We would like to cite the response of a prominent Muslim scholar, Sheikh Yusuf Al-Qaradawi, on this issue. He said:

Slaughtering the animal is more preferable than donating the money allocated for it, for that is part of Islam’s rituals and a mode of seeking Allah’s Pleasure, as Allah said, (…So pray unto they Lord, and sacrifice…) (Al-Kawthar 108: 2).

Muslims slaughter animals during `eidul-adha in emulation of Prophet Abraham who was about to slaughter his son, Isma`eel (Ishmael), to show obedience to Almighty Allah, when Ishmael was redeemed by a ram brought to Abraham by Angel Gabriel. The Angel then conveyed to him Allah’s Command to slaughter the ram instead.

This act henceforth became a Prophetic Sunnah followed by Muslims. So to slaughter the animal in the `eid is better than donating the money, for if all Muslims were to do that, this virtuous tradition will become obsolete.

However, a donation can be made posthumously on behalf of a person who dies before fulfilling a religious duty of offering a sacrificial animal, if it will be useless to present a sacrificial animal due to, say, for instance, people are not in need of meat.

In short, it is preferable to slaughter animal and offer monetary donation if possible.