Jewish leaders bracing for Madoff fallout
The amount of money lost by Jewish charities in the Bernard L. Madoff scandal is staggering – $90 million by Hadassah, $110 million by Yeshiva University, and smaller amounts that have forced the closings of several foundations, including one on Boston’s North Shore.
The amount that has gone missing, compounded by the massive loss of wealth in the financial markets this fall, has led many Jewish community leaders to warn of a possible shakeout in the nonprofit world, as some organizations are forced to close or merge.
At the same time, some Jewish leaders are bracing for a backlash of anti-Semitism, which they believe is already being triggered by the very public focus on Jewish wealth and an alleged Jewish criminal.
“To be a Jew, to live fully as a Jew, is to be a blessing to all humanity, and that calling, which dates back to God’s first conversation with Abraham, has taken a potentially catastrophic hit,” said Rabbi William Hamilton of Congregation Kehillath Israel in Brookline. “When one considers the number of philanthropies that have been dedicated to fulfilling that calling that have been crippled or destroyed by Mr. Madoff’s desecration of God’s name, I don’t believe we’ve even begun to appreciate the historic setback.”
The Jewish Funders Network, an alliance of major Jewish foundations, has scheduled an emergency meeting of large family foundations tomorrow to discuss what to do next.
“There’s no question there will be a shakeout” among nonprofits, said Mark Charendoff, president of the organization. “There are organizations we will see, within the next couple of months, close down, and others will merge, and others will be changed forever.”
Jewish philanthropy has an enormous impact on the American nonprofit scene – a study by the Center on Philanthropy at Indiana University found last year that 91 percent of Jews give to charity, making Jews far more charitable than most Christians – and the vast majority of Jewish giving goes to non-Jewish organizations, such as hospitals, museums, and universities.
“They are among the most, if not the most, generous people in our community,” said Paul S. Grogan, president of The Boston Foundation. “And every new revelation suggests that this is going to be far more serious than anyone thought. One gets the impression that a very large percentage of the successful philanthropic Jewish families in this community had some connection to Madoff.”
Many of the bold-faced names of the Jewish community, particularly in New York, Florida, and Massachusetts, have been caught up in the Madoff scandal. Locally, Carl and Ruth Shapiro, who have given about $60 million to Brandeis over the last decade and are funding two buildings under construction there, lost 40 to 45 percent of their foundation, which was worth $345 million at last report. A foundation established by Elie Wiesel, the BU professor and Nobel Peace Prize recipient, had invested almost all of its assets, $15.2 million, with Madoff. The Lappin Foundation, in Salem, closed after announcing that its assets had been invested with Madoff, and the Maimonides School, in Brookline, sent a letter to parents warning that a bequest that had been supporting its operating budget was invested with Madoff.
Nationally, in addition to the losses by Hadassah and Yeshiva, there are scores of affected Jewish philanthropies. The Picower Foundation of Florida, which in 2007 declared assets of $955 million that included multiple Jewish institutions and causes among its beneficiaries, on Friday said it had invested with Madoff and would be forced to close. Last week, the Chais Family Foundation, founded in California but located in Jerusalem, which claimed $178 million in assets and gave primarily to Jewish causes in Israel and the United States, also closed. The American Technion Society, which supports a science university in Israel, lost $72 million with Madoff, according to the Jewish Telegraphic Agency. And there are many more.
The crisis has so unsettled Jewish philanthropy that even institutions not directly affected have begun issuing statements to try to reassure supporters. Hebrew College in Newton sent a letter declaring its investments Madoff-free; the Rashi School in Newton did the same. Both institutions, like many smaller Jewish institutions in Greater Boston, invest through a community endowment pool managed by Combined Jewish Philanthropies, which did not invest with Madoff.
In addition to the losses suffered by other foundations and charities, there is a large indirect impact because many of the organizations that did not have money invested with Madoff depend on donors who did.
But in recent days a handful of voices have emerged suggesting that some of the dire talk might be overblown.
“In the scope of Jewish philanthropy, the Madoff affair is more devastating psychologically and emotionally than it is financially,” said Gary A. Tobin, president of the Institute for Jewish & Community Research, in San Francisco. “Jews give away a minimum of $5 billion a year to Jewish causes alone, and much more than that to non-Jewish causes, so if we add up maybe a billion dollars that’s been lost, and you look at the tens of billions that are sitting in Jewish foundations and the annual operating budgets of Jewish philanthropies, this is serious, hurtful, and painful, but not devastating.”
Barry Shrage, the president of Combined Jewish Philanthropies, is also urging caution.
“It seems hard to believe that this could affect more than one percent of donors, or even one percent of major donors,” Shrage said. “This is a massive piece of economic news, on top of a lot of other bad economic news, but the Jewish people have been through a lot in 3,500 years, and this is not the time to panic.”
Even the Shapiro Foundation, which gave away about $80 million over the last decade but says it had invested between 40 and 45 percent of its assets with Madoff, said it is hoping to avoid reducing donations. “We really are committed to building back the resources as a foundation and anticipate that the foundation will continue to be a strong supporter of the region’s nonprofits for many years to come,” said foundation spokeswoman Diana C. Pisciotta.
But recipients are on edge. “Any college or art institution that relies on the support of philanthropies and benefactors has to be concerned about the future,” said Dennis Nealon, a spokesman for Brandeis University. The school, like many nonprofits that benefit from Jewish philanthropy, holds an annual benefit in Palm Beach; this year it has scaled back the event to just a lecture, canceling the social components because of concern about the post-Madoff climate.
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Some observers say that the Jewish philanthropic world will not be uniformly affected. Those who invested with Madoff appear to have been older, and experts say that older Jewish donors have tended to focus their giving more on established organizations and, within the Jewish community, on “defensive” organizations that battle anti-Semitism. Younger donors, who grew up after the Holocaust and the founding of the state of Israel, have tended to favor smaller and more innovative organizations.
“One thing that’s not sufficiently understood is that the people who are involved in this are disproportionately older, and enormously loyal to the Jewish community,” said Jonathan Sarna, a Brandeis professor. “If that generation has now been wiped out of money, we’re going to see a real change, because the people who made their money in high-tech weren’t affected at all, and the younger Jews don’t even understand how you could have given that much money to one guy.”
Some Jewish leaders are concerned about a possible rise in anti-Semitism.
“It becomes grist for the anti-Semitic mill,” said Rabbi Ronne Friedman of Temple Israel in Boston. “In this instance, there’s a double indemnity – the Jewish community has really been wounded by a Jewish guy, and that’s not going to stop folks who are anti-Semitic from using it as their evidence for Jew hatred.”
The Anti-Defamation League has been monitoring blogs and comment boards and finds a substantial number of anti-Jewish comments.
“Anti-Semitic comments tended to focus on Jewish greed and thievery, as well as conspiracy theories linking these losses to Israel,” the ADL said in an analysis.
Several Jewish community leaders and observers say they are worried about other indirect effects of the scandal – the potential erosion of trust within the community and a potential chilling effect on giving.
“People who have considerable wealth have been acting like they’re going to run out of money, and that fear piece becomes really the biggest contention that the fund-raising nonprofit world has to deal with,” said H. Peter Karoff, chairman and founder of The Philanthropic Initiative, a Boston-based nonprofit that advises donors. “People are just traumatized.”