Personal Finance Question: Donation-Based Crowdfunding

Salaam alaikum wa rahmatullahi wa barakatuh,

Is it permissible/halal for someone to take.get money from Donation-Based Crowdfunding and use it for like, investing?

Jazak Allah khair!

Wa alaykum salaam,

If the definition and your understanding of donation-based crowdfunding is as follows, then it is permissible:

This is where individuals donate money to a cause, charity or person without expecting anything in return other than the satisfaction of having contributed towards something they feel is worthwhile. It is typically used by social causes, not-for-profit organisations and arts projects for example, to raise money.

If you are seeking to raise capital, I would always advise to double check with a Mufti if the structure is Shariah compliant.

Allah knows best

Jazak Allah khair for the reply! But I mentioned about investing. So, can I invest (whether in Sukuk or the stock market, etc) with that money? Is it haram?

You should avoid asking for donations to invest. The only time donation-based crowdfunding should be used is when it is for a charitable cause or for yourself in times of desperation and need.

To merely ask for donations so that you may invest goes against the very teachings of the Prophet Muhammad (peace be upon him).

Al Bukhari and Muslim reported from Abdullah Ibn Umar (Radiya Allahu Anhu) that the Prophet (Sallallahu Alaihi wa Sallam) said: “The person keeps on begging until he comes on the Day of Resurrection with a face without any bit of flesh.”

Al Bukhari reported from Abu Hurairah that the Prophet (Sallallahu Alaihi wa Sallam) said: “By whom my soul is in His Hand! It is better for one of you to collect firewood and carry it on his back (to sell it in town) than to ask someone for something. He might give it to him or he might not.”

In another narration: “It is better for one of you to collect firewood, carry it on his back and give away Sadaqa (alms) from it hence becoming self-sufficient than to ask someone who might give him or refuse. Indeed, the upper hand (the hand that gives) is better than the lower hand (the hand that takes). The person should start (when giving away) with those he is in charge of.”

As for those to whom begging is lawful in Islam, they are three only: 1) the person who becomes a guarantor of large amount of money to reconcile people 2) whoever suffered from a disaster or a misfortune that affects his property. 3) The needy person who cannot satisfy his necessary needs from own belongings. The evidence for this is the Hadith reported by Muslim: “O! Qabisa, begging is not permissible but for one of the three (classes) of persons: one who gives a guarantee to a large amount to settle the dispute of people, for him begging is permissible till he pays that off, after which he must stop it; a man whose property has been destroyed by a calamity which has smitten him, for him begging is permissible till he gets what will support life, or will provide him reasonable subsistence; and a person who has been smitten by poverty, the genuineness of which is confirmed by three members of his peoples, for him begging is permissible till he gets what will support him, or will provide him subsistence. O! Qabisa, besides these three (every other reason) for begging is forbidden, and one who engages in such consumes what is forbidden.”

Allah knows best