Is extravagance in charity blameworthy, such that moderation should be observed to avoid financial harm? And what is the interpretation of the verses: "And those who, when they spend, do not squander nor are stingy but are moderate between the two" and "Do not make your hand shackled to your neck, nor extend it completely"?

Obligatory charity (such as zakat, Sadaqat al-Fitr, and vowed charity) cannot involve extravagance, because its amount is fixed. As for voluntary charity, blameworthy extravagance can enter into it if it exceeds what is customary, and leads to the impoverishment of the giver, for Allah Almighty says: (And do not be extravagant. Indeed, He does not like the extravagant.)

A Muslim should not donate all of his wealth in charity; rather, it is better for him to give some and retain some, based on the Prophet's (peace be upon him) saying to Ka'b ibn Malik: "Keep some of your wealth, for it is better for you," and his (peace be upon him) saying: "The best charity is that which is given when one is rich."

Allah has commanded moderation in recommended charities, and not to exceed the limit that leads to the impoverishment of the giver himself. He, the Almighty, says: (And those who, when they spend, are neither extravagant nor stingy, but rather are moderate in between), and He, the Exalted, says: (And do not make your hand shackled to your neck, nor extend it completely, lest you sit blameworthy and regretful.)