The Endowment That Cannot Be Sold

It is a counter-intuitive instrument. Property that cannot be sold cannot be moved to a better use, cannot be borrowed against, cannot be turned into cash in an emergency, and cannot be rescued by a sale when holding it becomes ruinous. Every ordinary financial instinct says this is a defect.

It is not a defect. It is the entire point, and it was arrived at by people who had watched what happens to endowments that can be sold. This essay sets out what inalienability protects against, what each protection costs, how both traditions in this sub-cluster built an escape door and then spent centuries guarding it, and what a Nigerian body can realistically do with the idea today.

An endowment is a bet on the future made by someone who will not be present to defend it. That is its whole difficulty.

The founder can choose good administrators. He cannot choose their successors, or their successors' successors, and he cannot anticipate the circumstances in which those people will be making decisions — a currency collapse, a war, a genuinely urgent need, a persuasive argument advanced by someone he would not have trusted. He is designing for conditions he cannot see, to be operated by people he will never meet.

Faced with that, a founder has two strategies. He can grant discretion and hope for wisdom, or he can remove the option and rely on the removal. The endowment traditions overwhelmingly chose the second, and they chose it because the failure mode they feared was not stupidity but persuasion: the sale that seemed necessary at the time, made in good faith, for a reason everybody present found compelling.

In the law of endowments the corpus is preserved and only the yield is applied. In the common law of charity, property held on a charitable trust is tied to its purposes and cannot simply be redirected because the trustees have had a better idea. Different vocabularies, one instinct: take the decision away from the future, because the future will have reasons.

Inalienability is not a rule against selling. It is a rule against being convinced.

Every protection inalienability offers has a corresponding price, and a body considering the idea should know both halves before adopting either.

No tradition managed absolute permanence for long, because circumstances defeat it. Each therefore built an escape, and each then discovered the escape was the greatest danger in the instrument.

In the law of endowments the mechanism is substitution: the dedicated property is exchanged for a replacement of equivalent or better value, so that the endowment continues in another form rather than ending. It is hedged with conditions, and the jurists differ about how freely it may be used, precisely because it is the route through which endowments are most easily dissipated.

In the law of charity the mechanism is the application of property to a purpose as near as possible to the original where the original has become impossible or impracticable — a determination made not by the trustees but by a court or a public authority, together with statutory powers permitting sale and reinvestment in defined circumstances.

Both designs share a single feature that is easy to miss and is the whole lesson. The escape is not available to the person holding the asset on his own authority. Substitution is subject to doctrinal conditions and, in practice, to external sanction; the near-purpose doctrine is administered by a body outside the trust. In both traditions the door exists and the holder does not carry the key.

Build the exit. Then give the key to someone who will not need to use it.

Three observations about the Nigerian position, offered carefully, because this is the point at which general doctrine meets an uneven local reality.

First, endowment under Islamic law is live here and administered institutionally. Several northern states operate zakat and endowment boards with statutory footing, which administer obligatory giving and endowed property, and which represent the most developed public machinery for religious capital anywhere in the country. Their existence is the strongest single answer to anyone who imagines endowment is a foreign or historical idea.

Second, the general federal register does not have a natural home for a dedication of this kind. As an earlier essay in this sub-cluster set out, the register records a holder and the nature of a right; it does not have a column for property that a holder may not alienate by reason of religious dedication. A holding that is inalienable in the law that created it may sit on the register in a form that discloses nothing of the kind.

Third, the practical route available to most bodies is neither of these. It is to hold the asset in the incorporated body and place the restriction in the body's own constitution — a provision that this property may not be disposed of except on stated conditions, by a stated majority, with reasons recorded and, if the body is serious, with the approval of someone outside the leadership.

If a body decides to do this, the drafting matters more than the decision. Six points, drawn from what both traditions actually did.

None of this makes an endowment safe. It makes it harder to lose in the ordinary way — by a reasonable person, under pressure, with a good argument, on a bad afternoon. That is all any of these instruments has ever done, and it has proved to be enough for a surprisingly long time.

Permanence is not achieved by intending it. It is achieved by removing the decision from whoever will be tempted.