What is the Islamic Fatwa for a principle of an Islamic school who buys school properties by borrowing money from lending institutions and banks?
All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.
It is prohibited to take up a loan from a usury-taking bank in order to finance charitable projects or any other economic activity. Paying an interest due on a loan is Riba itself, and Riba is strictly forbidden in the Quran.
Establishing charitable projects is a righteous act that brings the doers nearer to Allah, who is Tayyib (which implies pure, good) and accepts only that which is good. So, a person who wants to establish such projects has to use lawful money, since it is not acceptable to commit a sin for the sake of a good deed.
The Prophet said: “Shun what I have forbidden you to do, and do what I have commanded you to do as much as you can.” [Al-Bukhari and Muslim]
Allah knows best.
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