Conditions for removing the administrator of an endowment: Strict procedures to protect endowment assets

Introduction to the decisions of the General Authority for Endowments

The General Authority for Endowments in the Kingdom of Saudi Arabia announced the adoption of a set of strict procedures and precise controls governing the immediate dismissal and replacement of endowment administrators. This strategic step comes as part of the Authority's ongoing efforts to protect endowment assets and ensure their efficient management, in accordance with Sharia principles and applicable legal regulations in the Kingdom, and to guarantee the achievement of the ultimate goal for which endowments were established.

Historical context and importance of the endowments sector in Saudi Arabia

The endowments sector holds immense historical, religious, and economic importance in the Islamic world in general, and in the Kingdom of Saudi Arabia in particular. The General Authority for Endowments was established as the regulatory body for this vital sector, aiming to enhance its role in economic development and social solidarity. In line with the objectives of Saudi Vision 2030, the Authority seeks to govern and develop endowments to ensure their sustainability. This makes the establishment of stringent conditions for endowment management crucial for safeguarding the funds of donors and executing their wills with precision and complete transparency.

The most important conditions for dismissing the supervisor of an endowment and the violations that warrant such dismissal

The relevant regulatory authorities clarified that dismissal occurs immediately upon proof of deliberate mismanagement or negligence. These procedures are based on respecting the "endowment conditions," which are fundamental to ensuring the integrity and sustainability of the endowment system. Financial and administrative violations topped the list of grounds for dismissal, including:

• If the supervisor commits any crime stipulated by law while holding the position of managing the endowment.
• Deviation from the basic objectives of the endowment and violation of the paths approved by Sharia and the system.
• Mixing endowment funds with personal or other accounts without legal or regulatory justification is classified as a serious violation that warrants immediate accountability and direct dismissal.
• Conducting fictitious actions or suspicious transactions in the name of the endowment to achieve illicit gains, which necessitates replacing it with another qualified one.
• Refusal to open a separate bank account in the name of the endowment without justification undermines the principle of transparency in transactions.
• Committing any violation of the procedures and provisions relating to the disposal of endowment assets in any form whatsoever.

Transparency and oversight: Addressing the obstruction of the work of inspection committees

In a move underscoring the seriousness of oversight and the firmness of institutions, the General Authority for Endowments emphasized that any attempt to prevent its oversight teams from conducting desk or field inspections, or to deliberately withhold required documents and records, constitutes a clear violation. Such practices justify the competent authorities taking deterrent regulatory measures, culminating in the immediate dismissal of the administrator, to ensure that endowment assets are not misappropriated and are protected from any abuses.

Expected impact of the decisions at the local and regional levels

These decisions are expected to have a wide-ranging positive impact. Locally, these regulations will enhance the confidence of the community, businesses, and philanthropists in establishing new endowments, knowing that there is a rigorous regulatory body protecting their funds and ensuring that their proceeds reach their intended beneficiaries. Economically, this will contribute to directing endowment returns towards their proper purposes, thus supporting the non-profit sector. Regionally, the Kingdom presents a leading institutional model in endowment governance that other Islamic countries can emulate to develop their endowment sectors and protect their assets from waste.