Eric Fingerhut elucidates how the Madoff scandal has hurt the Washington-area Jewish community.
If the economic downturn and plunging stock market weren’t bad enough, a number of Jewish organizations in the Washington area were smacked in the face with even worse news this week: A portion of their endowments had vanished, victim of the $50 billion Ponzi scheme of Bernard Madoff.
The organizations had placed those endowments in a communal fund under the control of the Jewish Federation of Greater Washington. Known as the United Jewish Endowment Fund, the pooled fund had more than $10 million of the $125 million it held at the end of last month invested with Madoff’s company. That means each organization was facing the loss of about 8 percent of any endowment money it was investing with the federation.
A person close to the federation said up to 15 local agencies had investments with the fund, including Jewish community centers, day schools and synagogues.
In addition, agencies are bracing for what one official described as a second wave — local donors whose wealth was decimated by Madoff. The scheme is believed to have dealt a devastating blow to the family foundation of Charles and Mary Kaplan, which funded the local Jewish demographic study in 2003.
According to the organization’s 2006 IRS Form 990, more than $29 million of the foundation’s $30 million in assets was placed in a “Madoff brokerage account.” The Kaplans are major annual donors to the federation and a multitude of other Jewish organizations in the community.
The JCC of Greater Washington suffered one of the bigger hits. The JCC, in Rockville, Md., had its entire $5.5 million endowment invested with the fund and stands to lose more than $400,000.
Under existing rules the organization can draw 5 percent annually from its endowment fund for operating expenses, which means it now has $25,000 less to draw on this year. Those monies are needed to help pay for programs involving special needs, senior services and nutrition that don’t pay for themselves, according to chief operating officer Michael Feinstein.
For example, the Jewish Council for the Aging had 50 percent of its endowment invested with the communal fund, translating into a loss of approximately $50,000.
There is more in the story…