The Madoff scandal has rocked the Jewish philanthropic world to its very foundations.
By LIAT COLLINSmadoff after court 248.88 ap(photo credit: AP)
Tsunami. Avalanche. Those are just two of the descriptions doing overtime in coverage of the Madoff scandal. A third cliche is perhaps more relevant. The collapse of Bernard L. Madoff's Wall Street investment firm last week was an earthquake. While victims of the September stock market crash were struggling to dig their way out of the wreckage, there came another, even more devastating aftershock, a tremor which buried many alive.
On December 15, the United Jewish Communities (UJC) Metro West NJ issued a press release stressing that neither they nor the local Jewish Community Foundation had been directly exposed to Madoff and his scam although Madoff's clients included some of the most charitable families and major organizations in the Jewish community. It was the last line of the press statement, however, which grabbed my attention. "Our hearts go out to the families affected by these events," it read.
This was the sort of utterance you expect to hear after a major bereavement. For this is not an "ordinary" economic disaster; this is a devastating loss. A loss in both senses of the word. Millions and billions of dollars disappeared - amounts that make you count the zeros after the first digits and then check again - but this isn't about the loss of trust funds. It's about the loss of trust.
It is also, conceivably, about a loss of a certain way of life, not just for those folks and organizations directly involved, but for the entire Jewish community around the world.
While the full scope of the crisis is not yet known, several charitable organizations have already become defunct, individual investors have lost their entire fortunes, and other individuals and organizations have experienced such tremendous losses that according to speculation - of the non-financial kind - their chances of recovery are slim.
ALREADY the list of Madoff's victims is too long to print here: Yeshiva University; Jewish day schools such as the SAR Academy in the Bronx, Manhattan's Ramaz School and Boston's Maimonides; and major donors to good causes including Morton B. Zuckerman (a reported $30 million loss), Steven Spielberg, Elie Wiesel and Sen. Frank Lautenberg were all among the first known to be hit in the fiasco. The Los Angeles Jewish Community Fund reported a $25.5m. investment that has disappeared, while the Chais Family Foundation shut down because of its losses. In Boston, the Robert I. Lappin Charitable Foundation, which financed trips for Jewish youth to Israel, similarly basically ceased to exist overnight.
In Israel, the Technion-Israel Institute of Technology reportedly had some $6m. in funds invested with Madoff's firm, while Yad Sarah, which loans medical equipment, also seems to have suffered a severe blow.
While most charities reliant on individual donors have already had to reassess their strategy as donations dropped earlier this year in the wake of the Wall Street crash, those organizations funded by foundations did not consider the possibility of the money simply evaporating.
ALL THIS will necessitate a whole new way of thinking. Rabbi Akiva and Rabbi Nahum "Ish Gamzu" used to claim all adversity in life should be met with the response "Gam zu letova," "Everything is for the best." While it might be hard to think positively in the immediate aftermath of a disaster of these dimensions, the ill wind that caused one door to painfully slam shut might also have blown open a window of opportunity, to use the phrase so beloved of the diplomats in today's global village.
The collapse of Madoff's pyramid scam could provide the impetus for the American Jewish community to rethink its priorities, reorganize and - hopefully - emerge strengthened, able to use the rubble to rebuild.
In the mad, mad, post-Madoff world, the community will have to necessarily come to terms with the new reality: cut down and cut out. It might mean merging the Jewish alphabet soup of organizations; helping establish affordable public Jewish schooling, less traveling - or at least traveling in less style; and generally reprioritizing.
APART FROM the financial loss, there is, of course, also a significant psychological blow. That Wall Street's worst-ever fraud was carried out by an active and respected member of the Jewish community could increase anti-Semitic sentiment, already on the rise.
The Ponzi who infamously gave his name to the Ponzi Scheme pyramid-style fraud might have been an Italian immigrant, but it is the Jews who are uncomfortably the focus of the current crisis.
The community would do well to use the disaster to look inwards and reduce the obsession with material success and its trappings - a trap, indeed. The mega-donors, who have proved their worth and earned a place in the world to come, might have to acknowledge that theirs is not the only way in this one.
Money talks, but you need to listen to what it's saying. We all know the old adage "If it seems too good to be true, it probably is." Yet it's so tempting to ignore it, especially when you're distracted by the glittering of something that looks like gold.
That's how people like the 70-year-old Madoff get away with such huge frauds. It's difficult to count the number of articles on Madoff which use the term "well-respected" before his name. He was, after all, the former chairman of the Nasdaq Stock Market. He owned expensive homes and had expensive tastes. He was a friend - although not a good one, it now turns out - to the rich and famous. When suspicions were raised about his business practices, he managed to brush them off. Few whistle-blowers want to tackle someone who's tooting his own horn so loudly it can be heard all over the world.
IF GREED has a name, it is Bernard L. Madoff. Simple folk living ordinary lives find it hard to understand the drive to make another million dollars and then another. Just how many homes, cars and private planes does one person need? The goodhearted use excess earnings to carry out good deeds. Madoff seems to have felt charity starts at home: your favorite charity, his favorite home.
While Madoff made a killing, he was killing off the world of tzedaka as we know it. Now it has come tumbling down - to the financial foundations. It is time to carry out a real tikkun olam: to give for the sake of giving, not for the glory.
A younger generation of go-getters and givers will probably arise with its own agenda. Hopefully, they will use their good fortune - or what's left of it - to benefit a world in sore need of being fixed as it gets ready to enter 2009.
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