A study titled “Inactive Endowments in the Kingdom of Saudi Arabia from the Experts’ Perspective: An Exploratory Study” has been released by the Center for Future Investment in Riyadh.
The study covered key topics such as the prevalence and causes of inactive endowments, how they are identified, the obstacles affecting their inactivity, expert opinions on solutions and strategies to address this issue, the future of inactive endowments in Saudi Arabia from the perspective of experts and elites, the main challenges facing the solutions for inactive endowments from the experts’ point of view, and their key proposals to overcome these challenges.
The study sample consisted of 111 experts and specialists with experience in the field of endowments from various parts of Saudi Arabia. They were selected based on seven criteria representing their leadership positions, practical, or administrative experience. The criteria were as follows:
- Holds a postgraduate degree related to the field of endowments, or has two peer-reviewed research papers on endowments.
- Has at least 10 years of practical or administrative experience in the field of endowments.
- Is well-known as a reference in the field of endowments.
- Has been or is currently an overseer of endowments for at least ten years.
- Has been or is currently a judge handling endowment case.
- Has been or is currently a lawyer handling endowment case.
- Has taught a course on endowments and their rulings in higher institutes or universities.
The experts’ opinions were surveyed, and data were collected using two successive methods: telephone interviews with experts and sending a survey link via WhatsApp and SMS messages.
The study resulted in several findings, the most notable being that the majority of participating endowment experts agreed that inactive endowments are a serious issue facing the endowment sector, with 94% affirming this. It requires decision-makers’ attention to find solutions for optimal investment.
Experts’ opinions varied on determining when an endowment is considered inactive, but most believe that when the endowment’s income falls to half or less compared to similar market income, it is considered inactive. These views later influenced the proposed solutions to the problem.
Agricultural real estate was deemed most prone to inactivity by experts, while they held an optimistic view towards industrial, residential, and commercial properties. Cash endowments, stocks, bonds, and endowment companies were considered the most viable for investment.
Regarding the causes of endowment inactivity, experts identified “the lack of efficiency of the overseer or the supervisory board” as one of the strongest reasons contributing to the problem, along with “complex solutions arising from weak system and legislative efficiency,” “poor drafting of the endowment document and its failure to encompass all aspects of its sustainability,” and “delays in court procedures related to endowments and delays in resolving endowment disputes.” These results lead to the belief that any approach to solving the problem should not be singular but rather a mix of diverse approaches and solutions—legislative, administrative, and financial.
Moreover, more than half of the experts participating in the survey expressed an optimistic outlook on the possibility of solving the issue of inactive endowments, while acknowledging the necessity of implementing a package of reforms in the endowment sector to address the existing inactivity and prevent its spread and expansion.
Regarding the main solutions to the problem of inactive endowments, experts suggested attracting skilled overseers and diversifying their specializations, increasing the effectiveness of the General Authority for Endowments in the Kingdom, and entrusting the management of endowments to a non-profit charitable organization under general governmental supervision. They also called for reviewing the systems, regulations, and religious fatwas related to endowments regarding buying, selling, and disposal. Furthermore, they proposed establishing a bank for inactive endowments to collect and classify them, which would help identify and address the problems.
The study was conducted by a group of researchers under the supervision of Dr. Samir Abu Rumman.
To download the study:
