Foundations as economic and social institutions: Economic and social effects of cash foundations in the Ottoman 16th and 19th centuries

Foundations are institutions that have fulfilled the public services provided by the state today by contributing to social integration and balance within the sense of cooperation and solidarity, and have done this successfully for centuries. They are important auxiliary institutions of the central government in ensuring social peace and ensuring economic and political stability by taking from the rich and giving to those in need in order to ensure social balance. Foundations have a great role in the fulfillment of many public services, especially religious, cultural, public works and municipal services, which the state cannot reach or is not sufficient and which are provided by the state today. On a voluntary basis, a large share of the wealth was removed from private ownership and transferred to the social ownership group. This transfer carried the Ottoman Empire forward against other civilizations and characterized the Ottoman Empire as a foundation civilization. As foundations became widespread, institutionalized and diversified, cash foundations emerged. Cash foundations are foundations whose capital consists entirely of cash. It contributed to the fulfillment of economic and social services, and on the other hand, provided financial support in the execution of these services. Before cash foundations emerged, consumers and producers had to take loans with interest rates of 50-60% to meet their financing needs. Cash foundations serve as alternative financial institutions and provide financial support at rates of 10-15%, preventing high interest rates and usury. Cash foundations, whose operations are similar to financial institutions and participation banks today, served as banks in the Ottoman Empire. In our study, we aim to provide information about the foundation system and the effects of cash foundations on economic and social life, and to reveal differences by evaluating the functioning of cash foundations from past to present and whether they can be applied to the present day.