Islamic Ruling on Matched Savings Account

Assalamualaikum,

I work closely with a non-profit organization that helps Muslim refugees settle down in Maine. In efforts to make it easy for immigrant and refugee families to support themselves, we have connected them to different resources that provide helpful services such as low-income housing, Medicaid benefits etc. One other main resource that has come up is “matched savings account” offered through New Ventures Maine, an organization that help Maine people succeed in the changing economy and achieve economic security for themselves and their families. As savings account generate interests which is haram/impermissible and matched accounts are usually fixed, this concerns a lot of Muslim refugees, we are asking you to provide a ruling on this matter, whether these matched savings account are permissible, especially in the case of immigrant families. The matched savings account that I am referring to are “Family Development Account (FDA) Program” and “Rainy Day Savings Account”. The Federal FDA Program offers a matched savings account for income-eligible individuals (under 200% of the Federal Poverty Level) and families who want to save money to buy a home, pay for education or training, or start or expand a small business. Both Federal and Maine funded FDA programs match each dollar you deposit (up to $1,000) in your FDA with $4 from public funding and private donors. It also gives you guidance on how to save and manage your money effectively, how to build good credit, and how to reach your goal. The Rainy Day Savings Account (RDSA) Program offers a matched savings account for income-eligible individuals and families who want to save money to pay for unexpected emergency expenses. This program matches each dollar you deposit in your RDSA, up to $300, with $1 from private donors. In case you need more information, the link to their website is ttp://newventuresmaine.org/programs/manage-your-money/.

New Ventures Maine has tried to address some of the concerns by setting up a savings account with no interest for Muslim immigrant families and not putting the matched funds into the bank account. They likened the program to a gift i.e. if a client has saved, say $1000 towards buying a car, New Ventures would pay $3000 to the car dealership to purchase a $4000 car.

So based on the information that I provided about who funds these programs, eligibility requirements, and the limit on the amount of money, our question is whether they are permissible according to the Islamic rulings. The main concern we have about these programs is that the money being matched has a fixed rate and the money acquired does not involve personal effort which may be considered interest and thus impermissible. Your ruling about this matter will be very helpful to us and the immigrant families.

JazakumulAllahu Kharian