Gary Tobin writes in the Chronicle of Philanthropy that even though Bernard Madoff stole billions of dollars — which will hurt some nonprofits — his real theft was that of trust.
The loss of trust and stability that donors and nonprofit groups are experiencing gets to the heart of the real damage Mr. Madoff has done to the American charitable spirit. He has introduced fear and uncertainty about how nonprofit groups use their money. As a result, donors may choose to cut back their donations or at least put them off for a while.
Tobin, the executive director of the Institute for Jewish & Community Research in San Francisco, argues that Madoff’s sins may put a dent in Jewish charities and the nonprofit world in general, but it will not be a death blow. Far from it.
It is important, Tobin says, that nonprofits and their supportersnot not let fear of another Madoff-like scheme impede their charity work by becoming overly cautious and implementing too may new restrictions.
Some charities and foundations have been entirely wiped out. Those are unimaginable hardships for the institutions involved, but not a disaster for all Jewish nonprofit organizations.
The largest organizations that lost money will survive, and many smaller organizations will probably benefit as donors rally to help make up the shortfall caused by the Madoff-induced losses. It is important to remember that changes in the housing and financial markets account for far more of the financial troubles facing charities today than anything Mr. Madoff did. All nonprofit groups, including Jewish organizations, have been hit hard by the economic turmoil.
Jews are embarrassed and bewildered by Mr. Madoff’s scheming, as well as angry.
But Jewish charities are wounded, not devastated. Over all, the Jewish philanthropic network consists of thousands of nonprofit groups with total budgets in the tens of billions. Jewish foundations have additional tens of billions in assets.
Those thousands of organizations generally have sound fiduciary controls in place, and in the constellation of Jewish communal life, very few of them have been affected in a serious way by Mr. Madoff’s cheating.
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