Can interest money be used to pay for toilet facility and wudu khanas (ablution facility) for an orphanage?
In the Name of Allah, the Most Gracious, the Most Merciful.
There are two views among the Ulama regarding the disposal of interest money received from the bank:
1) The first view is that such interest money can only be given to the poor who are entitled to receive Zakat (i.e. they must not possess the nisab of Zakat). It is also necessary that the recipients are granted ownership and possession of the wealth (tamleek al-fuqaraa). According to this view, it is not permissible to utilise such interest money directly in public welfare projects, such as building roads, bridges and public toilets etc.
(Fatawa Mahmudiya: 24l431, Maktaba Mahmudiya)
2) The second view is that in addition to giving such interest money to the poor, it is permissible to use such interest money directly in public welfare projects. According to this view, granting of ownership to the poor (tamleek al-fuqaraa) is not a requirement.
(Fatawa Raheemiya: 9/279-282, Darul Isha’at)**
(Kifayatul Mufti: 7/105, Darul Isha’at)
The first view is more precautionary (ahwat) whereas the second view is more accommodating (awsa’).
In view of the different academic views, there is a leeway to use interest money received from the bank for the construction of toilets and ablution facility for an orphanage.
As a general rule, no Muslim by his free choice should deposit his money in an interest-bearing account. A non interest-bearing account should be utilised for the purpose. If there are any intricacies, a mufti should be consulted.
And Allah knows best.
Mufti Faizal Riza
Darul Ifta Australia