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The purpose of this article is to highlight the importance of waqf in financing higher education. Nowadays, higher education is costly and this has prevented students, especially those who are self-financed, from accessing such learning environments. This paper offer an alternative solution to relieve such a situation, namely, through the application of an endowment-based or waqf educational institution. The study suggests a way to establish an endowment university by concentrating the discussion on the concept and principles of its establishment, as well as sharing the experiences of the Malaysian waqf universities and the Turkish Foundation Universities/Vakif Üniversitesi in financing their universities using waqf, i.e. a pious endowment instrument.

The empirical data were mainly collected using in-depth interviews with the universities’ higher management authorities and some of the members of the board of trustees.

The findings show that the role of waqf or pious endowment is significant in providing financial assistance to their communities as well as strengthening their academic quality. In addition, tawhidic epistemology together with morality and ethics have influenced waqf donors or founders to donate their wealth and property to enrich and sustain universities and higher education.

This article provides the experiences of the Malaysian Waqf Universities and the Turkish Foundation Universities/Vakif Üniversitesi in financing their universities using waqf. It also contains some good examples from the experience of several earlier Islamic civilizations, in particular those of the Ottoman Empire and the Mamluk Sultanate of Egypt. In addition, examples of the implementation of waqf and endowment-based universities in the UK and USA as well as the Al-Azhar University of Egypt is also included.

This study aimed to analyse the role of the Waqf Fund Scheme, by taking Penang (or Pulau Pinang) as one of the states in Malaysia as a sample of the study. Waqf Fund Scheme was established by the Islamic Religious Council of Penang, Majlis Agama Islam Negeri Pulau Pinang (MAINPP), in an effort to develop the economy of the Muslim community in the state.

This study analysed the contribution that this endowment fund makes towards a comprehensive scheme of economic development, namely, in terms of the economic, spiritual and social welfare of the Muslim community in Penang. The primary source of data was obtained through interviews conducted by the researcher with the Manager of the Waqf Fund Scheme, the Head of Administration and Finance Section and the Account Executive of MAINPP. The researcher also interviewed respondents from four institutions that were beneficiaries of the Waqf Fund Scheme.

The findings of this research show that the endowment fund scheme plays an important role in the economic development of the Muslim community in Penang. The Waqf Fund Scheme contributes by way of providing a financing facility towards the acquisition of waqf assets or through cash support channelled to associations or committees of a masjid.

This study only focuses on Waqf Fund Scheme which was established by MAINPP.

This study is expected to contribute to the improvement of the Waqf Fund Scheme management.

The paper is the first attempt to address the Waqf Fund Scheme contributions by MAINPP, particularly in Penang.