Answered by Sayyidi Habib Umar bin Hafiz (may Allah protect him and benefit us by him)
What is the wisdom behind reciting Surat al-Fatihah and donating the reward for its recitation to the dead?
It is recited because it is the greatest chapter of the Qur’an and there is a great reward for reciting it. It should thus be given precedence over other verses or chapters of the Qur’an. Donating the reward for any recitation of the Qur’an is one of the best actions that someone can perform on behalf of a dead person. The dead are those most in need of these gifts since they no longer have the ability to act. They may, however, still receive them from people whom Allah has given the opportunity to act while they are still alive. May Allah make us among the people of the Qur’an and among those who act according to it. May He have mercy on those among us who are dead and those who are alive, O Most Merciful, through Your immense mercy.