As it turns out, the United Jewish Endowment Fund of the Jewish Federation of Greater Washington might not be hurt as badly by the Bernard Madoff scheme as was initially thought.
JTA reported in December, in the early days of the reportage of the infamous scam, that the UJEF had lost nearly $10 million of the $125 million it then held because it had invested the money with Madoff.
But the president of the endowment, David Butler, now says that $500,000 of the "lost" money is going to soon be returned — and the UJEF might get more back eventually.
On Tuesday, Butler told the Fundermentalist that the trustee in the Madoff case had informed the UJEF last week that it was going to get back at least the $500,000 as part of an insurance claim, and down the line could end up getting back much more.
Let’s break down the numbers a little bit — because in the mass hysteria in the days immediately following the outing of Madoff’s scam, the nonprofit world might have overstated what its actual losses were.
Right off the bat, for months it was believed that the UJEF had lost $10 million with Madoff.
That was not, it turns out, an entirely accurate portrait.
The UJEF, according to Butler, invested $10 million of its money with Madoff.
Because the fund has strict rules prohibiting more than 10 percent of the endowment being invested with any one firm, the UJEF had withdrawn $4 million from its Madoff account in 2008; and that was after after pulling out $500,000 from the account in 2005.
When the Madoff scam was revealed, the UJEF had about $4.8 million of its initial investment in the account. The rest were phantom gains that never really existed.
Of that actual loss, the UJEF will now get $500,000 back for sure, meaning that its losses stand now at $4.3 million.
Just to put that into perspective. … the entire fund was $125 million — meaning just 3.5 percent was lost with Madoff.
Only a small percentage of the endowment is actually paid out in grants each year. Exact figures were not available, but say the endowment is paying out 5 percent of its assets every year. Then the Jewish community lost about $175,000 in actual cash flow with Madoff as of now, and that number could shrink.
Not to downplay the hurt that Madoff put on the nonprofit world (or $175,000), but I think that as money starts to return to Madoff’s victims, we ought to pay as close attention to what nonprofits are getting back as we did in December to what we thought nonprofits were losing.