It seems to be certain that wakfs did not exist in the pre-Islamic Arabia. The origin of waqfs is traced to an utterance of the Prophet.
However, the rules relating to waqfs were developed later on by ijma (consensus). The following tradition is considered to be the basis on which the law of wakfs has been developed: One Omer Ibn al-Khattab on getting lands in Khyber went to the Prophet and entreating him said, “O Messenger of Allah! I have got land in Khyber than which I have obtained more valuable property; what does thou advice me?” The Prophet whereupon spoke thus: “If thou likes make the property itself inalienable and give the profits from it to the charity”. Omer acting accordingly, laid down that the property would not be sold, or given away in gift, or inherited. He directed that out of the income of the property, charity should be given to the needy and the relatives, slaves should be set free, provision should be made for travellers, and guests should be entertained. The following utterance of the Prophet is often quoted, and is considered the briefest definition of a waqf. ’Tie up the substance and give away the fruit”.
The author of the Fath-ul-Kadir writes that the law of wakfs has its origin from the Prophet himself, who besides having prescribed the above rule to Omer, is reported to have declared that all human actions end with the life of the individual except such beneficiations as are perpetual in their character; and that, in accordance with these principles, trusts or dedications were frequent in the life time of the Prophet and the early centuries of Islam. However, in early days of Islam the law of wakfs suffered from great uncertainty. It was only in the second century after the Flight that a body of rules based on ijma were developed which might be considered to be the basis of the law of waqfs. In the centuries that followed not merely the land but all types of property, movable and immovable, were made subject-matter of wakfs. In the course of time, the Muslim world found that the “dead hand” (as wakfs were figuratively called and which in fact they had become) was trying to strangulate all progress and prosperity.
Vast stretches of land, and all other types of properties, were dedicated to wakfs all over the Muslim world. In 1925, Turkey found that three-fourth of arable land of the country was under wakfs. Algiers had its one-half of cultivable land in clutches of “dead hand”. This was the story all over the Muslim world. The sprawling ruins caused by the “dead hand” were contained and controlled in several Muslim countries by legislation.
In some countries the arable land was divested from the waqfs. In India, there are about one lakh waqfs valued at more than a hundred crore of rupees. Instances of the mismanagement of wakfs are numerous; the incompetency and corruption of the mutawallis is appalling and abysmal; more often than not, the properties of the wakfs are squandered away. As early as 1873, the Bombay High Court observed: “A waqf for a family settlement creates a perpetuity of the worst description, for it prevents the alienation of the house for ever, and necessitates its use in a manner which, with the natural increase in the number of descendants, would probably render impossible, even if they would be willing (which could hardly be expected) to live amicably under one roof throughout the generations.