The pillars and conditions of endowment: The new guide of the Endowments Authority for the endowment of money and shares

In a move aimed at strengthening the governance of the non-profit sector and developing its legislative structure, the General Authority for Endowments a detailed guide that identifies the basic pillars of endowment and the conditions for its establishment, as part of its ongoing efforts to raise awareness of endowments and regulate their practices in accordance with the legal and regulatory frameworks in the Kingdom of Saudi Arabia.

A regulatory framework that aligns with Vision 2030

This regulatory move comes at a time when the endowments sector in the Kingdom is undergoing radical transformations in line with the objectives of Vision 2030 , which seeks to increase the contribution of the non-profit sector to the gross domestic product. This step lays the foundation for a new phase in which endowments move from limited, traditional forms to broader investment horizons, ensuring financial sustainability and maximizing social and economic impact.

The four pillars of a waqf: the foundations of its establishment

The new evidence clarified that an endowment is not legally and religiously valid unless four main pillars are fulfilled, namely:

• The endower: He is the one who establishes the endowment, and it is required that he has full legal capacity and complete ownership of the money, and that he is acting of his own free will and not under duress.
• The endowed (original): The money that is held in trust, and it must be known, owned, and usable while its substance remains.
• The beneficiary: the entity that receives the endowment, whether it be individuals (such as descendants) or general charitable organizations.
• The formula: The word or deed indicating the establishment of the endowment, and it is the cornerstone in proving the will of the endower.

A qualitative leap: Permissibility of endowing cash and stocks

In a remarkable development reflecting the flexibility of Islamic jurisprudence and its ability to keep pace with contemporary financial developments, the evidence confirms the permissibility of dedicating cash and shares as endowments . Cash can be dedicated for investment, with the proceeds used for charitable purposes, and shares and company stakes can also be dedicated. This opens the door wide for the establishment of investment endowment funds managed by professional economic minds, moving away from the stagnation that can afflict traditional real estate endowments.

Documentation and legal protection

The Authority emphasized the importance of officially documenting endowments with notaries public and registering them with the Authority to ensure their protection from disputes and loss. The guide, which was included in a comprehensive publication titled "100 Questions and Answers on Endowment Matters," indicated that documentation safeguards the rights of donors and beneficiaries and facilitates oversight and accounting procedures.

The difference between endowments and other entities

The guide clearly distinguishes between endowments, charitable organizations, and non-profit companies. Endowments are characterized by the "dedication of the principal and the allocation of its benefits," offering a permanence and continuity not necessarily found in other entities, which may rely on disbursable donations or temporary commercial activities. The authority emphasized that each form has its advantages, but endowments remain the ideal tool for those seeking lasting reward and a lasting impact.

Unknown Endowments Management

The guide addressed the issue of "unknown endowments," emphasizing that the Authority is the body responsible for investigating and identifying them. It affirmed the principle that endowments do not lapse with time; assets remain endowed as long as evidence and proof of their endowment are established, and the proceeds from unknown endowments are to be spent on general charitable works, thus ensuring that endowment assets do not fall into disuse and continue to fulfill their developmental role.