JTA: The Global News Service of the Jewish People

JPost: Federations were inherently protected from Madoff

By Jacob Berkman · December 26, 2008

The Jerusalem Post says that Jewish federations by their nature where better protected from exposure to Madoff than private foundations and other nonprofits:

They were founded to centralize and rationalize communal fund-raising, to be an address where all institutions together raise and dispense the communal treasury. The result is a system that generates competition over resources, but then structures it and channels it into compromises that allow the community to pay for itself.

True, the board members and executive leadership of federations are not the average Jew on the street, though the system is by its nature more representative of varied interests. But federation leaders still constitute multiple centers of power and competing layers of oversight within the top tier of the communal philanthropic structure.

When a federation board comes to manage policy-making and risk, it is more often than not a place of debate, of clashing egos and different visions for Jewish life, incorporating different donors, competing communal leaders and disagreeing religious movements.

Because federations have a fiduciary responsibility to multiple donors, their levels of oversight enjoy a degree of support that almost institutionally forces them to think twice about any initiative or investment.

This can be a frustrating experience in daily governance, but Mr. Madoff may have taught us that it has a positive side to which we may not have paid sufficient attention in recent years - that it can be an institution's salvation from the sort of woes afflicting the Jewish world in these very days.