A new charitable foundation is being set
up in the UK that aims to become a £1 billion waqf fund combining
commercial and social investments.
There are waqf funds in the UK which are
targeted by specific organisations like Islamic Relief or the East London
mosque. However, there are few social waqf funds focused on capacity building
in society.
In an exclusive interview with Salaam
Gateway, Sultan Choudhury, Executive Chairperson of the new One Endowment
Trust (OET) and former CEO of Al Rayan Bank, explains how the waqf will meet
its goals as well as longer-term objectives.
“The vision of the One Endowment Trust
is to present Islam in a positive way though contribution to UK civil society,”
said Choudhury.
“We aim to build assets that generate
returns that will support sustainable social projects.”
OET’s commercial investment strategy
will be focused on three areas: real estate investments and developments,
private equity, and sukuk and Islamic funds.
“At its core it’s a charity and
endowment which will invest in a wide range of asset classes to deliver
competitive returns,” said Choudhury. “Those asset classes will include
both commercial and social enterprise.”
OET’s first investment is a £1.75
million 21 residential apartments with planning for four more in Creative Lofts
in the Yorshire town of Huddersfield. The Islamic Development Bank’s waqf
department provided 75% of financing for the overall project. OET expects to
exchange this month and complete the deal by May. The project is expected to
offer a yield of 9%.
The returns generated from OET’s portfolio
of assets will cover the Trust’s costs and also be reinvested in designated
social projects with partners. OET expects to begin investing in social
projects particularly in the area of social care in 2022.
“Returns will be reinvested or fund grants
for capacity building social projects. “Members will have significant input
into the grant giving process - democratising, if you like, giving donors
the say where their money is going,” said Sultan Choudhury.
He said that in the future the OET plans
to facilitate co-investment in some assets.
“If there is a co-investor and our
assets return 8%, then at least 1% will be invested into OET projects through a
management fee,” he said.
He added that OET would consider assets
in the non-real estate sectors like taking equity in private ventures in the
halal food sector, and social ventures such as enterprises aiming to provide
affordable care homes.
MEMBERSHIP, TRANSPARENCY
Funding for OET’S asset portfolio will
be done via membership and co-investors.
Members will be able to donate and
provide qard hasan and co-investors will be able to provide capital. These
co-investors will consist of professional, retail and Muslim Institutional
investments.
Members will then be able to decide how
to deploy the funds for the chosen social projects.
OET aims to practice good governance and
transparency by providing reports on deployment, costs, as well as the
financial and social returns to their members and investors.
“Transparency and governance in most
charities needs improvement,” said Choudhury. “For example, timely
updates on projects to donors with reporting are often relegated to the end of
year report. We will aim to provide frequent transparency through an app, once
ready.”
£1 BILLION ENDOWMENT
Like all new charitable ventures, OET
has had to deal with start-up funding challenges.
“Many charities experience problems of
sustainability and the constant challenge of getting funding,” said
Sultan Choudhury.
He said OET is currently applying for
charity status which can run up to about six months. In the meantime it is
operating under Mercy Mission UK, a charity incubator.
Nonetheless, OET aims to be operational
this year and is in the process of completing its first building, the 21
residential units project, said Choudhury.
“We are aiming to raise £9 million by
the end of 2022 as well as have 1,500 members,” he said.
OET aims to have 100 founding fellows
contributing at least £2,500 each with proceeds going towards the first
building, the costs of developing the app, and set-up costs.
“These founding fellows will benefit
from the blessings of all good work that flows from the One Endowment Trust
going forward,” he said.
“Eventually we aim to become a £1
billion endowment as that is the level where returns can make a real difference
socially.”