Extract from a story in Issue 20, January 19, 2009 of The Jerusalem Report. To subscribe to The Jerusalem Report click here. As the list of philanthropists and foundations that lost money to Bernard Madoff continues to grow, the Jewish non-profit world is trying to assess the full scope of the damage and mobilizing to help some of the hardest-hit victims. Some even see a silver lining in the scandal: an opportunity to make Jewish organizations more efficient and adopt mechanisms to support each other. "We were already moving into a redefinition of our community organization because of the economy. We can look at this Madoff situation as horrible, or we can look at it as an opportunity," said one professional in a major foundation that supports Jewish causes, who spoke on condition of anonymity because he "didn't want to downplay the tragedy and loss." Madoff, 70, was arrested for securities fraud December 11 and charged with operating a projected $50 billion Ponzi scheme, in which his New York investment firm paid its early investors with new money coming in from new hedge funds and institutions. The list of Jewish philanthropists and foundations who have disclosed that they have lost money through investments in Madoff's scam continues to grow. Dan Brown, founder of eJewish Philanthropy, an independent Jerusalem-based resource, tells The Jerusalem Report that "it will take six to seven months" to learn about all the losses resulting from this purported largest financial fraud in history. Brown pointed out that since the American tax year ended December 31, banks will only begin to notify investors of possible losses in the next few months. "Some people won't know their exposure for awhile. Some may not know where their money is invested," he said. Some media outlets have reported that as many as 4,000 as-yet unidentified individual investors may have lost money due to Madoff's alleged fraud without even knowing it, as they invested in funds or banks that, in turn, reinvested their money with Madoff. The former head of NASDAQ, Madoff used his personal relationships and associations in a well-heeled social network to attract the funds he needed to keep his alleged scheme operating. In turn, "donors not only personally invested in Madoff, but they told the charities to which they were contributing to invest in Madoff," says Jeffrey Solomon, president of the New York-based Andrea and Charles Bronfman Philanthropies (which had no funds invested with Madoff, according to Solomon). Actually, Solomon points out, 95 percent of Jewish organizations had not invested their funds with Madoff. But among the five percent that did are many non-profit charities and foundations that supported numerous Jewish and non-Jewish social programs throughout the United States and the world. In North America, these programs ranged from providing legal representation to young people, to assisting newly unemployed to find jobs to sending young people on Israel trips. Indeed, by late December, the website of the Jewish Funders Network (JFN), an umbrella organization of nearly 1,000 individual and foundation members who give away at least $25,000 annually in philanthropic dollars, led with the statement: "We are all shaken in the wake of the economic crisis and the recent Madoff scandal which has disproportionately affected the Jewish funding community and, in turn, dozens of Jewish non-profit organizations in the United States, Israel and the former Soviet Union." JFN president Mark Charendoff is also concerned about the "secondary impact" of the Madoff scandal. In many large projects, foundations partner with each other, so that when one partner is harmed, the future of the project is at stake. Providing an example from his own organization, he tells The Report, "We were planning to launch a matching grant program for Israeli investors in January 2009 that included $1 million from the Chais Family Foundation and another $1 million from another group, to be matched by Israeli donors. The $4 million was to go to Israeli schools. This was very exciting." With the loss of the Chais Foundation, which closed its doors after undisclosed investments with Madoff were wiped out, Charendoff says he is no longer certain about the project's future. Although JFN is not a grant-making organization and didn't directly lose money in Madoff's scheme, Charendoff says some of JFN's members "had all their money invested with him." Many of the projects funded by these organizations, especially in Israel and the FSU, have no endowment funds and are totally dependent on allocations and contributions from foundations and family funds. Many agencies already were hurting due to the economic crunch and the thorny currency exchange rate that meant donated dollars equaled fewer shekels. The Jewish Agency - one of the recipients of funds raised by federations and their umbrella UJC - had already reduced its work force. Without question, Brown predicts, 2009 will be "very difficult for the entire Jewish non-profit world. Some organizations, whose mission is hazy or whose structure is not great, will have a tough year. Other organizations, such as Yeshiva University and Hadassah, will have huge problems with governance. [Yeshiva University, where Madoff served as treasurer, lost a reported $110 million, while Hadassah has told its members that it lost some $90 million of its nearly $500 million assets.] Even federations that haven't lost money will take a closer look at their investment strategies," he says. Others may not feel they have to. Solomon, for example, says that the Bronfman Philanthropies won't change their investment strategy. "We have good checks and balances. We don't let social prominence trump due diligence." Not surprisingly, federation after federation across the country was quick to announce that they hadn't lost any money in the Madoff scam. As Steve Rakitt, president of the Jewish Federation of Greater Atlanta, tells The Report, "We have no exposure to any of the Madoff investments. We use an outside fund management firm and a volunteer-led investment committee that carefully scrutinizes asset allocations and underlying quality." After conducting a survey of United Jewish Community members, Howard Rieger, president and chief executive director of UJC, has reported that seven U.S. communities with endowments/foundations were directly exposed to losses related to Madoff, in sums ranging from $70,000 through funds of $24.4 million. Of these, two federations have publicly acknowledged direct impact: The Jewish Federation of Greater Washington's communal fund, which lost a reported $10 million, and the Los Angeles Jewish Community Foundation, which lost $6.4 million. In the new fiscal year, federations will vie for fewer available dollars due to the scandal as well as the overall economic downturn. The agencies and programs the federations support - including those in Israel - will, in turn, compete for their piece of the smaller pie. According to Jewish Philanthropy's Brown, "Most federations in the United States will prioritize the needs of their local communities, such as vocational services and food banks." "The effect is going to be dramatic," says Charendoff. Worried about that impact, the JFN has moved into overdrive in an attempt to control the damage from the Madoff scandal. Just two weeks after Madoff's arrest, JFN brought to New York 35 heads of the largest Jewish foundations "to deal with this issue and to see what we could do together. We were determined to do something," Charendoff tells The Report. Extract from a story in Issue 20, January 19, 2009 of The Jerusalem Report. To subscribe to The Jerusalem Report click here.