Skip To Content

Charities, Day Schools Hard Hit by Madoff Scandal

The collapse of the investment firm of Bernard Madoff has opened a black hole at the center of the tight knit circles of wealthy Jews who socialize and do business together, and who, year after year, support Jewish causes.

Madoff, who stands accused of running a multibillion-dollar Ponzi scheme, served on the board of Yeshiva University and was a long-time donor to the UJA-Federation of New York, and many other Jewish-oriented charities. He belonged to exclusive Jewish country clubs, where members reportedly begged to be allowed to invest with Bernard L. Madoff Investment Securities.

“The Jewish philanthropic world depends on personal relationships and personal solicitations,” said Gary Tobin, president of the Institute for Jewish and Community Research, which studies Jewish philanthropy. “Many Jewish philanthropies are dependent on high-end donors in very close social and economic networks, and this guy is right in middle of them.”

Now, the tight bonds of these circles are turning into shackles. They are ensnaring many of those who knew Madoff, trusted him, and invested with him; some of them have lost everything.

The scandal has reportedly engulfed its share of boldfaced names — Senator Frank Lautenberg, New York Mets owner Fred Wilpon, real estate and media mogul Mortimer Zuckerman, and GMAC Financial Services chairman J. Ezra Merkin, among them. The Elie Wiesel Foundation for Humanity and Steven Spielberg’s Wunderkinder Foundation have also been hard hit by Madoff’s collapse, according to reports.

But the alleged scheme has also had a devastating impact on lower-profile Jewish individuals and institutions. In recent days, two Jewish charities that invested the bulk of their assets with Madoff have been forced shut.

Within 24 hours of Madoff’s arrest, the Boston-based Robert I. Lappin Charitable Foundation closed its doors. The 16-year-old charity, with $8 million in assets, funded teen trips to Israel, enrichment programs for Jewish educators, and interfaith outreach initiatives.

Two days later, the much larger Chais Family Foundation, which in 2006 distributed $8.1 million to mostly Jewish causes, announced that it would shut down as its entire portfolio had been invested with Madoff. Tax returns show that the Encino, Calif.-based Foundation was a major supporter of the American Committee for the Weizmann Institute, to which it gave $1.4 million, and to Hillel: The Foundation for Jewish Campus Life, which received $300,000 — earmarked for start-up and operating expenses at its centers in Israel and the Former Soviet Union. Also that year, the Chais Foundation granted $50,000 to the Hillel campus center at UCLA.

Hillel spokesman Jeffrey Rubin said that the Hillel foundation had only minimal exposure — about $20,000 of its assets were in a fund tied to Madoff — but he was not sure how the Chais Foundation’s demise would impact Hillel going forward, or whether other major Hillel donors had lost significant wealth. “We’ll have to work to make up for that money,” he said. “In this economy, we can’t take anything for granted.”

Facing some of the largest known losses is the Carl and Ruth Shapiro Foundation, based in Boston, which lost an estimated 40% of its endowment as a result of investments with Madoff. Its 2007 tax return shows that the foundation gave away $12.9 million, with well over $1 million going to Jewish charities — including $360,500 to Combined Jewish Philanthropies of Boston, $200,000 to the Jewish Home for the Aged in Palm Beach, and $150,000 to the Anti-Defamation League. In addition, the foundation gave more than $3 million in capital, operating support, and project support to Brandeis University.

Regardless of whether any of its Madoff-tied funds can be recovered, the Shapiro Foundation intends to make good on all of its outstanding pledges — even if it means invading a portion of the endowment’s principal, according to a source familiar with organization’s finances.

Hadassah, the Women’s Zionist Organization of America had approximately $90 million invested with Madoff, according to a statement released by the organization on December 17: “Falling victim to this unprecedented fraud will require us to make necessary adjustments, but it has not in the slightest affected our commitment to our core Zionist mission.”

Yeshiva University, where Madoff was the treasurer and the chairman of the business school, has reported a $110 million loss, and the American Jewish Congress says it had substantial exposure, but did not specify a dollar amount. The Jewish Funds for Justice estimated its losses at $3.9 million.

Meanwhile, the United Jewish Endowment Fund of the Jewish Federation of Greater Washington, which had been investing with Madoff since 2004, has admitted exposure of “over $10 million in a variety of stocks, bonds, cash and other investments” — representing about 10% of its total portfolio; and the Los Angeles Jewish Community Foundation yesterday said its losses could total $18 million, which is less than 5% of the charity’s total assets, according to a statement put out by Foundation chairwoman Cathy Siegel Weiss and President and CEO, Marvin I. Schotland: “In light of the substantial recent declines in the stock market as well as the financial impact of the Madoff situation, The Foundation is re-evaluating its investment strategies and examining ways to respond to these changed market conditions. This process includes a full review of The Foundation’s policies, practices and due-diligence procedures.”

The Forward Association had an indirect exposure to Madoff-related funds amounting to $355,000, which represents less than 1% of the Forward Association’s financial assets.

“It’s an atomic bomb in the world of Jewish philanthropy,” said Mark Charendoff, president of the Jewish Funders Network, an organization that advises wealthy Jewish donors. “There’s going to be fallout from this for years.”

Jewish education institutions have also hurt. SAR, a major Orthodox day school in Riverdale, N.Y. lost one-third of its endowment with Madoff’s meltdown, BloombergNews reported Monday. And Ramaz, another prominent school in Manhattan, as well as Maimonides School in Boston, have also been significantly affected, according to JTA.

One reason that the effects in the Jewish non-profit world may be so extensive, ironically, is that Madoff’s firm was perceived as a low-risk place to park money, Charendoff said: “Madoff was perceived as a such a safe place to invest, you’re seeing places like Chais that didn’t have this as part of their portfolio, it was their portfolio.”

But not everyone was taken in by Madoff’s promises of steady returns in up and down markets. Jeffery Solomon, president of the Andrea and Charles Bronfman Philanthropies, said that his foundation was approached about investing with Madoff, but refused. “It simply did not pass our due diligence,” Solomon told the Forward. “Our advisers basically live with a rule that says if something looks too good to be true, it usually is.”

I hope you appreciated this article. Before you go, I’d like to ask you to please support the Forward’s award-winning, nonprofit journalism during this critical time.

Now more than ever, American Jews need independent news they can trust, with reporting driven by truth, not ideology. We serve you, not any ideological agenda.

At a time when other newsrooms are closing or cutting back, the Forward has removed its paywall and invested additional resources to report on the ground from Israel and around the U.S. on the impact of the war, rising antisemitism and the protests on college campuses.

Readers like you make it all possible. Support our work by becoming a Forward Member and connect with our journalism and your community.

Make a gift of any size and become a Forward member today. You’ll support our mission to tell the American Jewish story fully and fairly. 

— Rachel Fishman Feddersen, Publisher and CEO

Join our mission to tell the Jewish story fully and fairly.

Republish This Story

Please read before republishing

We’re happy to make this story available to republish for free, unless it originated with JTA, Haaretz or another publication (as indicated on the article) and as long as you follow our guidelines. You must credit the Forward, retain our pixel and preserve our canonical link in Google search.  See our full guidelines for more information, and this guide for detail about canonical URLs.

To republish, copy the HTML by clicking on the yellow button to the right; it includes our tracking pixel, all paragraph styles and hyperlinks, the author byline and credit to the Forward. It does not include images; to avoid copyright violations, you must add them manually, following our guidelines. Please email us at [email protected], subject line “republish,” with any questions or to let us know what stories you’re picking up.

We don't support Internet Explorer

Please use Chrome, Safari, Firefox, or Edge to view this site.