11 · Grant & Qard Hasan Policy — funding instruments
Two instruments only. Type A — Hibah (non-refundable grant). Type B — Qard Hasan (interest-free loan, principal only). Funded from waqf yield only — never from the corpus. Pending SSB confirmation (doc 09 Q16–18).
1. Source of funds — hard rule
Funding is paid exclusively from the Waqf's investment yield. The corpus is never spent, never lent, never pledged. If yield in a period is insufficient, the round is reduced or postponed — the corpus is never touched.
2. Type A — Hibah (non-refundable grant)
- Nature: an outright gift. No repayment. No equity. No royalty. No revenue share. The Waqf takes no ownership in the startup.
- Purpose: innovation, research, prototype, MVP, early product.
- Indicative ceiling: [EUR/USD 100,000] per award.
- Conditions permitted: use-of-funds restriction, milestone reporting, and the negative screen (doc 10). These are not financial claims.
3. Type B — Qard Hasan (benevolent loan)
- Nature: interest-free loan. The Waqf may recover the principal and nothing more. No interest, no mark-up, no profit share, no penalty for late payment — any excess over principal is riba and is prohibited.
- Indicative ceiling: [EUR/USD 100,000] per award.
- Term: [24–60] months, with a grace period matched to the startup's stage.
- Administrative fee: only an actual, documented cost of administration may be charged, if the SSB permits — never a percentage of the loan, never a disguised return (doc 09 Q17).
- Security: only if the SSB permits; if taken, it may secure principal only.
- Default: if the founder is genuinely unable to repay, the Waqf shall grant time (Qur'an 2:280) and may forgive the debt by SIC decision. Wilful default or fraud → recovery pursued; the founder is barred from future funding.
- Repaid principal returns to the Waqf — increasing the corpus, not the yield.
4. Choosing the instrument
| Situation | Instrument |
|---|---|
| Pre-revenue research, prototype, public-good tooling | Type A |
| Clear path to revenue; founder can realistically repay | Type B |
| Mixed | A blend (part grant, part Qard Hasan) — SIC decision |
The startup may decline Type B and request Type A only; the SIC decides.
5. Ranges by stage — indicative, not fixed
| Stage | Signal | Indicative range | Typical instrument |
|---|---|---|---|
| Idea | concept, no product | [5,000 – 20,000] | Type A |
| Early seed | prototype/MVP, first users | [20,000 – 50,000] | A or blend |
| Seed | traction, revenue, team | [50,000 – 100,000] | B or blend |
Ranges are guidance. The SIC sets each award on merit, need and available yield. No entitlement arises from stage alone.
6. Disbursement — milestones
- Award letter (instrument, amount, milestones, conditions, negative-screen covenant).
- Tranched release against milestones; the Mutawalli releases each tranche.
- Reporting per tranche (progress, spend, KPIs).
- Undrawn tranches may be cancelled on milestone failure, pivot into a prohibited activity (doc 10 §A5), or breach.
- All disbursements recorded and published in aggregate.
7. What the Waqf never takes
No equity. No convertible. No royalty. No revenue share. No board control. No warrant. The relationship ends when the grant is used, or the principal repaid. Any voluntary give-back is Success Sadaqah (doc 12) — separate, voluntary and unenforceable.
8. Eligibility
- Passes the negative screen (doc 10);
- Muslim-founded technology venture (as defined by the SIC);
- Founder integrity and execution capability (doc 08 §B3);
- No conflict with SIC/SSB members (doc 08 §B6);
- Complies with applicable law in its jurisdiction.
9. Reporting
Per round, published: number of applications, screened out, funded; instruments; amounts; reasons; and aggregate yield deployed. Personal data excluded.
A working draft, not an executed document and not legal advice. digiwaqf is pre-launch: not yet a licensed waqf, not Shariah-certified. Nothing here is an offer to sell securities.
