contribute to the former are driven by institutional trust. Although for-profit institutions may have little business in the field of charity and public goods provision, donors may perceive them to be more trustworthy vis-Ã -vis non-profits. The fourth chapter tackles the second broad question and addresses why cash waqfs are offered by the state in Malaysia but by Islamic banks in Bangladesh. In this chapter, I argue that the colonial legacies of divergent approaches toward the management of religion in British India and British Malaya shaped how Islam has been administered, which extends to the sphere of religious charity. The judicial approach to manage religion in British India did not create an extensive bureaucracy to administer religion, leaving elbowroom for initiatives such as cash waqfs to emerge in the private sector later. The emergence of all-encompassing bureaucracies in British Malaya, first at the state level and later at the federal level in an independent Malaysia, to regulate Islam meant that all matters pertaining to religion fell strictly within the purview of the state, including cash waqfs.