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Fatwa CenterLending money should not be conditioned by a benefit
Question
Bismillah, We are a group of Muslim graduates living in Qatar (we named it as old boys association). We have agreed upon that every one should pay 10 Riyals monthly which is used for the benefit of our Islamic college in India and some Islamic activites here in Doha. We are more than 100 old students and living here from a long time. Since we are accumulating this money from a long time the total amount reached to some thousand Riyals. Instead of leaving this amount unused we decided that whoever is in need may take loan form this amount provided he should clear his all previous monthly dues for the old boys association. What is the religious rulings concerning what we are doing? Whether taking loans from this amount is allowed? Some times we get together for Islamic purpose and have food form this money, is it allowed? Now, we decided to introduce another new policy for the benefit of our brothers who are being fired from their jobs. The policy is as follows: 1- This is a policy for “Tawun Alal Kahir” for every one who leaves Qatar. 2- It is an optional policy not a compulsory for all the members of old boys association. 3- Whoever wants to enroll (from amongst us) in this policy has to pay 125 Riyals as admission fee. 4- He has to pay 10 Riyal (other than the above ten Riyals) monthly for this policy. 5- After six months any member (who has accepted this policy) leaves this country he will get 10,000 Riyals as a gift for him. 6- If one fails to pay for three months we will inform him first and then we will fired him form the policy and he will not get any amount he has paid till the date since what he is paying is Sadaqa and he does not have the right to take back the Sadaqa. The justification for this action is that we did not force him to accept this policy. 7- If two three people leave country at the same time and the fund does not have sufficient amount i.e. ten thousand for each one then we will distribute the available amount among them. It means
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
Helping in goodness and truth, and helping the poor and needy is something that Allaah ordered His slaves to do. Allaah Says (what means): {Help you one another in virtue, righteousness and piety.}[Quran 5:2] The best act of goodness is calling people to Allaah. Allaah Says (what means): {And let there be [arising] from you a nation inviting to [all that is] good, enjoining what is right and forbidding what is wrong, and those will be the successful.}[Quran 3:104]
We ask Allaah to help the brothers who are cooperating in righteousness and piety and reward them for doing so.
As regards the articles of the contract which you mentioned, they are religiously permissible and acceptable except one article, which is conditioning on the members of the Project (i.e. the Association) who want to borrow money from the members to first pay the delayed instalments which he had not paid.
The instalments are a donation from the members, so if the latter are conditioned to first pay the donation in return of getting a loan from the money of the Project, then it appears that this is not permissible. This is similar to what the scholars 
mentioned that when the creditor conditions the debtor to give him a charity, then this is not permissible.
To conclude, lending money is a contract of help, therefore, it is not permissible to condition a benefit, whether it is for the creditor or the debtor.
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