Waqf means putting aside the original property and donating its benefits for the sake of Allah. What is meant by the original property is something from which benefit may be derived whilst its essence remains, such as houses, shops, gardens, etc. What is meant by benefits is beneficial to produce that comes from the original property, such as crops, rents, provision of shelter, etc.
The ruling concerning waqf is that the waqf is an act of worship which is recommended in Islam (highly recommended). The evidence for that is the Sahih Sunnah (Authentic Narration). One narration is from ‘Umar (may Allah be pleased with him), he said:
“’Umar acquired a land at Khaibar. He came to Allah’s Apostle and sought his advice in regard to it. He said: Allah’s Messenger, I have acquired land in Khaibar. I have never acquired property more valuable for me than this, so what do you command me to do with it? Thereupon he (Allah’s Apostle) said: If you like, you may keep the corpus intact and give its produce as Sadaqa. So ‘Umar gave it as Sadaqa declaring that property must not be sold or inherited or given away as a gift. And Umar devoted it to the poor, to the nearest kin, and to the emancipation of slaves, aired in the way of Allah and guests.” [Source: Sahih Muslim no. 1632 a]
Another authentic narration said that the Prophet (peace and blessings of Allah be upon him) said:
“When the son of Adam dies, all his good deeds come to an end except three: on-going charity (ie. waqf), knowledge from which others may benefit after he is gone, and a righteous son who will pray for him.” [Source: Sunan an-Nasa’i no. 3651] Jaabir said: “There was no one among the Companions of the Messenger of Allah (peace and blessings of Allah be upon him) who had the means, but he set up a waqf.”
There is the condition that the one who established the waqf should be one who has the authority to dispose of this wealth, i.e., he should be an adult, free and mature because a waqf made by a minor, a fool or a slave is not valid.
The contract of the waqf is done in either of two ways:
(1) By saying something that indicates that a waqf is being established, such as saying, “I make this place a waqf” or “I make it a mosque.”
(2) By doing something that customarily indicates a waqf, such as making a house into a mosque, or giving general permission to the people to pray there, or making one’s land into a graveyard and giving people permission to bury their dead there.
Image source: Evan Kirby