New regulations issued for endowment companies in Abu Dhabi

The Abu Dhabi Department of Economic Development (ADDED), in partnership with The Endowments and Minors’ Funds Management Authority (Awqaf Abu Dhabi), has announced a new resolution regarding the establishment and licensing of endowment institutions in Abu Dhabi.

The resolution signifies a transformative advancement in enhancing endowment structures, supporting the sustainability of family-owned enterprises, and promoting best practices in endowment management. It further solidifies Abu Dhabi’s leadership in endowment governance and amplifies the contributions of non-profit organizations and associations (the Third sector) to the gross domestic product (GDP).

A first of its kind in the UAE

This resolution introduces a comprehensive regulatory framework that formalizes the role of the endowment sector in fostering sustainable socio-economic development. It aligns with the UAE’s Year of Community 2025, under the theme “Hand in Hand,” reflecting the vision of His Highness Sheikh Mohammed bin Zayed Al Nahyan, President of the UAE, to promote sustainable growth, a knowledge-based economy, and social solidarity.

Framework for governance

The resolution builds upon existing laws addressing family-owned endowments and introduces structured governance for these entities. It provides a framework for the creation and administration of endowment companies, covering essential elements such as legal status, permitted activities, and licensing requirements.

By establishing clear legal and regulatory guidelines, the resolution empowers companies, institutions, and individuals to contribute to long-term social and economic progress. All applications must receive approval from Awqaf Abu Dhabi to ensure adherence to current regulations, donor intentions, and the broader objectives of the grant.

Managing private grants

Under the new framework, endowment companies will be equipped to manage private grants while engaging in commercial activities that support the sustainability and growth of endowed assets, thus maximizing both financial returns and social impact. The resolution also establishes robust monitoring and supervisory mechanisms to enhance governance and accountability within the sector.

His Excellency Rashed Abdulkarim Al Blooshi, undersecretary of ADDED, stated: “Endowments have been playing a vital role in socio-economic development for many decades. Issuing this resolution to establish and license endowment companies in Abu Dhabi aims to provide suitable frameworks to enable them to grow and thrive. This aligns with the emirate’s vision, which places human development, sustainability, and economic inclusion at the core of its strategic plans to accelerate economic growth and diversification, and further enhance a knowledge-based, innovation-driven economy.”

Focus on sound management

H.E. Al Blooshi added: “Our cooperation with Awqaf Abu Dhabi is to ensure achieving the objectives of this step with a focus on sound management of endowment companies, sustainability, and adherence to the highest standards of governance and transparency. Providing a suitable ecosystem to establish endowment companies paves the way for enhancing their role and contribution in various economic sectors while focusing on achieving the social development objectives of these unique investments.”

With detailed guidelines and manuals to be introduced later for the endowment institutions, the resolution presents a regulatory framework that guarantees the highest standards of governance and transparency for the benefit of the founders and their beneficiaries. It encourages investments in multiple strategic areas such as manufacturing, education, trade, healthcare, agriculture, culture, and innovation. Additionally, it promotes collaboration between the public and private sectors to attain sustainable development goals and optimize resource usage.

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Balancing investment and risk management

His Excellency Fahad Abdulqader Al Qassim, director general of Awqaf Abu Dhabi, emphasized the resolution’s role in balancing sustainable investment with prudent risk management across various asset classes. He remarked: “This resolution reflects the strategic partnership between Awqaf Abu Dhabi and ADDED, establishing a regulatory framework that fosters endowment investments and maximizes their social and economic impact. It reinforces the sustainability of family-owned businesses and ensures the continuity of donors’ philanthropic legacies for generations to come. This embodies the UAE leadership’s vision of securing a dignified quality of life and promoting solidarity, in alignment with the UAE’s Year of Community 2025.”

“The introduction of endowment companies represents an innovative evolution in endowment governance, allowing for greater flexibility and adaptability in response to changing economic conditions. The resolution provides donors with the ability to establish independent, legally recognized entities under corporate law, adhering to the highest governance standards and best practices.”

The resolution encompasses various types of endowment institutions, including private (family-owned) endowments, charitable endowments, and joint endowments. It also permits the management of endowed shares and equity stakes in commercial enterprises, provided such provisions are explicitly included in the articles of incorporation and comply with applicable laws.

Attracting investment

Leveraging Abu Dhabi’s strategic position as a global investment gateway, Awqaf Abu Dhabi launched Awqaf Capital, its dedicated investment arm, in December 2024. This initiative is set to deploy capital across diverse asset classes, further establishing Abu Dhabi’s role as a center for sustainable endowment management and international investment.