Performance of waqf institutions in Malaysia

Abstract

As charity organisations founded on solid Islamic religious values to meet specific religious, social, political and economic objectives, it is necessary to ensure that waqf institutions monitor their own performance and achieve their objectives effectively, efficiently and in the most economic manner. However, allegations of mismanagement have long been the concern of researchers because of the severe deterioration of waqf fortunes. Although this has been widely acknowledged, limited studies have investigated how waqf institutions assess their performance and the extent of their efficiency and effectiveness. This research examined the performance of waqf institutions in Malaysia using content and ratio analysis of the 2008 audited financial statements of the waqf institutions. Administrative ratio, returns on investment, rental efficiency ratio and revenue expense ratio were used to measure efficiency. Equity balances, administrative costs, revenue concentration index were applied for effectiveness performance evaluation. The findings indicate that, on average, the institutions were inefficient but satisfactorily effective in administering and managing waqf properties. Although this is the first humble attempt, it should contribute to the performance measurement literature, provide a reference for researchers and students, and guide policy makers concerning the formulation of policies for the revitalisation of waqfs.