Opening Remarks
As-salamu Alaikum / Peace be upon you:
Deeply rooted in Islamic traditions of charity, the institution of Endowment (Waqf) originated during the life of Prophet Muhammad (PBUH). Throughout history, charitable foundations and endowments spread across the Islamic world and became fundamental parts of the Islamic society. In our current society, in the United States, an endowment will continue this honorable legacy and aims to provide a source of financial support for charitable causes. Endowment funds provide lasting community impact, where gifts are invested over time and income from investment funds contribute to charitable grants.
At the Muslim Association of Puget Sound (MAPS), we have dwelled upon the idea of creating self-sustaining financial sources for quite some time. Endowment was considered as a source of helping us achieve financial stability and self-sufficiency to meet our operational and charitable needs for generations to come. The Board of Directors has unanimously approved the launch of this major initiative for 2023 that is further explained below.
True Endowment Creation Plan
Our goal this year is to launch a True Endowment through a separate 501(c)3 (MAPS-Waqf). To implement an endowment successfully, it would require a dedicated board of directors and a donor relations manager, along with staff or outsourced investment management services. It will not be viable without at least ~$1M – $1.5M as an initial investment into the True Endowment fund. According to MAPS by-laws, any major investment or expenditure of over 20% of the annual budget must be approved by the General Assembly. Hence, MAPS Board has approved the following plan towards realizing the creation of a True Endowment:
- Kick-off a Quasi-Endowment fund by creating a Cash Reserve under the supervision of MAPS Board
- Fundraise to get this cash reserve account to over $1M
- Learn from other Islamic institutions in the country who have successfully managed endowment investment and donation strategies
- Seek MAPS General Body’s approval to create a True Endowment fund and transfer the $1M+ from MAPS’ Cash Reserve account to MAPS-Waqf’s True Endowment fund
Principles
Our goal is to develop a fully sustainable endowment (MAPS-Waqf) to help fund a major portion of our operations cost and other community services’ needs. It would necessitate a long-term sustainability of funds into the MAPS-Waqf account. We will be working on the fund-investment strategy in the next few months, while we collect seed money into our Cash Reserve account. However, we have formulated the following principles to help guide MAPS-Waqf’s investment strategy:
- Islamic: All investments will be made according to established Islamic principles of investing
- Sustainability: Provide an annual and predictable source of revenue to support a portion of operating cost and community services
- Conservative: Preserve the purchasing power of the original gifts
- Self-Sufficient: Increase independence from funding trends outside of our control
Frequently Asked Questions
Why aren’t we starting with a True Endowment now?
As explained, it would require a significant initial seed investment to start this. We need to fundraise seed money before we will be ready to launch it. Secondly, we will need approval from the MAPS General Body to transfer funds from MAPS account (in this case a separate Cash Reserve account under the supervision of MAPS Board) to True Endowment account. Even if we did have the funds now, we wouldn’t be able to launch a True Endowment prior to completing the General Body approval process. Creation of a separate 501(c)3 with by-laws, a board, and other operational procedures with clear policies will need time.
What will be our investment strategy? Are we going to fund community projects?
It is very important for us to follow our guiding principles. MAPS-Waqf’s Board will be responsible for coming up with investment strategies and developing risk profiles. We will ensure that our board members do not bring their biases for one investment vehicle over another. We aim to develop a well-balanced investment strategy that prevents the risk of putting all our eggs in one or a few baskets. We are committed to funding community projects that align with our guiding principles and do not compromise the integrity of our original gifts. Additionally, we are dedicated to minimizing risk exposure in our investments.
What if the General Body doesn’t approve of the True Endowment initiative?
We will work very diligently to explain to our community the importance of launching a True Endowment, which is a multi-generational commitment. Investing in our future generation, who call the Pacific Northwest their home, is a decision that requires community involvement and support. As with our General Body approval process for the 2021 expansion project, we trust that our community has the vision and expertise to make strategic and bold decisions. If for some reason we do not receive approval from the General Body, having funds in a Cash Reserve account is a very safe option. We will convert these funds back to our capital expenditure (Capex) account to invest in other real-estate expansions, modernizations of our facilities, and infrastructure projects. This would still allow us to invest our donors’ funds into other sadaqa jaaria/long running charity-related projects.
Why are we planning for a separate non-profit 501.c3 for MAPS-Waqf?
Our goal is to model the MAPS-Waqf/Endowment after established best practices. We aim to minimize our exposure to major assets with the potential to reach multi-million dollars. By establishing a separate non-profit with its own board and having MAPS as the primary and only beneficiary of MAPS-Waqf, we can ensure proper checks and balances, as well as ownership at the institutional level.
Will MAPS-Waqf Board report to the MAPS BoD?
MAPS-Waqf Board will include two to three members of the MAPS Board (such as the current President, Vice President, and Treasurer) alongside other members who will be selected by MAPS Board for a limited duration. The board will operate independently; however, the bylaws, best practices, processes, investment strategies, grant distribution, and governance will be overseen by MAPS Board. Additionally, MAPS will be the only beneficiary of MAPS-Waqf which will help us institutionalize our assets and establish a self-sustaining financial structure. We will be studying other Islamic organizations’ Waqf’s bylaws when creating MAPS-Waqf’s by-laws to ensure a balance between independence and association with MAPS.
Closing Remarks
This is a bold undertaking for our entire community. We hope you’re as excited as we are about taking this major step towards creating a strong, financial future for our organization and generations to come. We request your prayers (duas) that Allah swt puts His blessings (barakah) in it and makes it a successful initiative for all of us.
Also, we are very excited to invite you to our Annual Banquet this Saturday, March 19, where we will talk about this and other accomplishments. We will also provide you with an update on our other future plans. We can’t wait to see you there!
Please buy your tickets here.
Wassalam,
Mohammad Vakil
MAPS President