Community endowment (Waqf) established and independently audited
This criterion assesses whether the organization has established a formal community endowment (Waqf) with asset-lock provisions that secure resources for long-term community benefit. It evaluates the organization's commitment to intergenerational equity through the creation of sustainable financial structures that preserve capital while generating ongoing returns for community needs. This model institutionalises ongoing charity (Ṣadaqah Jāriyah, Muslim 1631) with robust governance and audit, fulfilling the trust (Amānah, Q4:58) by ensuring assets are delivered to their rightful purposes. The endowment undergoes an annual independent audit covering financial statements (SORP-compliant fund accounting), compliance with the waqf/endowment deed and asset-lock, Shari'ah compliance of investments and uses, and verification of social impact. Findings are publicly reported with corrective actions. Capital preservation and asset-lock controls serve Ḥifẓ al-Māl and Sadd al-dharā’i, ensuring preserved capital multiplies benefit over time (Q2:261).
- Does the organization have a legally constituted community endowment (Waqf) with a formal deed or trust document?
- Does the endowment's founding document contain clear asset-lock provisions and define its specific, long-term charitable objectives?
- Is there a formal investment policy statement (IPS) that governs the management of the endowment's assets and includes 'proper advice' confirmation?
- Is the endowment subject to regular, independent financial audits by a qualified third party (voluntary if below threshold)?
- Does the audit process verify compliance with the stipulations of the Waqf deed (Shari'ah compliance) and assess the endowment's impact?
- How are the endowment's performance and audit results communicated to the community and other stakeholders to ensure transparency?
- Are permanent vs expendable endowment funds segregated and disclosed per SORP?
- Is a total return or spending policy in place with an inflation-preservation target?
- Does an Audit/Finance Committee oversee auditor independence and monitor closure of audit findings?
- Are custodian statements reconciled to the ledger monthly?
- Is a Shari'ah adviser/committee in place and do they issue an annual compliance certificate?
- Has the charity used any Charities Act permanent endowment spending/borrowing powers in the year, and is this disclosed with supporting trustee minutes?
- If endowed property/land exists, were any disposals/leases/mortgages conducted and did trustees follow CC28 requirements?
- Copy of the legal Waqf deed, trust document, or endowment charter.
- Evidence of the endowment's legal registration and status.
- Endowment governance policies and Investment Policy Statement (IPS).
- Minutes from the endowment's board/trustee meetings.
- Annual financial statements for the endowment fund.
- Most recent independent audit reports (including financial, Shari'ah compliance, and/or impact assessments).
- Publicly available annual reports or communications detailing endowment performance and distributions.
- Auditor engagement letter and ISA (UK) 260/265 communications; auditor’s management letter and actions log; SORP fund notes showing endowment movements; custodian statements and reconciliations; investment manager mandate and quarterly compliance reports.
- Annual Shari'ah compliance report (template) including: scope, SS33 checklist results, investment screening evidence, purification amounts, distributions compliance with deed, any variances, and adviser’s signed statement/certificate.
- Endowment risk register (market, liquidity, custody, valuation, Shari'ah non-compliance, fraud, related-party risk) with mitigations and owners.
- Internal controls matrix for endowment (custody, reconciliations, valuations, drawdowns, approvals, segregation of duties) aligned to CC8.
- Impact report/assurance; conflicts of interest register; Charity Commission order for total return (if applicable).
| Level | Rating | Description |
|---|---|---|
| 5 | 5/5 | Unqualified audit (voluntary if below threshold); audit scope covers SORP fund notes, asset-lock testing, existence/valuation, related parties; Shari'ah certificate; impact assurance; all high-risk findings closed within 90 days; report published within 6 months. |
| 4 | 4/5 | Unqualified audit (voluntary if below threshold); minor findings; Shari'ah/adherence evidenced; publication within 10 months. If above threshold, statutory audit explicitly covers endowment notes and controls. |
| 3 | 3/5 | Independent examination or limited-scope review (capped here if below audit threshold unless voluntary audit undertaken); partial fund segregation; no Shari'ah certificate. |
| 2 | 2/5 | Formal endowment established with separate fund code/ledger and bank/custody account; IPS adopted; informal review only; no asset-lock testing. |
| 1 | 1/5 | No endowment established |
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📋 **Version updated: 1.0.0 → 2.9.7** **Changes:** Updated islamic_references from mizan-297.json
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