I lent my friend $26,000. When the loan was due, he sent me a check for the full amount – plus $461 as interest for the loan. I immediately called and told him that I wouldn’t accept interest for the loan under any circumstances, since it is prohibited. He apologized for the error but told me that I should cash the check and give the $461 as a donation to a tzedaka of my choice. I would love to make a donation to my children’s school… but something about it doesn’t feel right.

Q: May I cash the check and write a check for $461 to my children’s school?

A: Shulchan Aruch (Yoreh Deah 160:23) rules that a lender may not stipulate that the borrower must hire him when his services are needed.  For example, if the lender is a painter, he may not stipulate that the borrower hire him if he needs a painter.  Similarly, if the lender owns a retail store, he may not stipulate that the borrower must shop in his store (Bris Yehudah 11:24-25).  At first glance it would seem that this should not violate the prohibition against charging interest, since the borrower is not paying interest to the lender; he is merely hiring him to work as a painter and he is paying him a fair wage for that work.  As such, the lender is not receiving any additional amount of money for the loan and it should be permitted.  The reason this is prohibited is that it constitutes tovas hana’ah – benefit of gratitude.  Although there is a dispute in the Gemara (see Kiddushin 58b) whether tovas hana’ah has intrinsic monetary value, Shulchan Aruch maintains that both positions would agree that it is considered an interest payment.  The only difference between the two opinions is whether it is Biblically prohibited or prohibited by Rabbinic injunction.  Accordingly, to accept the additional $461 to give to your children’s school is a form of tovas hana’ah. The prohibition of ribbis applies even if it was not stipulated at the issuing of the loan. Therefore, here, too, it is prohibited to give the $461 to tzedaka. You should return the check to the borrower and ask him to write you a check for the exact amount of the loan.