Feasibility Studies for Waqf and Charitable Projects: From Good Intentions to Sustainability

Many waqf (Islamic endowment) and charitable initiatives start from a sincere intention and a genuine desire to do good, then falter years later because the asset was not invested in a way that preserved and grew it, or because the charitable project remained dependent on seasonal donations that did not cover its fixed costs. Good intentions are a condition for blessing, but they are no substitute for sound management.

This article is written for waqf administrators (nazirs), the management of charitable associations and foundations, and benefactors. It explains how to build a feasibility study that respects the particular nature of waqf and charitable work and turns an initiative from an activity based on intermittent giving into a project with sustainable impact.

Why does a waqf need a feasibility study?

At its core, a waqf means holding the asset in perpetuity and dedicating its benefit to a charitable purpose. This places a double responsibility on the nazir: to protect the asset from loss or erosion, and to invest it so that it generates income that fulfils the founder's intent. Every investment decision in a waqf is a trust, and a mistake does not touch private money but the rights of the beneficiaries and of future generations.

A feasibility study here is not a formality but a tool for fulfilling that trust, because it:

• Sets out the investment alternatives clearly before the nazir, together with the risks of each.
• Documents the reasons for the decision, protecting the nazir and the supervising authority at the time of review.
• Estimates expected income realistically, so that commitments are not built on uncertain promises.
• Defines the maintenance and renewal requirements that preserve the asset over the long term.

How does a waqf study differ from a commercial study?

A waqf study uses the same tools for market, technical and financial analysis, but it differs in its priorities and its criteria for judgement.

Components of a waqf feasibility study

First: understanding the asset and the founder's conditions

Before any analysis, the nature of the endowed asset must be understood: land, a building, cash or shares; its location and legal status; and the conditions and beneficiary purposes set out in the waqf deed. There is no point in an investment alternative that contravenes the founder's conditions or requires asset-substitution procedures that have not been completed through the competent authorities.

Second: studying the investment alternatives

Rather than starting the study with a single ready-made idea, it is better to compare several alternatives, such as:

• Leasing the asset directly in its current state, usually the lowest-risk and lowest-return option.
• Real estate development of residential or commercial buildings leased on long-term contracts.
• Partnering with a developer under Sharia-compliant structures, with safeguards that protect the waqf's rights in the asset.
• Operating projects related to the waqf's purposes, such as educational or health centres that generate both income and impact.

Third: financial analysis through a sustainability lens

Calculating the return is not enough. The study must confirm that net income, after maintenance, operations and a renewal provision, is sufficient to cover the target purposes on a regular basis. The standard evaluation indicators, explained in our article on net present value, internal rate of return and payback period, can be used, with conservative discount rates suited to the nature of a waqf.

Fourth: risk assessment and governance

Risks include property vacancy, tenant default, construction cost overruns, and regulatory change. Governance must be added to these: Who takes the decision? How are the accounts reviewed? And how is performance disclosed to the supervising authority and to the community?

Fifth: measuring impact

A waqf or charitable project is measured by the number of beneficiaries and the quality and continuity of the service, not by income alone. A good study therefore includes clear impact indicators that can be tracked annually, such as:

• The number of direct beneficiaries of the waqf income or of the charitable programme.
• The cost of the service per beneficiary, and how far it falls as the project matures.
• The extent to which income covers the needs of the purposes specified in the waqf deed.
• The continuity and regularity of the service, without interruptions caused by fluctuating income.

Linking these indicators to the financial figures gives the nazir and benefactors a truer picture of the waqf's value, and turns disclosure reports into a tool for building trust and attracting new endowments, rather than a mere procedural obligation.

A hypothetical example

A nazir responsible for endowed land in a commercial location is considering three alternatives:

The second alternative may look like the highest earner, but it requires substantial financing that must comply with Sharia rulings and regulations, and it exposes the waqf to construction and vacancy risks. The third alternative delivers reasonable income without spending waqf funds, but it requires a tightly drafted contract that preserves ownership of the asset and its rights when the term ends. This is where sensitivity and scenario analysis comes in, to test each alternative under conservative assumptions. All figures are hypothetical, for illustration only, and do not represent any actual waqf.

Charitable projects: from seasonal donations to sustainable income

Many charitable associations and foundations face a recurring challenge: their programmes expand and their fixed costs rise, while donations fluctuate from season to season. A feasibility study helps here by:

• Evaluating income-generating projects that serve the association's mission and cover part of its operating expenses.
• Estimating the true cost of each programme and of each beneficiary, which strengthens donor confidence.
• Building persuasive proposals for donors and institutional partners, similar in logic to what funders look for, as we explained in our article What does a financier look for in a feasibility study?.

Preparing the study in practice

For the study to be a decision-making tool rather than an archive document, it is best for it to pass through clear stages, with the nazir or the board involved at every step:

1. Diagnosis: gathering the waqf deed, title deeds and plans, visiting the asset on site, and identifying the target purposes and their annual needs.
2. Initial screening: excluding alternatives that contravene the founder's conditions or do not suit the site, and keeping two or three worth analysing.
3. In-depth analysis: a market, technical and financial study of each alternative, with a conservative scenario and a base scenario.
4. Sharia and regulatory review: presenting the preferred alternative to Sharia specialists and the competent authorities before it is approved.
5. Implementation and monitoring plan: a timeline, defined responsibilities, and financial and social indicators reviewed periodically.

This step-by-step approach protects the waqf from rushing into a single idea before comparing it with others, and gives decision-makers a complete picture they can defend before supervising authorities and beneficiaries.

Common mistakes in waqf and charitable projects

1. Starting with the building before the operating model: constructing a building without a clear plan to operate or lease it.
2. Neglecting the maintenance and renewal provision: so the asset gradually erodes and its income declines.
3. Poorly drafted long-term contracts: which cost the waqf its rights or prevent rent reviews.
4. Mixing waqf funds with operating funds: which weakens transparency and complicates the accounting.
5. No impact indicators: so no one knows whether the project is actually achieving its purpose.

Conclusion

A feasibility study for a waqf or charitable project is the bridge between good intentions and sustainable impact: it preserves the asset, estimates income realistically, adheres to the founder's conditions and Sharia requirements, and measures impact clearly. The final decision rests with the nazir and the competent supervising authorities, once the Sharia and regulatory requirements have been met, while the study provides the objective basis on which that decision is built. If you are the administrator of a waqf or an official at a charitable organisation looking for a well-founded vision for your project, we would be glad to help: request your study.