Gemara

(Rav Anan citing Shmuel): We may lend orphans' money on Ribis.

Rav Nachman: We should not cause them to transgress. They will be punished for this! What was the case (from which you inferred this)?

Rav Anan: Mar Ukva's orphans had a cauldron by Shmuel; he rented it to others and also charged them if it decreased in weight. To pay both is Ribis!

Rejection (Rav Nachman): One may pay both even to people with beards (adults). They pay for the loss of weight, and also rental, because the remaining metal depreciates through usage.

(Rabah bar Shila): One may invest orphans' money on condition that they are apt to profit but not to lose.

Question: What do we do with orphans' money?

Answer #1 (Rav Yosef): We leave it in Beis Din and give them each Zuz when they need it.

Objection (and Answer #2 - Rav Ashi): We do not allow them to consume the principal! Rather, we find a man with uncontested property, who is trustworthy, knows Torah law and does not accept excommunication. We invest the money with him in Beis Din, on condition that they are apt to profit but not to lose.

Bava Kama 93a: In Pumbadisa, Rav Yosef deposited Tzedakah money with a man. He was negligent, and thieves took it. Rav Yosef obligated him to pay.

Question (Abaye - Beraisa): "To guard" - not (if he was given)... to distribute to Aniyim:

Answer (Rav Yosef): (In most places, we do not know who was destined to receive the money, so no Oni can claim it.) In Pumbadisa, each Oni gets a fixed amount from Tzedakah. The man was like a Shomer for every Oni.

Kesuvos 106b (Mishnah - R. Akiva): We do not invest Hekdesh or Tzedakah for the sake of profit. We do not invest Hekdesh, lest the rich appear to be poor. We do not invest Tzedakah, lest an Oni come, and there will not be what to give to him.

Rishonim

The Rif and Rosh (7:50,51) bring the Gemara in Bava Metzia.

Rosh (50): The Ge'onim permit all Ribis mid'Rabanan with orphans' money.

Rosh (Sof 51): We invest the money with him in Beis Din, in order that the fear of Beis Din will be on him.

Rambam (Hilchos Malveh 4:14): We may give orphans' money to a trustworthy man with good property on condition that the orphans are apt to profit but not to lose.

Hagahos Maimoniyos (Mishpatim Teshuvah 14): A man was negligent with Tzedakah money, and Rav Yosef obligated him to pay. This shows that Tzedakah is not like Hekdesh, rather, like money of people. Avi ha'Ezri learned from here that we may not lend Hekdesh on Ribis. My Rebbi permits. He learns from the Yerushalmi, which allows borrowing on Ribis for the sake of a Mitzvah like (the meal to publicize) Kidush ha'Chodesh. Since we may borrow on Ribis for the sake of a Mitzvah, all the more so we may lend on Ribis (money for) the Mitzvah itself. The Ri permits even Ribis mid'Oraisa, since it did not say 'apt to profit but not to lose', i.e. Ribis mid'Rabanan. Also, Stam 'Ribis' connotes mid'Oraisa. Rav Yosef obligated the man only because in Pumbadisa, each Oni gets a fixed amount from Tzedakah. Elsewhere, one may lend Tzedakah on Ribis. A Mishnah forbids investing Tzedakah. It refers to Tzedakah that is to be distributed. We may invest Tzedakah in which the principal remains and Aniyim eat the Peros.

Question (Mishneh l'Melech DH Od Kosav): The Tur says that Avi ha'Ezri forbids even Ribis mid'Rabanan. What is his source?

Mordechai (Bava Metzia 287): Avi ha'Ezri learns from Kesuvos. We gave different reasons why we do not invest Hekdesh and Tzedakah. This shows that they are different, so we may not lend Tzedakah on Ribis.

Rosh (Teshuvah 13:8): Fixed (mid'Oraisa) Ribis is not permitted with money made 'Hekdesh' for the poor or Talmud Torah, only with Hekdesh Bedek ha'Bayis, which is not 'Achicha". One pays for damage to an ox of "Re'ehu (his fellowman)", but not of Hekdesh. Maharam me'Rotenburg proves from Bava Kama that money of Aniyim is like of Re'ehu. Abaye wanted to exempt the Shomer due to "Lishmor" - not to distribute to Aniyim. If it were not Mamon Re'ehu, in any case he is exempt! Why did Maharam need a proof? This is obvious!

Mishneh l'Melech (Malveh 4:14 DH Kosav ha'Rashba): The Rashba (669) says that perhaps we are lenient to lend money for Talmud Torah on Ribis to Yisraelim because the Ribis does not go from borrower to lender. The money does not have known owners. However, one should not do so, lest people be lenient elsewhere. The Maharit (39) understood that this is because one does not pay Ribis to "Re'ehu". He asks (45) why the Rosh considers it obvious that money of Aniyim is Re'ehu. He answers that money that no one can claim is not called money. One might have thought that if Levi gave money for Aniyim, it is considered his until it is distributed. We expound "Lishmor" - not to distribute to Aniyim. I.e., it is not called Levi's money. It seems that the Rashba permits because there is no Isur for the owner of the money.

Poskim

Shulchan Aruch (YD 160:18): All Ribis mid'Rabanan is permitted with money of orphans, and 'Hekdesh' for Aniyim, Talmud Torah or needs of a Beis ha'Keneses.

Rema: The custom is to be lenient, even though some are stringent to require making the contract in Beis Din.

Beis Yosef (DH u'Ma'os): The Mordechai (like Rashi) said that we invest in Beis Din, for they can make the man's property Hefker (to allow Ribis mid'Rabanan). Without Beis Din, the orphans' money is like regular money. The Rosh disagrees. Rather, it is to instill fear of Beis Din on him. Talmidei ha'Rashba suggest that perhaps Beis Din must authorize lending the orphans' money.

Pilpulei Charifta (5:5): The Rosh disagrees with Rashi, for surely we do not need Beis Din to permit Ribis mid'Rabanan with orphans' money. Chachamim permitted it!

Beis Yosef (DH Kosav ha'Rashba): The Rashba says that the Yerushalmi explains that 'apt to profit but not to lose' is when the borrower accepts any loss on himself, and to share any profit. The principal will remain for the orphans. He may not borrow for his own needs and repay later, for this is absolute Ribis! The Rashba says that perhaps the only Ribis mid'Rabanan permitted is 'apt to profit but not to lose', in which the orphans' principal remains intact, and the profits come from it, not from the borrower's money. The Ge'onim, Rambam and Rosh all permit all Ribis mid'Rabanan, so we are not concerned for the Rashba's Safek.

Shach (27): I never saw or heard of anyone lend such money on Ribis. We lend only in ways permitted even for adults.

Rema: An overseer may lend an orphan's money on Ribis mid'Rabanan until he is mature enough to handle his money, even if he is above 13.

Beis Yosef (DH Kasuv bi'Terumas): The Terumas ha'Deshen (300) says that if a man does not want to feed his son or help him manage, the son is not considered an orphan. It seems that if a man died and the son does not know how to manage his money, even if he is an adult, he is considered an orphan. If so, one should be allowed to lend a widow's money on Ribis mid'Rabanan, for most widows do not know how to manage their money! This is astounding; no Posek ever said so. Perhaps this is because she can manage her money like other women; she need not be able to manage it like men. The Maharil was not lenient for orphans above 13.

Gra (46): The Gemara said 'one may pay both even to people with beards.' This shows that in all cases, one with a full beard has understanding. He is not considered an orphan.