Is it permissible to invest zakaah funds?
Question

                Charitable organizations collect zakaah funds, of which there is a great deal, especially in the month of Ramadan. Is it permissible for the charity to invest these funds, with the profits going to the poor and needy?
Praise be to Allah.
    It is obligatory to give zakaah 
    to those who are entitled to it, who are mentioned in the verse in which 
    Allah, may He be exalted, says (interpretation of the meaning):

    “As-Sadaqaat (here it means 
    Zakaah) are only for the Fuqaraa’ (poor), and Al‑Masaakeen (the poor) and 
    those employed to collect (the funds); and to attract the hearts of those 
    who have been inclined (towards Islam); and to free the captives; and for 
    those in debt; and for Allah’s Cause (i.e. for Mujaahidoon — those fighting 
    in a holy battle), and for the wayfarer (a traveller who is cut off from 
    everything); a duty imposed by Allah. And Allah is All-Knower, All-Wise”

    [al-Tawbah 9:60]. 

    Zakaah is the right of these 
    categories of people over the wealth of the rich. So long as any of these 
    categories is present, they must be given their due. Investing zakaah funds 
    delays giving zakaah to those who are entitled to it, or prevents it being 
    given to them altogether, if the project incurs losses and the capital is 
    lost. 

    Therefore contemporary scholars 
    have ruled that it is not permissible to invest zakaah funds. 

    Shaykh Ibn ‘Uthaymeen (may Allah 
    have mercy on him) was asked about the ruling on some charities investing 
    zakaah funds. 

    He replied: With regard to 
    investing it in the purchase of real estate and the like, I do not think 
    that is permissible, because what should be done is to meet the need of the 
    poor person who is entitled to it at present. As for the poor in the future, 
    that is up to Allah.

    End quote from Liqa’ al-Baab 
    al-Maftooh (1/67) 

    The scholars of the Standing 
    Committee were asked about a charity that wants to invest its funds. 

    They replied: If the wealth 
    mentioned in the question is zakaah funds, then it must be given to the 
    categories who are entitled to it according to sharee‘ah when it reaches the 
    charitable organisation. But if it is not zakaah funds, then there is no 
    reason why it should not be invested in the interests of the charity, 
    because that will further benefit the aims of the charity and those who 
    donate to it. End quote.

    Fataawa al-Lajnah ad-Daa’imah 
    (9/403, 404) 

    They were also asked:

    Can a global Islamic charity 
    invest zakaah funds that may be put in the bank until they are spent, and 
    the investment thereof will not affect their being spent on the categories 
    of zakaah recipients stipulated in sharee‘ah, on the basis that they will be 
    invested in “liquid” or “unfrozen” schemes, so that it will be possible to 
    withdraw the funds when necessary, and they will be invested in areas that 
    are well-established and proven to be trustworthy – although we do not say 
    that they are guaranteed – so that they will not be akin to dubious 
    investments? Moreover the charity is not a real person or several person who 
    represent themselves; rather it is a virtual entity and the people involved 
    are working for the good of Islam and the Muslims. 

    They replied: 

    It is not permissible for the 
    trustee of a charity to invest zakaah funds. What is required is to spend 
    them on the categories stipulated in sharee‘ah, after ascertaining that they 
    are being given to those who are entitled to them. That is because the 
    purpose of zakaah is to meet the needs of the poor and pay off debts of the 
    debtors, and because investment may be detrimental to these interests or may 
    cause severe delay in giving it to those who are entitled to it.

    End quote from Fataawa al-Lajnah 
    ad-Daa’imah (9/454, 455 

    Those who regard it as 
    permissible to invest zakaah funds stipulate that that should only be done 
    after meeting the urgent needs of those who are entitled to zakaah. It says 
    in the resolutions of the Fiqh Council: 

    It is permissible in principle 
    to use zakaah funds in investment projects which will end with those who are 
    entitled to it taking possession of the zakaah, or which belong to the 
    Islamic organisation that is responsible for collecting and distributing 
    zakaah, so long as that is done after meeting the immediate needs of those 
    who are entitled to it and so long as there are sufficient guarantees to 
    prevent loss.

    End quote from Majallat al-Majma‘ 
    al-Fiqhi 

    It is very difficult, if not 
    impossible, to say that this condition could be met, because the number of 
    poor and needy, mujaahideen striving for the sake of Allah, wayfarers, 
    debtors, and those whose hearts are to be softened, exist in the millions. 
    So zakaah must be given to these people, and it is not permissible to delay 
    it. 

    And Allah knows best.