Madoff scandal rocks Jewish philanthropic world
Area foundations take stock — or lose it
A handful of local foundations appear to be unscathed by the fallout from Bernard Madoff’s alleged Ponzi scheme, but the full effects on donors have yet to be realized.
While the country’s economic downturn has taken place over the course of several months, this single instance was sudden and provided no time for those affected to make changes to limit the damage. Mark Charendoff of Englewood, president of the Jewish Funders Network, called the fallout on his organization’s members “absolutely devastating.”
“In a way, this is worse than the general economic downturn,” he said.
Unlike the unrest in the stock markets that has rocked the nonprofit donor base recently, the fallout from this scam is irreversible and, in some cases, complete.
“People understand that as much as the market went down, the market will go up. That’s not the case here,” Charendoff said. “There are some people who’ve just had all their money all in this one ‘safe place.’ That’s something that they just can’t recover from.”
One of the most notably hit organizations in New Jersey is the family foundation of Sen. Frank Lautenberg, reportedly one of the wealthiest members of Congress.
“Sen. Lautenberg was an investor in Bernard Madoff’s investment fund, primarily in the form of his family’s charitable foundation,” said Lautenberg’s spokesman, Scott Mulhauser.
According to a 2006 tax document obtained through the nonprofit tracking Website Guidestar.org, the foundation was a donor to more than two dozen Jewish and Israeli causes. Its contributions for 2006 totaled $765,509 to more than 100 organizations, including American Friends of Magen Dovid Adom, American Friends of Israel, the Anti-Defamation League, Chai Lifeline, Hadassah, UJA MetroWest, and UJA Federation of Northern New Jersey.
UJA-NNJ issued a statement on Tuesday that it has no connection with Madoff and remains unaffected.
“UJA Federation of Northern New Jersey and its Endowment Foundation did not have a relationship with Madoff, and we have confirmed with SEI, our investment manager, that no portion of the Endowment Foundation’s portfolio is invested with Madoff,” according to the statement.
Similarly, the Teaneck-based Russell Berrie Foundation had “zero exposure with Madoff,” said its president, Angelica Berrie. While the rest of the financial world takes a hit, Berrie looked at the situation as an opportunity for those who still have the means to make up for charities’ losses.
“The real emergency in the next few years is going to be the emergency in our community,” she said. “We have the opportunity to exercise our humanistic values.”
This new crisis within the fund-raising world will last years, too, said Charendoff.
“We don’t know how many years and we don’t know how severe it will be,” he said. “There are charities that are going to be affected that won’t even know about it for a year.”
While some organizations have no connection with Madoff and seemingly have been spared, they cannot yet account for all of their donors. For example, he said, a charity that received a six-figure gift from a donor this December may expect and plan for a similar gift next year.
“Next December is going to roll around and they’re going to find out the donor doesn’t have the capacity to make the gift,” he said.
The Jewish nonprofit world will eventually recover, though, he said.
“The only way we’re going to be able to minimize the damage to the charities we all care about is to work together to figure out what the needs really are — to figure out which programs can be salvaged, postponed, which organizations should merge,” he said. “We can’t avoid the damage but it is in our power to minimize it.”
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Bernard Madoff is not the only trustee of Yeshiva University who resigned in shame last week.
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The securities fraud of Bernard Madoff has rocked the Jewish nonprofit world — and the worst may be yet to come.
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