Cash Waqf Linked Sukuk as a Financing Instrument for Islamic Educational Institutions: Institutional Model and Capacity Constraints of Nazhir

Abstract

More than ninety-five percent of madrassas in Indonesia are private and depend on the contributions of guardians of students as the main source of financing. Cash Waqf Linked Sukuk (CWLS) was originally designed to cover the financing of waqf assets in the form of madrasas and Islamic boarding schools, but the evidence of its use by the Islamic education sector is still little discussed. This study aims to map the institutional model of distributing CWLS returns to Islamic educational institutions, identify obstacles stemming from the capacity of the nazhir, and assess the prospects for the sustainability of the scheme. The method used is qualitative descriptive with an instrumental case study design. Data were collected through the analysis of documents on waqf regulations, information memorandum on the issuance of Retail Waqf Sukuk, institutional reports of the Indonesian Waqf Board, and official publications of the Ministry of Religious Affairs, and then analyzed by qualitative content analysis. The results of the study showed three findings. First, Islamic educational institutions occupy the position of mauquf alaih and not fund managers, and the traces of the distribution of initial series of returns actually lead to the health sector, not education. Second, the gap between 548 registered money waqf kenazhiran institutions and 87,397 madrasas shows that the main problem lies in the availability of competent nazhir, not in their financial instruments. Third, the five-year tenor of retail CWLS is not in sync with the ongoing needs of education financing. This study recommends a collective kenazhiran scheme across madrassas and a firm separation between cyclical and permanent financing.