The prohibition of blood is established in the Qur'ân: "Forbidden to you is that which dies of itself, and blood, and flesh of swine, and that on which any other name than that of Allah has been invoked, and the strangled (animal) and that beaten to death, and that killed by a fall and that killed by being smitten with the horn, and that which wild beasts have eaten, except what you slaughter, and what is sacrificed on stones set up (for idols) and that you divide by the arrows; that is a transgression." [Sûrah al-Mâ'idah
Also, the Prophet (peace be upon him) said: "If something is forbidden upon a people for food, its price is also forbidden to them." [Sunan Abî Dâwûd
(3488) and Musnad Ahmad
On the strength of this evidence, contemporary Islamic scholars have determined that the sale of blood is unlawful, even though blood transfusions and voluntary blood donations are allowed.
One of the first legal pronouncements to be issued in this regard was made in 1950 by Sheikh Husnayn Makhlûf, Egypt's Grand Muftî at the time. Then there was that of his successor, Sheikh Hasan Ma'mûn, which he issued in 1959.
These were followed by many others. The Algerian Fatwa Council passed a ruling to that effect 1972. The Fatwa Council of Jordan did so in 1977. Saudi Arabia's Committee of Leading Scholars passed a verdict to the same effect in 1979.
The Islamic Law Council of the Muslim World League issued its ruling prohibiting the sale of blood on 20 February 1989. This decree also elaborated that a blood transfusion from a woman to a child under two years of age does not produce a foster relationship. (This is another point that all decrees addressing the matter have been in agreement about.)
Dozens, indeed hundreds, of similar decrees have been issued by scholars and organizations around the world.
Likewise, hundreds of books and scholarly articles have been written regarding various questions surrounding blood transfusions. Everything written in favor of blood transfusions has consistently stressed that its permissibility is only in order to preserve life and treat illness. These works also maintain that blood should be donated on a voluntary basis, and not in exchange for any compensation. However, if a patient or hospital is in need of blood, and the only way to procure it is to pay for it, then there is no sin upon the patient or hospital officials for purchasing it. However, all precautions should be made to ensure that the blood is safe and free from disease.
The ruling issued by the Muslim World League's Islamic Law Council states the following:
As for compensation being taken in exchange for blood – in other words, the sale of blood – the Council had determined this to be unlawful and that its unlawfulness is explicitly stated in the Qur'ân along with carrion and pork. This is why it is unlawful to sell blood, especially since it is authentically related in the hadîth that: "When Allah forbids something, He forbids its price." It is also established that the Prophet (peace be upon him) forbid the sale of blood.
Exempted from this are cases of medical necessity (darûrah) when sufficient supplies of blood cannot be obtained without compensation being given. This is a case where necessity makes permissible that which is unlawful. Therefore, it will be allowed for the purchaser to secure the amount of blood that is needed and there will be no sin on the purchaser for paying the price to the seller. The sin for the transaction will fall entirely on the seller.
Also, there is no objection to giving money as a gift or as a stipend to encourage participation in a blood drive and engage in the humanitarian effort of donating blood. In this case, the matter will remain one of charity and not one of a commercial transaction.
And Allah knows best.