Using interest money for the running of a charitable organisation

CategoriesTrade, Business & All Things Money [558]

Fatwa ID: 01245

Answered by Mufti Mohammed Tosir Miah


1. We have a business account in the name of the charity, which we use for incoming donations. I would like to know whether it is permissible to open a savings account with the sole intention of generating more interest money.

2. As we have a business account, the bank charges the charity for its services. I would like to know whether it is permissible for us to use interest money, which we receive from the bank, or interest money, which we receive in donations to pay off these bank charges. 

3. Is it permissible to use donation interest money to pay off the following? Charity car/van insurance, Business insurance, PAYE Employers tax.





In the name of Allah, the most Beneficent, the most Merciful.

We will now look at your questions individually.

1.  It is not permissible to open a saving account with the intention of generating more interest money.

It should be understood that taking and giving interest is counted as one of the gravest and heinous sins in Islam.                 

The Holy Prophet (saw) has said:

??? ???? ???? ? ??? ?????? ?????? ??????? ???????   (????? ?244 ?1 )

“The Holy Prophet (saw) has cursed the person who takes interest, who gives interest, who writes it and who witnesses it.”

???? ?????? ????? ????? ??? ???? ??? ?? ??? ??????? ????   (?????  ?246 ?1) 

“To take one dirham of interest knowingly is worse than committing adultery 36 times.”

??? ???? ???? ? ?????? ????? ???? ?????? ?? ???? ????? ??? (?????  ?246 ?1)

“A person who involves himself in usury will be afflicted wit 70 kinds of sins. The lightest in comparison with others is committing adultery with your own mother.”

In the Holy Qur’an Allah has said: 

?????? ????? ????? ????? ???? ????? ?? ??? ?? ?????? ?? ???? ??????. ??? ?? ?????? ?????? ???? ?? ???? ??????                                                                                                                       

“O’ you who believe! Be afraid of Allah and give up what remains of riba if you are believers. And if you do not do it, then be ready for war with Allah and his Prophets.” (Cha.2 Verse 278)

2. It will not be permissible to use interest money to pay of bank charges. The recipients of interest money are the poor and destitute. However, some scholars such as Hadhrat Ashraf Ali Thanwi (RA) and Molana Khalid Saifullah Rahmani have said that one may use the interest money to make toilets for the poor or to repay an interest based loan. (Raddul Muhtar p.553 v.9 & Jadeed Fiqhi Masaail p.406 v.1)

3. Insurance is unlawful in Islam. And one of the reasons for its impermissibility is that it is based on interest. Therefore, it is permissible to use interest money to pay of car and business insurances. (Jadeed Fiqhi Masaail p.408 v.1 & Imdadul Fatawa p.173 v.3) Similarly, it is also permissible to use interest money to pay of PAYE Employers Tax. (Jadeed Fiqhi Masaail p.407 v.1)

Only Allah Knows Best

Mohammed Tosir Miah

Darul Ifta Birmingham.

About the author