JTA: The Global News Service of the Jewish People

Hadassah to pay back $45 million of Madoff gains

By Jacob Berkman · December 9, 2010

Hadassah: The Women’s Zionist Organization of America will pay back $45 million of the money it made in the Bernard Madoff scam.

Hadassah President Nancy Falchuk in a letter Thursday told the organization’s supporters of the settlement reached by the group with the trustee of Madoff’s estate.

The organization, which began investing with Bernard Madoff Securities in 1988 with a $7 million gift, deposited a total of $40 million in its Madoff accounts, and by April 2007 had withdrawn $137 million. The last account statement showed approximately $90 million at the time the fraud was discovered.

The $45 million is half of what Hadassah earned unwittingly in the scam. With the settlement, Hadassah avoids a lawsuit by the trustee, Irving Picard, who already has sued a number of individuals, organizations and foundations that made money in the Madoff fraud.

“As painful as it is, this settlement is in the best interest of Hadassah," Falchuk wrote in the letter. "It allows us to put this chapter behind us, and move forward with our critical life-affirming mission. A charitable mission praised by the trustee for its philanthropic value.”

Here is the full text of Falchuk's letter:

Dear Friends,

As we approach our Centennial, no one can doubt Hadassah’s success. We built the healthcare infrastructure and much of the educational foundation for the State of Israel. Remaining true to our core Zionist mission, we are a central force in the nation’s continued development and in strengthening the Jewish people. Hadassah has overcome many obstacles in our history, from wars and terrorism to recessions, the Great Depression and other financial crises.

It must be said, that because of all of you, Hadassah has been able to invest over $1B in Israel in just these past 15 years to meet the needs of our projects.

Hadassah has always followed, and continues to follow, a sound financial investment strategy, constantly reviewing our investment policies. As a result, Hadassah realized gains on its investments over the years. These proceeds were used for our charitable purposes of supporting healthcare, education and youth work in Israel and around the globe.  But despite this strategy, like others, we were misled by Bernard Madoff who perpetrated the largest fraud ever—a fraud that even escaped detection by federal regulators.

The Bernard Madoff scandal has left thousands of individuals, organizations, and charities with huge financial losses, and in some cases utter collapse. From Hadassah’s inception 99 years ago, we have treated every dollar as a sacred trust. We have been responsible stewards of the contributions from our generous donors and members, enabling us to uphold our mission of strengthening our partnership with Israel and ensuring Jewish continuity.

Hadassah was introduced to Bernard Madoff Securities in 1988 by a French donor, through a $7M gift.  In addition to the gift, between 1988 and 1996, we deposited $33M in our accounts, and by April 2007 had withdrawn $137M.  The last account statement showed approximately $90M at the time the fraud was discovered.

Like so many, for those who withdrew more than they had invested, we faced a “clawback”.  After many months of negotiation, and as a direct result of good faith cooperation of Irving Picard, the Madoff Trustee, and his counsel, we arrived at an agreement, allowing us to continue our commitment to Israel.  According to that agreement, subject to approval of the bankruptcy court, Hadassah will pay back $45M.

As painful as it is, this settlement is in the best interest of Hadassah.   It allows us to put this chapter behind us, and move forward with our critical life-affirming mission. A charitable mission praised by the trustee for its philanthropic value.

Hadassah’s fiscal discipline will allow it to pay this obligation from existing unrestricted funds.  As always, Hadassah gifts will continue to be used for their intended purpose.

Let me emphasize that Hadassah, like so many others, were misled. Precisely because we were following a sound investment strategy, we realized more than we invested, and will return some of the proceeds to be distributed to those who lost.

You and I, together, will not let the evil deeds of one man shake our dedication, or that of Hadassah’s 300,000 members and supporters around the world. We not only remain steadfast in our commitment to our mission, but we will put this painful event in the context of all we have accomplished over these past 99 years.

Tomorrow, we will wake up to a new day, united in purpose, looking forward to being together in Jerusalem in October 2012 to dedicate the Sarah Wetsman Davidson Hospital Tower.

In the spirit of our humble beginnings, we will continue as pioneers and pacesetters in Israel and a critical force in American Jewry for the next 100 years.

With humility, appreciation and respect,

Nancy Falchuk
National President
Hadassah, the Women’s Zionist Organization of America, Inc.

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Forward: CEOs of Jewish nonprofits fare well in 2009, but women not as well as men

By Jacob Berkman · December 9, 2010

The Forward this morning published its second annual survey of salaries of CEOs of Jewish nonprofits and found that while the CEOs of Jewish nonprofits may not have had it all that bad last year, women who head organizations did not make out as well as their male counterparts.

The paper queried 74 organizations and found that in 2009, some 80 percent of the heads of Jewish organizations actually received raises, despite that their organizations were in the throws of the recession. Not bad, when The Chronicle of Philanthropy recently found that 59 percent of CEOs in the broader nonprofit world got raises in 2009.

Still, says the paper, women lag behind men in terms of pay:

In this, the Jewish communal experience is dramatically at odds with trends in the broader not-for-profit world. GuideStar, which collects the informational tax forms that not-for-profit groups are required to file with the Internal Revenue Service, reported in September that women were chief executives of nearly 47% of the nation’s charities in 2008. Although women were concentrated in smaller organizations, even in the larger charities — those with annual budgets of more than $1 million — they still held 38% of the top roles.

Using public records listed on GuideStar, the Forward found that the gap between male and female salaries among Jewish executives did grow smaller from 2008 to 2009, but women still earned only 67 cents to every dollar earned by men. The median salary for men was $316,074; for women it was $213,855.

Overall, Jewish not-for-profit leaders took home more pay in 2009, but here, too, there was a serious gender gap: For men, the median salary increase was 5.82%; for women it was 1.42%. Only six leaders in our survey took no pay increase at all, and three of them were women.

Nine men took a pay cut.

You can check out the findings of the report here at The Forward.

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Carl Shapiro to return $625 million of Madoff money

By Jacob Berkman · December 8, 2010

Philanthropist Carl Shapiro and his family will return $625 million they made in investments with Bernard Madoff, The Boston Globe is reporting.

Shapiro, the Boston-area philanthropist who was among one of the biggest winners in the Madoff scam, gave heavily to Jewish causes after Mafoff made him a billionaire. He has maintained that he was unaware that he was investing in a Ponzi scheme.

Reports the Globe:

Shapiro sold his Kay Windsor Inc. dress business in 1971 for $21 million, and, with Madoff's help, managed to parlay that into a fortune exceeding $1 billion. Over the years, Shapiro invested hundreds of millions of dollars with Madoff, and received hundreds of millions back in what has since been determined to be fictitious profits, according to the US Attorney filing. Government officials have gone after Shapiro and other wealthy Madoff clients to settle victim losses.

Through a spokesman, Shapiro, 97, declined comment. Shapiro has maintained that he had no idea Madoff was stealing from some investors to pay off others.

The Shapiros have claimed losing at least $545 million to Madoff, including $250 million Carl Shapiro gave Madoff just days before the Wall Street financier admitted to running a fraud in December 2008.

Shapiro, through his family foundation, has given away large chunks of his fortune, with numerous buildings and wings bearing his name, including at Beth Israel Deaconess Medical Center and the Museum of Fine Arts. Because of the Madoff scandal, Shapiro family members have said they might not be able to continue such a high level of charitable giving.

Hat tip to, The Chronicle of Philanthropy. 

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Woman who fled Nazis leaves $500,000 to University of Wisconsin

By Jacob Berkman · December 8, 2010

A woman who fled Germany before the Holocaust and found safe have in Wisconsin has left $500,000 to the University of Wisconsin, Madison, according to the school’s newspaper, The Daily Cardinal.

Vera Croner fled Nazi Germany for Copenhagen in 1920 with her family. In 1951, she settled in Madison, and then in 1958, at the age of 38, she graduated from Wisconsin with a degree in accounting and ultimately got a job Credit Union National Association.

Now, after her recent death, she will give $500,000, about 75 percent of her estate to Wisconsin’s Business School, Scandinavian Studies and the Music School.

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Is Steinhardt retiring from Jewish philanthropic life?

By Jacob Berkman · December 7, 2010

According to this Op-ed in the Jerusalem Post by Shmuley Boteach, Michael Steinhardt, the hedge-fund manager who famously quit his job to become a full-time Jewish philanthropist, is now going to retire from Jewish communal life.

We do not have any confirmation on this, but according to Boteach, Steinhardt, who has spent more than $100 million in becoming one of the architects behind Birthright Israel, Partnership for Jewish Education, Areivim and other Jewish identity building causes, announced at his 70th birthday party that he is stepping away.

Again, we are waiting to hear from the sometimes tempestuous Steinhardt or his people about this, but this is what Boteach writes:

But for all his grouchiness, you will never find a more loyal friend or wise adviser – one who will stand by you no matter the controversy.

I was therefore heartsick to hear Michael announce at his 70th birthday party that he plans to retire from Jewish communal life next year and move on to the next chapter. Doing so would impoverish Jewry of one of its most innovative rebels and thought-provoking irritants.

And Jewish youth would lose its most stalwart advocate.

Developing.

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Is Hadassah cutting a deal with Picard to avoid a clawback lawsuit?

By Jacob Berkman · December 6, 2010

The Forward reported Friday that Irving Picard, the trustee for Bernard Madoff’s estate, had filed lawsuits late last week against a number of Jewish charities and individuals who actually made money on their investments in the multi-billion dollar scam.

Picard is trying to recover as much money as he can via these “claw-back” lawsuits to repay those victims who lost money with Madoff. Among the organizations sued were the America-Israel Cultural Foundation (for $5 million), the American Committee for Shaare Zedek Medical Center in Jerusalem (for $7 million),  and United Congregations Mesorah (for more than $16 million), along with 20 private foundations, according to the Forward.

Conspicuously absent from the list was Hadassah: The Women’s Zionist Organization of America, which made millions, albeit inadvertently, in Madoff’s scam. It was initially reported that Hadassah had lost $90 million, the stated value of its Madoff account at the time that the scheme was shut down. But it turned out that since 1987 the organization had put $40 million in, but withdrawn at least $130 million.

The Fundermentalist is hearing now that Hadassah may have avoided a lawsuit by cutting a deal with Picard that could be approved by the organization’s board Thursday. Picard has a Dec. 11 deadline to file clawback lawsuits. 

According to several sources within the organization, Hadassah’s lawyers have been working with Picard on a settlement. They will present the settlement to Haddassah’s higher-ups at a meeting Wednesday evening in Chicago. And then the proposal will be brought to Hadassah’s board for approval Thursday.

Sources did not know how much Hadassah would be required to pay back under the possible settlement, but believed it would be less than the full amount that the organization had taken out of its Madoff account over the years.

The organization recently sold an apartment it owned next to its headquarters that has been used traditionally by its president. It is believed that the proceeds from that sale – speculated at under $1 million -- would be used to pay Picard. But the organization would likely owe far more.

Hadassah would have a hard time using many of its cash assets to cover the costs of a deal, as most are restricted by donors for specific uses. 

The organization, according to one source, is contemplating selling its building to pay off its Madoff settlement. 

When contacted by The Fundermentalist, a spokesperson for Hadassah declined comment, except to confirm that the organization had not been sued.

Developing…

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Jewish organizations targets of clawback lawsuits in Madoff case

By Jacob Berkman · December 6, 2010

 The Forward is reporting that a number of Jewish organizations have been slapped with lawsuits filed last week by Irving Picard, the trustee for Bernard MAdoff's estate.

Picard is seeking millions of dollars back from a number of individuals, foundations and nonprofits who actually profited from Madoff's multi-billion dollar scam. 

Reports The Forward:

Non-profit targets of the clawback suits include the America-Israel Cultural Foundation, a 70-year-old organization that gives scholarships to Israeli artists. The group was sued on December 2 for over $5 million of what the lawsuit claims are fictitious profits.

Also targeted was the American Committee for Shaare Zedek Medical Center in Jerusalem, which was also sued on December 2 for nearly $7 million in alleged fictitious profits.

Representatives from both organizations were not immediately available for comment.

The charity pegged with the largest claim appears to be an organization called United Congregations Mesorah, which was sued for over $16 million. No information was immediately available about the group.

Other non-profits targeted by clawback suits on December 1 and December 2 include the Joseph Persky Foundation, the Miles and Shirley Fitterman Charitable Foundation, and the Melvin B. Nessel Foundation. In all, over 20 charities and foundations were sued.

None of the foundations and charities sued was alleged to have been aware that Madoff’s operation was fraudulent.

Conspicuously absent from the list was Hadassah. Public statements by the Zionist women’s organization have indicated that it profited from its Madoff investment, placing it at risk of a clawback lawsuit. Queries to Hadassah’s press representatives and to members of Picard’s team regarding the status of Hadassah with regard to the trustee’s investigation have not been answered.

Read more here.

When contacted by The Fundermentalist, a spokesman for Hadassah h declined all comment, except to confirm that Hadassah had not been sued.

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Germans to give $145 million in 2011 to provide home health care to survivors worldwide

By Jacob Berkman · December 6, 2010

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Help Israel fight fire [UPDATED]

By Jacob Berkman · December 3, 2010

Donate using any of the links below to a variety of emergency campaigns in the wake of Israel's devastating forest fire.

• American Friends of the Magen David Adom, Israeli Red Cross
• America Jewish Joint Distribution Committee
• American Friends of Yemin Orde (which was 40 percent destroyed in the fire)
• B'nai B'rith Israel Emergency Fund
• International Fellowship of Christians and Jews
• Jewish Agency for Israel
• Jewish Federations of North America
• Jewish National Fund, Forest Fire Emergency Fund
• JStreet
• The New Israel Fund
• Organizations of the Conservative/Masorti movement in North America
• ORT America 
• Orthodox Union emergency fund
• Union for Reform Judaism and ARZA
• Young Israel charity fund
• Zaka, the body part recovery and identification organization

We will add more links as they come in. 

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Guest Post: Seeking innovative funding models

By · December 3, 2010

Maya Bernstein, the director of education and leadership initiatives at UpStart Bay Area, an incubator of Jewish projects in San Francisco, suggests in this guest post that the Jewish world need to consider alternative funding models, along with alternative programing:

UpStart Bay Area http://www.upstartbayarea.org recently hosted a sold-out event featuring two speakers, Dr. Debbie Findling, the deputy director of the Richard and Rhoda Goldman Fund, and Dr. Amy Rabino, the director of philanthropic services at the  Jewish Community Federation of San Francisco, the Peninsula, Marin and Sonoma Counties. Their topic: Innovation and philanthropy.

I was struck by Findling’s response to the following question: How does your organization approach philanthropy differently now from how it did five years ago? 

In answering it, she drew a big circle in thick, black marker on a white board and began to fill the circle with the names of organizations representative of “the establishment” – JCCs, synagogues, Federation, Day schools, camps, etc. 

She then drew a number of dots in varying distances from the outside perimeter of the circle. Those dots, she said, denoted the majority of Jews, “lost souls,” afloat in the wide world. She explained that, five years ago, foundations were interested in funding those inside the circle with the expectation that they would rescue the lost souls and bring them into the circle of the Jewish community. 

Now, she explains, Jews “outside of the circle” have made it quite clear that they are not lost. They are organizing and affiliating in new and creative ways, redefining where the Jewish community resides, coming in and out of the circle at will, and making that thick black line around the circle of the establishment more porous. 

Foundations such as hers, she said, are interested in funding these new modes of organizing, and in helping to make the circle more permeable and those within the establishment more resonant with those outside.

This approach seems to echo what Rabbi Elie Kaunfer of Mechon Hadar claimed in his recent article “Generational Divide in Jewish Life Is Overstated.” when he wrote, “We are in a new age. There is no loyalty to a perceived establishment, but there is also no loyalty to a perceived non-establishment. Every organization, every program, is being evaluated by its own merits.” 

In other words, what matters is what people are doing, and how it is contributing to the rich fiber of Jewish life. What is beginning to matter less is who is doing it, and in what context.

My question is this: Can this pattern be replicated in the world of funding and philanthropy? 

When Findling shared that her job essentially involves the sifting through thousands of grants in search of the lucky few that may excite her board members, I could not help but think of her diagram. 

Are not all of the little dots, which Findling drew to symbolize the lost Jewish souls, also symbolic of “lost,” or hopeful, projects, desperate to get funded? What Jewish entrepreneur doesn’t dream of making it past the iron curtain separating her from the inner circle of secure funding? Those beyond the circle are clamoring at the gates, pushing and shoving and hoping to be noticed. The success stories in our community are those lucky projects that get a major grant, receive attention, and then get funding from others in the inner circle. Are they always the ones doing the most meaningful, creative, and innovative work? And who, ultimately, is making these decisions for our community? 

A variety of funding opportunities are available in the Jewish community today: Community funds with large boards who vote on allocations, donor advised funds, large family foundations with staffs who research and boards who vote, and smaller ones in which individuals or family members make all decisions, and incubators that offer start-up seed money. 

Some of these entities, like the Goldman Fund and Joshua Venture Group, have been particularly focused on and successful in finding those creative projects happening outside of the mainstream, and launching them towards success. 

Perhaps, though, innovation in philanthropy is not only about funders in the existing model seeking out and funding innovative projects. Perhaps it can also involve our becoming more creative with the very nature of our funding models, and developing funding units “outside of the inner circle,” so to speak, just as there are new innovative organizations being created outside the world of established organizations. What would these units look like? What types of collaboration – financially, not only programmatically – and innovative business and financial models could we design to begin to make those walls between those inside and those beyond more supple? 

The onus for innovations in funding for Jewish programs is on all of us – the practitioners and the funders. Funders can explore creative models and think about replicating them. 

One such model, Natan http://www.natan.org/html/index.html, which took the giving circle model from the secular world and brought it into the Jewish world, already exists. Each year, Natan members pool their contributions and make funding decisions collectively.

Another interesting model to consider is that of DARPA, the research and development office for the U.S. Department of Defense. 

DARPA fosters collaborations in order to achieve ambitious projects. A lead company is responsible for building a team, which is composed of individuals with diverse expertise and reach. Multiple teams are created for each project, and, after initial meetings in which DARPA identifies a challenge, the teams work together on proposals, and compete against each other to receive funding. DARPA works closely with the “winning team,” funding them for a year, and, then, if the originally outlined milestones are achieved, provides funding for an additional 2-4 years. Could our funding community collaborate to reproduce this type of model on issues they collectively decide are the most pressing for the Jewish community?

Practitioners can think about writing joint grants for projects that share goals, or pooling resources to accomplish shared goals and meet shared needs. And the entire Jewish community must grapple with the statistic that approximately only 20% of Jewish philanthropic dollars goes to Jewish causes and think about the innovations necessary to change that statistic.

These are some of the questions around innovation and philanthropy with which practitioners and funders must grapple, so that we can continue to, as Kaunfer claims, stay focused on the “substance of Jewish life.” 

Maya Bernstein is director of education and leadership initiatives at UpStart in San Francisco.

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