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The function of waqf institution, which is an integral pillar of the third sector of an ideal Islamic economy, is to contribute towards provision of a social security net to those falling within its vicinities. The value proposition of waqf lies in effectively cascading wealth and benefits of resources to the neglected or comparatively disadvantaged sectors of an economy. Similarly, waqf is equally envisaged to support informal economy by responding to, and patronising the un-organized sectors. To this end, it is critical to identify the existing gaps in the areas of public and private sectors- spending for waqf to effectively fulfil its socio-economic objectives. By targeting the resource-deficient pockets of the economy on priority basis, the utility of waqf-resources can be maximized, which, in turn, reinforces the building blocks of the real economy. This paper argues that the institution of waqf needs to adopt a bottom-up approach in its socio-economic targets in order to optimise its contribution towards real economy in a socially responsible manner. The bottom-up approach calibrated with the sense of Islamic social responsibility is based in sequencing the progression of waqf-based benefits-coverage from necessities to needs and luxuries as per the hierarchy of maqasid-al-shariah. By adopting the framework of maqasid hierarchy, a self-regulatory paradigm can be established for the allocation of awqaf benefits more effectively. The paper critically analyses the moral philosophy, the value proposition and functional mechanism of an ideal waqf followed by pinpointing the key policy recommendations to enhance the role of modern waqf institution. It argues for the introduction and promotion of parallel waqf concept, particularly, in the context of a family waqf. Additionally, the study postulates linking the expected sum of virtues (ajr/thawab) for the waqif with the generated benefits from his/her underlying waqf. Finally, the study argues the merits of consultation mechanism for the potential waqif prior to creation of a waqf in order to maximise the contribution and value addition of his/her underlying waqf benefits. The paper is an outcome of a library-based research, and it adopts socio-legal research paradigm for the analysis of the available literature. To determine the moral philosophy of waqf along with its socio-economic objectives, the primary and secondary sources of shariah including the classical and contemporary fiqh literature have been consulted and referred to.