The Charitable Lending Fund
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Q: I, along with some noble brothers known for their good deeds and righteousness, wish to establish a charitable project called the "Charitable Lending Fund." This project aims to collect voluntary charity from benefactors and place it in the fund, then lend it to those in need, such as members of poor families and young people who have not found employment opportunities. It seeks to alleviate the distress of those in financial difficulty, meet the needs of heads of poor households, and provide essential necessities such as work, a car, rent, and furniture. It also aims to prepare some young men from needy families for work to protect their modesty from begging, keep them away from forbidden loans and interest-based loans, and steer them clear of forbidden means of earning. After the needy person receives a loan that meets his need, he repays it in easy installments that correspond to his income. The money available in the fund is then lent out repeatedly to those in need, so the loans move from one person to another, and so on. I hope you will give your opinion on this charitable project, and whether contributing to funding this fund is considered a continuous charity (sadaqah jariyah) for the donor. Please note that amounts will be deducted from the funds available in the fund and placed in investment projects whose returns go back to the fund to strengthen
its income, expand its benefit, and ensure the continuity of its giving.
A: After the Committee studied the contents of the questioner's letter describing the activities of the fund in question, it responded that placing money in this fund is considered a type of continuous charity (sadaqah jariyah). This is because the money continues to be used, as it is lent to one person after another, resembling an endowment (waqf) that is used while its principal remains intact. A group of scholars have explicitly stated the validity of endowing money, and this is a narration from Imam Ahmad and the choice of Shaykh al-Islam Ibn Taymiyyah . However, it is a condition that the money placed in the fund not be from zakah, because zakah must be spent in the specific categories mentioned in the statement of Allah, the Exalted and Majestic:[At-Tawbah 9:60], and the fund in question is not among those categories mentioned in the verse.
its income, expand its benefit, and ensure the continuity of its giving.
A: After the Committee studied the contents of the questioner's letter describing the activities of the fund in question, it responded that placing money in this fund is considered a type of continuous charity (sadaqah jariyah). This is because the money continues to be used, as it is lent to one person after another, resembling an endowment (waqf) that is used while its principal remains intact. A group of scholars have explicitly stated the validity of endowing money, and this is a narration from Imam Ahmad and the choice of Shaykh al-Islam Ibn Taymiyyah . However, it is a condition that the money placed in the fund not be from zakah, because zakah must be spent in the specific categories mentioned in the statement of Allah, the Exalted and Majestic:
Zakah expenditures are only for the poor and for the needy and for those employed to collect [zakah] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveler
إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّهِ وَاِبْنِ السَّبِيلِ
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.