Area Jewish Groups Take a Hit Financially
The umbrella group that provides funds to almost every Jewish nonprofit group in the Washington region might have lost more than $10 million when the investment firm operated by Bernard L. Madoff collapsed last week in what authorities describe as one of the largest securities frauds in history.
The Rockville-based Jewish Federation of Greater Washington had almost 10 percent of its endowment invested with Madoff, who was charged last week after confessing to his sons that he had taken $50 billion from investors. The endowment fund is one of dozens of Jewish organizations across the country, including an apparent handful in the Washington area, that invested with Madoff.
“We have a pretty good sense of the scope of our loss, and we understand that the loss and the resulting ramifications have an impact on the services we can deliver throughout the area,” said David Butler, president of the United Jewish Endowment Fund, the federation’s funding arm, which had invested with Madoff Investment Securities since 2004.
The fallout from Madoff’s alleged fraud has had a disproportionate effect on Jewish organizations and philanthropists, the result of Madoff’s own involvement in Jewish nonprofit organizations and the extensive personal networks he built up.
Yeshiva University, the Jewish institution in New York City where Madoff was a board member, might have lost $140 million through investments with Madoff’s firm, the school’s newspaper reported. The foundation of Nobel Prize winner and Holocaust survivor Elie Wiesel is waiting to hear how much of its $37 million investment with Madoff has disappeared. At least two Jewish groups lost almost everything and shut down this week.
“The world of Jewish giving is relatively small, and Madoff was one of the biggest players in that world,” said Gary Tobin, president of the San Francisco-based Institute for Jewish and Community Giving, which studies Jewish philanthropy.
The alleged Ponzi scheme’s effects on Washington’s Jewish community appear to be smaller than those in New York, Boston and Los Angeles, but local leaders warned that the resulting cuts could be considerable. The federation provided $33.7 million to synagogues, Jewish day schools, community centers and dozens of other nonprofit groups in the Washington region and beyond in 2007, according to federal tax filings.
“It seems like a lot of Jewish wealth has been impacted, which is devastating to individuals as well as to the foundations they support and the people who work for them,” said Michael Feinstein, chief operating officer of the Jewish Community Center of Greater Washington, also in Rockville.
Feinstein said JCC officials expect to lose as much as $450,000 of their endowment, which was invested through the federation fund, and are discussing cost-cutting strategies.
Butler said the fund’s losses could have been much worse if not for the federation’s policy of limiting investments with individual firms to no more than 10 percent of its total endowment. In a letter to donors and grant recipients, Butler said federation leaders have hired legal counsel to attempt to recover the money, but he acknowledged in an interview that the endowment fund has probably lost a significant portion of its total value.
“We understand the pain that these losses may cause, and we will do all we can to lessen the impact,” he said.
The federation’s grants range from $100 or less to a variety of organizations to $281,000 to United Jewish Communities, a New York-based group that represents dozens of Jewish groups across the country. Some of its dozens of local donations in 2007 include $77,750 to the U.S. Holocaust Memorial Museum, upwards of $100,000 to each of several synagogues, and $62,274 to the Jewish Social Service Agency.
Some leaders of groups that receive federation money said they have no idea how the losses might affect them.
“Through our own endowment we had no money invested with [Madoff’s] firm, and while we get allocations from the Jewish federation, we really don’t know the magnitude of potential losses,” said Ken Kozloff, chief executive of the Jewish Social Service Agency.
But several Jewish philanthropists in the region said they are concerned about what the full impact may be for area groups. Tobin said he expects the harm from the Madoff scandal to reach far beyond the groups that actually invested with him.
“The organizations that have been hurt provide education, care for the needy, build relationships between Jews and other ethnic and religious groups and so on,” he said. “There is nothing that will not be hurt in some way. This will probably end up being the worst scandal ever for American philanthropy.”
(Tags: Bernard L. Madoff, Scandal, Money, Jewish, Nonprofit)
Originally published here: https://www.washingtonpost.com/wp-dyn/content/article/2008/12/16/AR2008121602751.html