بسم اللہ الرحمن الرحیم

الجواب وباللہ التوفیق

If you donate this money, it is entirely your choice to do so in good faith, but there is seen a lot of corruption in the money that such organizations collect in the form of funerals and burials. If this organization is operating through such corrupt practices, then this kind of business will not be permissible.

For example:

1. In order to become a member of the committee, it is necessary for each person to deposit a certain amount in their account  every month. If a member does not deposit the amount, he/she will be  excluded from the committee membership and will not provide with the facilities it provides to members who make monthly donations. Obviously, in this case, the committee is least  concerned with "mutual aid” principle. Rather, its purpose is to provide facilities to each member in return for the money they have deposited. These facilities can sometimes be less or more depending on the deposited amount. Hence this scenario becomes illegal due of its similarity to gambling.
2. The members of the committee are sometimes poor who cannot afford to pay the monthly instalments. But for the sake of family or social standing or to avoid the ridicule of the people, they are forced to deposit money but without a good faith. Due to which it is not permissible for  the committee to accept and use this kind of money. According to a Hadith Sharif, which states that: “A Muslim's wealth is halal for another Muslim only if he is willing and happy".
3. Sometimes, instead of sympathizing with the needy, they are being discouraged, and are treated badly, because the poor members of the family who cannot pay the monthly or annual fees to the committee are excluded from the committe. Thus, in spite of their need and necessity, they are not made a part of this program and then on the sad occasion of death they face all sorts of criticism and humiliation. Therefore, this program is not legitimate. Also, if you have any further questions, write down your specific concerns for further clarification.

( وإن لم یکن ثمة من تجب علیه نفقته ففي بیت المال فإن لم یکن ) بیت المال معموراً أو منتظماً (فعلی المسلمین تکفینه ) فإن لم یقدروا سألوا الناس له ثوباً فإن فضل شیء رد للمصدق إن علم وإلا کفن به مثله وإلا تصدق به، مجتبی. وظاهره أنه لایجب علیهم إلا سؤال کفن الضرورة لا الکفایة ولو کان في مکان لیس فیه إلا واحد وذلک الواحد لیس له إلا ثوب لایلزمه تکفینه به. و في الرد: (قوله:فإن لم یکن بیت المال معموراً ) أی بأن لم یکن فیه شيء أو منتظماً أي مستقیمًا بأن کان عامراً ولایصرف مصارفه ط، (قوله: فعلی المسلمین ) أي العالمین به وهو فرض کفایة یأثم بترکه جمیع من علم به، ط ، (قوله: فإن لم یقدروا ) أي من علم منهم بأن کانوا فقراء، (قوله: وإلا کفن به مثله ) هذا لم یذکره في المجتبی، بل زاده علیه في البحر عن التنجیس و الواقعات، قلت: وفي مختارات النوازل لصاحب الهدایة: فقیر مات فجمع من الناس الدراہم وکفنون وفضل شیء إن عرف صاحبه یرد علیه وإلا یصرف إلى کفن فقیر آخر أو یتصدق به‘‘. ( رد المحتار، کتاب الصلاة، باب الجنائز، ج: ۲،ص:۲۰۵،۲۰۶ ، ط:سعید )(ماخوذ از ماہنامہ البینات)