Is it allowed for a charity organization to buy prize bonds from its saving with the intention that prize money would also be used for charity purposes? I know that prize bonds are haram but in this era of economic exploitation, wouldn’t it be okay for NGOs like Edhi etc, which exist in a country that does not have an Islamic economic system, to buy prize bonds not for personal benefit but for the poor? What about things like PSO loyalty card which announce prizes after every three month to its customers?

I believe that it is not allowed for organizations doing charitable work to invest their funds in any investment that is un-Islamic. If these organizations are doing their task to please the Almighty, they shouldn’t do anything that displeases Him. God knows that there is suffering in this world. Had He willed, He could have removed it Himself. He has created this worldly life as a trial for us to go through it. It is a part of this trial that we should not do anything unlawful to come to the rescue of the poor. Therefore, all efforts undertaken to collect funds for the needy through methods that are un-Islamic are disallowed.

At the time of the revelation of the Qur’an there was a custom amongst the rich of the society that they used to come together at the time of droughts, and gambled and drank. Those amongst them who would win in gambling would spend the entire amount in charity for the welfare of the suffering poor. When the Qur’an started getting revealed some people started wondering what would be the Almighty’s response to the custom which despite its evil aspects was extremely helpful for the suffering poor. The Qur’an responded with the following message:

They ask you about drinking and gambling. Tell them: “There is great sin in both, although they may have some benefit for men; but the sin is greater than the benefit.” (2:219)

Courtesy: http://www.islamicissues.info/qa_question.php?qid=106