Efficiency and Effectiveness of Waqf Institutions in Malaysia: Toward Financial Sustainability

Financial health is crucial to the continuous existence and operation of any organisation. It is even more essential in the case of waqf. Accordingly, determining the financial strength and vulnerability of waqf institutions is particularly significant and congruent to waqf’s perpetual existence. Using content and ratio analysis, the 2008 annual reports of state waqf institutions were examined to determine their transparency and performance accountability. Four essential financial health ratios were computed: the equity balance ratio, the revenue concentration index, the administrative costs ratio and the operating margin ratio. The findings indicate that the institutions were, on average, satisfactorily efficient and effective in administering and managing waqf properties. Although it is the first humble attempt, this study provides an insight into the efficiency and effectiveness of the Malaysian institutional mutawallis in carrying out their tasks, a guide for policy makers on the formulation of policies for the revitalisation of waqf, and it contributes to the financial sustainability literature as a reference for researchers and students.