Efficiency of Waqf Organizations in Pakistan: Data Envelopment Analysis

Abstract

The philanthropic sector of Pakistan is guided and rooted by the Islamic system of charity. Waqf is an important instrument of Islamic charity that has played a significant role in Islamic history by provided various public services to communities. Many public and private waqf institutions in Pakistan are deeply committed to serving society through a wide range of philanthropic activities. The objective of this research is to measure the efficiency of public and private (hybrid) waqf organizations in Pakistan. This research uses the Data Envelopment Analysis (DEA) a non-parametric approach, with output orientation and variable return to scale (VRS) assumption. A data sample of 100 hybrid waqf organizations was gathered during the period of 2021-2022. The result shows that waqf organizations in Pakistan, on average, remains technical efficient with an efficiency level of 74%. The pure technical efficiency score of large, medium and small size organizations were 75%, 85% and 88% respectively. The highest efficiency level of small size organizations could be due to their low operation costs and fewer employees. The overall scale efficiency level of waqf institutions is 89%. Pakistani waqf organizations can enhance efficiency by investing in technology, improving staff skills, and optimizing resource allocation. Strategic partnerships and government support can further boost their impact.