I have received interest money from a savings account which I use for various purposes. I only use this account because the bank charges are negligible in comparison to opening an account purely for savings.
One advice I received is that you are not allowed to give the interest to anyone and it must be used to build toilets or pay fines/taxes. The other is that you can donate to a non-Muslim.
I have subsequently given the interest to a childrens hospital in another city without any intention for reward but fear of Allah’s punishment. The reason why I did this was that whenever I asked anyone if they had fines or taxes to pay they would say no.
As far as the hospital is concerned, the hospital name is The Childrens Hospital Trust and is managed by the Provincial Government of Western Cape. This is a referral hospital just for the children that have complexities and cannot afford the treatment. I get tax deduction certificates but do not use them at all when submitting my tax affairs.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
The facilities of a conventional bank can only be used due to need and necessity. If you are putting your money into a savings account due to necessity, the interest money must be discharged off without the intention of attaining reward; instead you will be merely ridding yourself from wrongly-acquired money.
There is a difference of opinion amongst the contemporary scholars with regards to the disposal of interest money acquired from a bank:
1) The first opinion is that such interest money can only be given to those poor people who are eligible to receive Zakaat. It is necessary that the recipients are granted ownership and possession of the wealth. According to this opinion, it is not permissible to discharge interest money to public welfare projects, hospitals and the like thereof.
2) The second contemporary opinion is that such interest money can be used in public utilities. According to this view, granting of ownership to the poor is not a requirement.
The first view is more precautionary (ahwat) whereas the second view is more accommodating (awsa’).
As for giving the interest money to a non-Muslim, it is permissible to give it to them if they are poor. You may also forward interest money to a public utility directed by non-Muslims. Even then, giving it to the poor Muslims will be better as there are so many out there in the world.
It will not be permissible for anyone to directly gain benefit from the interest money they advance. In addition to this, interest money cannot be used to pay off legitimate taxes or legitimate fines.
It will not be permissible to give interest money to a masjid or for its construction. Likewise, it should not be given to Islamic institutions. 
After observing the background and nature of The Children’s Hospital Trust we understand:
100% of every donation you make to the Children’s Hospital Trust goes directly towards the Red Cross War Memorial Children’s Hospital or one of the projects aimed at improving the standard of pediatric healthcare in the Western Cape.
The Children’s Hospital Trust issues Section 18a tax certificates for all donations over R100 per annum, which are tax deductible for South Africans.
The Children’s Hospital Trust is an independent charity. The Children’s Hospital Trust operational costs are funded from an endowment, ensuring that 100% of all donations received go directly to the specified projects and programmes at the Hospital to benefit children. The same ethos will be applied for projects beyond the Hospital’s doors. Not a cent will be used for administration or operational expenses.
It is a charitable organisation and a non-profit organisation (NPO). Its focus is centered around goals of a general philanthropic nature.
According to the accommodating view (awsa’), dispensing of interest money in such a hospital will be permissible. It is a welfare project without any financial gain.
And Allah Ta’āla Knows Best
Mufti Faraz ibn Adam al-Mahmudi
Checked and Approved by,
Mufti Ebrahim Desai.
 Fatawa Rahimiyyah 9/256, Mahmudul Fatawa 3/63-64, Fatawa Mahmudiyyah 16/386
 Fatawa Rahimiyyah 9/256, Jadeed Fiqhi masaa’il 4/54, Contemporart Fatawaa p.243
 Fatawa Rahimiyyah 9/279
 Kitaabu Fatawa 5/319
 Fatawa Rahimiyyah 9/279
 Fatawa Rahimiyyah 9/256, Jadeed Fiqhi masaa’il 4/54, Contemporary Fatawaa p.243
اللُّقَطَاتُ هَكَذَا فِي مُحِيطِ السَّرَخْسِيِّ .وَمَا أُخِذَ مِنْ تَرِكَةِ الْمَيِّتِ الَّذِي مَاتَ ، وَلَمْ يَتْرُكْ وَارِثًا أَوْ تَرَكَ زَوْجًا وَزَوْجَةً ، وَهَذَا النَّوْعُ يُصْرَفُ إلَى نَفَقَةِ الْمَرْضَى ، وَأَدْوِيَتِهِمْ ، وَهُمْ فُقَرَاءُ ، وَإِلَى كَفَنِ الْمَوْتَى الَّذِينَ لَا مَالَ لَهُمْ ، وَإِلَى اللَّقِيطِ وَعَقْلِ جِنَايَتِهِ ، وَإِلَى نَفَقَةِ مَنْ هُوَ عَاجِزٌ عَنْ الْكَسْبِ ، وَلَيْسَ لَهُ مَنْ تَجِبُ عَلَيْهِ نَفَقَتُهُ ، وَمَا أَشْبَهَ ذَلِكَ كَذَا فِي شَرْحِ الطَّحَاوِيِّ . الفتاوى الهندية ج 1 ص 210 دار الكتب العلمية