After being raked over the coals by the media over the past year for its heavy investments that it had with Bernard Madoff, Hadassah is getting some somewhat positive press over how it has navigated the crisis.
Nancy Falchuk, Hadassah’s president, got the lede in today’s widely distributed AP story about how some of Madoff’s largest nonprofit victims have been effected:
Nancy Falchuk will never forget the phone call. She was in Boston, it was raining and the news was bad. Hadassah, the century-old Jewish charity she had been elected to lead a year earlier, had just lost a big chunk of its endowment in a Ponzi scheme — maybe as much as $90 million.
The man responsible for this disaster, the world would soon know, was Bernard Madoff.
"I don’t even say his name anymore," Falchuk said in a phone interview this week.
But Hadassah comes out smelling a little cleaner than others in the story in the end, as it withdrew more money from its account than it originally put in and so far the trustee in for the Madoff estate, Irving Picard, has not gone after the organization for a clawback. The AP reports:
So far, the trustee hasn’t demanded a repayment. Nor is the organization likely to volunteer one.
"It would be very, very hard for us," said Falchuk, citing the group’s fragile finances. "I can’t tell our donors that I’m going to take their money and give it back to Madoff victims."
In the meantime, she said, the group has sought to streamline and refocus itself. A reorganization, already in the works before the Madoff loss, was accelerated. Nearly 100 paid staffers lost their jobs.
Falchuk said she also has worked hard to rebuild the nonprofit’s reputation.
Hadassah has added 8,000 new members in recent months. It still plans to finish major projects, like construction of a new medical tower in Jerusalem, and fundraising has picked up in recent months.
But the job cuts were "painful," Falchuk said. "It’s not over," she added. "People are still angry."
The Wall Street Journal expounds on Hadassah’s situation, making clear what Hadassah has stressed to JTA for the past half a year – that despite layoffs and the appearance of Madoff trauma, Hadassah’s downsizing has been planned for years:
Hadassah, the Jewish women’s organization that booked a paper loss of $90 million with Mr. Madoff, hired consultants from McKinsey & Co. and outside counsel to investigate board-governance practices. Sheryl Weinstein, the group’s former chief investment officer, in August published a book in which she alleged having an affair with Mr. Madoff at a time she managed the group’s investments.
"We wanted to understand what we could have done differently," says Hadassah’s president, Nancy Falchuk, who conducted damage control with monthly podcasts, letters and town-hall meetings. "Nothing is more important than our accountability to donors."
With 2008 revenue down 50% from a year earlier to $85.6 million, Hadassah accelerated a previous restructuring plan to cut $35 million in costs, laid off 25% of its staff and cut as much as 15% of funding for all programs. The group also expanded fund-raising to other countries, including Mexico, Russia and Germany. Ms. Falchuk says the organization is back to pre-Madoff levels, raising about $7.5 million a month.