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Putting money in the bank, and can hospitals be built with zakaah funds?

If a person has money in a savings account or in the bank, and he pays zakaah on that money every year, does this money become dubious because of the interest? With regard to paying zakaah, is it permissible to donate this money for building a hospital or orphanage (by putting this money in a special account) or must it be given hand to hand?.

Praise be to Allaah.  

Firstly: 

Putting money in riba-based banks and taking riba for that, which is called interest, is a major sin, and paying zakaah on that money does not absolve one of sin. 

See the answer to question no. 22339, which explains the prohibition on riba. 

The answer to question no. 181 explains the prohibition on putting money in riba-based banks. 

Secondly:  

With regard to what zakaah may be spent on, it is not permissible to use it  for building a hospital or an orphanage, whether it is given hand to hand or via another means. The areas in which zakaah may be spent are limited and it is not permissible to add anything to them. The areas in which zakaah may be spent are mentioned in the verse in which Allaah 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 Allaah’s Cause (i.e. for Mujaahidoon — those fighting in a holy battle), and for the wayfarer (a traveller who is cut off from everything)”

[al-Tawbah 9:60] 

We have explained these further in our answer to question no. 6977 

We have stated in a number of our answers that it is not permissible to use zakaah money for building mosques or schools, or for printing copies of the Qur’aan. See questions no. 13734 and 21797

But if the intention in giving the money to an orphanage is so that this money will be spent on the poor orphans, then this is permissible, if the orphans are poor. 

It is better for you to dispose of the zakaah on your wealth yourself, so that you can be certain that you have given it to one of the causes enjoined by Allaah. You have to do your best to identify those who are entitled to it. 

And Allaah knows best.

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