Subscribe To our E-Newsletter
In the Post-Madoff Era
Few tears were shed when Bernard Madoff was hauled off to jail last week. While his despicable $64 billion fraud reached far and wide, it hit especially hard among Jewish individuals and institutions, many of whom were unwittingly ensnared in his web of deceit.
The list of organizations he swindled is well-known by now -- Yeshiva University, Hadassah, American Jewish Congress, American Technion Society, to name just a few. Several federations around the country also lost millions, though Philadelphia, thankfully, was not one of them.
Among the individuals who lost much in the Ponzi scheme were big names such as Elie Wiesel and New Jersey Sen. Frank Lautenberg, along with thousands more lesser-known figures who had put their trust in a fellow Jew.
Despite his courtroom remorse, it will take a lot of hard work to forgive Madoff come Yom Kippur. We may never understand why a man of such means could abuse his power -- and the public trust -- and ultimately bring down so many.
But one thing that's already becoming apparent is how the Madoff affair is beginning to change the way some Jewish institutions are thinking and operating. Tough times present an opportunity for organizations to take stock on several critical fronts.
This could be the one bright spot on an otherwise dismal horizon as agencies struggle with layoffs and other painful cuts and, in some cases, scramble just to stay afloat.
In some corners, hard questions are being asked about investment practices, economies of scale, possible mergers, the wisdom of endowments and core missions.
For others, the situation has prompted a new openness with donors and the public. The top executive of the Jewish federation in Chicago, for example, wrote an op-ed distributed by JTA that detailed his federation's investment policies and advocated the pooling of assets by institutions with less than $50 million endowments.
This is a trend that we are likely to see more of, according to Professor Jonathan Sarna of Brandeis University. In a lengthy essay examining the economic impact in historical terms, he wrote that the Madoff affair is likely to lead to "calls for higher standards of ethics and for greater transparency. Donors will demand more openness, less reliance on 'the wisdom of the rich,' and a higher general commitment to ethical principles and to transparent investments and spending."
To some extent, it's hard to separate the fallout from Madoff and the simultaneous economic downturn that is decimating so many Jewish institutions and philanthropies across the country.
But to the degree that both crises serve as a wake-up call to Jewish nonprofits as they struggle to survive and carry out -- and in some cases, redefine -- their mission, this could be a good thing.