Financial sustainability of statewaqfinstitutions (SWIs) in Malaysia

Abstract

Purpose-This paper aims to measure the financial sustainability and vulnerability of state-managed waqf institutions in Malaysia. Design/methodology/approach-The study mainly applied the commonly used Tuckman and Chang's (1991) model to measure the financial health of non-profits. Content and ratio analysis of the 2014 audited reports of seven institutions were used to determine their equity balance, revenue concentration, administrative costs and operating margin ratios. Findings-The results indicate that only one waqf institution was financially sustainable in all the four components. Research limitations/implications-Because the data used are not the latest and focussed only on a single year, the findings may not be necessarily true, currently. Second, the study focussed only on Malaysia. Thus, the results may not be generalisable to other waqfs in other countries or to privately managed waqf institutions. Accordingly, future research should address these limitations. Practical implications-The findings provide useful insights into the financial sustainability of waqf institutions and highlight the need for policymakers in Malaysia and other Muslim countries to give due attention to the holistic accountability of waqf institutions to ensure waqf's systematic revival. Originality/value-The paper, being the first to investigate the financial sustainability and vulnerability of state waqf institutions in Malaysia, serves as a reference for future researchers.

Perceptions of Waqf Reporting Practices by State Religious Islamic Councils

“…Initial investigations found that there are many problems in waqf financial statement, such as no standardisation and not updated. This supports previous literature, where it was found that Islamic councils practiced different reporting (Sulaiman et al, 2019;Daud et al, 2011;Yunanda et al, 2016;Masruki and Shafi, 2013;Mohamed et al, 2006). This might be due to the lack of mandatory regulation.…”

“…Unfortunatley, this is not the case in the present situation for waqf. It was found that there is a lack of reporting on waqf matters (Sulaiman, et al, 2019;Daud and Rahman, 2018;Yunanda et al, 2016;Masruki and Shafi, 2013;Mohamed, Daud, Md. Zain and Yaccob, 2006;Daftardar, 2008;Daud, et al, 2011).…”

Critical assessment of Islamic endowment funds (Waqf) literature: lesson for government and future directions

“…(2018) Adeyemi et al. (2016) Sulaiman and Zakari (2019) Pitchay et al. (2018) Thaker (2018) Thaker et al.…”

Financial Performance and Sustainability in Malaysian Waqf Institutions

“…Three indicators were used to determine financial performance, namely: (i) net income ratio (NIR); (ii) operating income ratio (OIR); and (iii) income growth (IG). Meanwhile, another four indicators were used to indicate financial sustainability, which are: (i) equity balances (EB); (ii) administrative costs ratio (ACR); (iii) revenue concentration index (RCI); and (iv) operating margin ratio (OMR) (Shafii et al, 2014;Sulaiman & Zakari, 2019). The use of audited financial information to determine both financial performance and sustainability is considered reliable due to the importance of the information published and those information have been verified before arriving at a conclusion by the auditor (Froelich et al, 2000).…”