the Fatwa Department Research Committee - chaired by Sheikh `Abd al-Wahhâb al-Turayrî
One should expect to receive no reward or blessing for the giving charity one gives from one’s unlawful earnings.
Abû Hurayrah relates the following hadîth which is found in Sahîh Muslim:
Allah’s Messenger (peace be upon him) said: “Allah is good and accepts nothing but what is good. Indeed, Allah commands the believers with the same command that He enjoins upon His Messengers, and He says:
“ ‘O Messengers! Eat of the things good and pure and work righteous deeds.’ [Sûrah al-Mu’minûn: 51]
“And says: ‘O you who believe! Eat of the things good and pure that We have provided for you.’ [Sûrah al-Baqarah: 172]”
Then the Prophet (peace be upon him) mentioned a man who had traveled on a long journey, his hair disheveled and discolored with dust. “He will raise his hands to the sky saying ‘O Lord! O Lord!’ but his food is unlawful, his drink is unlawful, and his clothing is unlawful. How then can he be answered?”
It is permissible for the charitable organization to accept the money that it knows the donor received through interest earnings. Unlawfully earned money is forbidden for the person who earned it, not for people who later receive that money from him through lawful means.
Indeed, it is the duty of someone who has come into unlawful wealth to rid himself of it by spending it on the needy and in public works. However, he must do so with the intention of ridding himself of unlawful wealth and not with the intention of charity.
And Allah knows best.
Source: Islam Today