Madoff Case Creates Worst Loss for Jewish Charities
Dec. 17 (Bloomberg) — New York’s Museum of Jewish Heritage recently cut its staff by 12 percent as it projects smaller donations following the worst year for U.S. stocks since 1931.
In the wake of the arrest of Bernard Madoff in what’s being called the biggest scandal in philanthropic history, museum Deputy Director Ivy Barsky expects more pain.
“It’s devastating, even for those of us who aren’t directly affected,” she said.
Madoff’s wealthy Jewish clients in New York, Boston and Palm Beach, Florida, are coping with pain and anger after disclosure of the alleged multibillion-dollar Ponzi scheme. The nonprofits they’ve funded will likely contend with budget cuts.
“I can’t think of anything since the Great Depression that had an impact of this size,” said Melissa Berman, president of Rockefeller Philanthropy Advisors in New York.
Jews in the U.S. give more than $5 billion to Jewish causes. Although they comprise just 2 percent of the population, Jews contribute 25 percent of the largest gifts to higher education, according to a recent study cited by Gary Tobin, president of the San Francisco-based Institute for Jewish and Community Research.
“To see foundations losing big parts or all of their assets through fraud has never happened before,” he said. “This is a tremendous violation of the public trust.”
The losses to Jewish philanthropists — who include film director Steven Spielberg and real-estate developer Mortimer Zuckerman — are in the hundreds of millions, if not billions.
Brandeis, Boston Museum
The $345 million Carl and Ruth Shapiro Family Foundation had about 45 percent of its assets invested with Madoff, a spokeswoman said. The foundation, a major donor to Brandeis University and Boston’s Museum of Fine Arts, was funded by Carl Shapiro, who sold his Kay Windsor Inc. women’s clothing business to VF Corp. in 1971.
“The Shapiro Family Foundation was shocked and horrified to learn about allegations against Mr. Madoff, who has long been considered a trusted and effective leader in the investment field,” a foundation statement said.
U.S. Senator Frank Lautenberg’s foundation was among the charitable groups that invested with Madoff, who told his sons he committed a $50 billion fraud.
The foundation run by Lautenberg, a New Jersey Democrat, invested $12.8 million of its $13.8 million in assets with Bernard L. Madoff Investment Securities at the end of 2006, according to a tax return for the organization.
The Lautenberg foundation’s largest donation in 2006 was $352,500 to the United Jewish Appeal of MetroWest NJ in Whippany, New Jersey.
Los Angeles Federation
The board of the Jewish Federation of Greater Los Angeles, the city’s largest Jewish nonprofit, may have suffered a Madoff- related loss of $6.4 million, or 11 percent of its endowment, President John Fishel said. It will meet next week to review investments and see “if any changes should be made,” he said.
The federation, with a budget of about $50 million this year, has “sufficient resources” to continue its mission of providing social services to the poor in the Jewish community, he said.
Yeshiva University lost about $110 million tied to the scandal, a spokesman for the New York school said.
Most of the losses were invested through hedge funds controlled by J. Ezra Merkin, who was a Yeshiva trustee and chairman of the school’s investment committee, spokesman Bill Anderson said in a telephone interview. Yeshiva, a 122-year-old private school that combines academic and religious education, has an endowment of about $1.2 billion remaining.
Ramaz, a Jewish school on New York’s Upper East Side, had about $6 million with Madoff. Congregation Kehilath Jeshurun, an Orthodox synagogue also on the Upper East Side, has about $3.5 million at risk.
“We are still in the process of gathering the facts and assessing the current status” of the investment, Eric Feldstein, the synagogue’s president, wrote in a letter yesterday to his congregation.
Maimonides School, an Orthodox day school in Brookline, Massachusetts, may have lost $5 million investing with Madoff, Chairman Jeffrey Swartz wrote to the parents of students.
Last night, about 1,100 attended the UJA-Federation of New York’s annual Wall Street dinner. On Page 2 of the program, Madoff is listed as an executive council member. The dinner raised about $18.8 million, down from $21.6 million last year.
“There’s no question a number of our large and medium donors were hurt by this,” Jerry Levin, the organization’s chairman and head of JW Levin Partners LLC, said in an interview. “I think the list is going to be considerably bigger.”
UJA-Federation of New York aids more than 100 health, education and community organizations. It said in a statement that it didn’t invest with Madoff.
To contact the writers on the story: Philip Boroff in New York at firstname.lastname@example.org; Patrick Cole in New York at email@example.com.