Charities face winding down as funds dry up
By Deborah Brewster in New York and Rebecca Knight in Boston
Published: December 17 2008 18:57 | Last updated: December 17 2008 23:25
The Vista Del Mar Child and Family Services Foundation, which runs foster care and programmes for abandoned and neglected children in California, might at first glance seem a long way from the high-rolling east coast world of Bernard Madoff.
But in an illustration of the far-ranging impact of Mr Madoffs alleged fraud the foundation, which last year received $100,000 from Steven Spielbergs Wunderkinder Foundation, has lost an undisclosed sum in Madoffs alleged Ponzi scheme. Vista was one of more than 50 charities to which Wunderkinder last year distributed money.
More than in any other case of recent years, the victims of Bernard Madoffs alleged fraud are the sick, poor and needy who were recipients of charities that entrusted money to Mr Madoff.
Mr Madoffs strong links to dozens of charities and foundations have resulted in disaster for many, as they have lost the money they invested with him at a time when most were already struggling with falling donations and rising need.
Mr Spielberg might be able to cover his foundations losses by putting more money in, but for many other charities it will be an difficult environment to raise additional money. Each charity in turn distributes to dozens of different causes, making for a domino effect.
Several foundations have already said they would close because they invested nearly all their money with Madoff. The hardest hit appear to be charities associated with Jewish causes, where Mr Madoff was an active board member and donor.
The Gift of Life Foundation, a Jewish bone marrow registry, said it needed to raise $1.8m immediately to make up its losses. The Robert L. Lappin Foundation, which financed trips to Israel for Jewish students, said it would shut after losing its entire $7m endowment.
The Carl and Ruth Shapiro Family Foundation, which supports the arts, education, hospitals, and Jewish causes in Boston and Palm Beach, has lost almost half of its assets, which stood at $345m at the end of last year.
Mr Shapiro said in a statement: I was stunned and saddened to learn about the allegations against Bernie Madoff. It is devastating to think that so many charities, individuals and institutions that put trust in Mr Madoff have had their lives so negatively impacted.
?Royal Dutch Shell, the energy group, revealed that its pension fund was exposed to Mr Madoff. In a statement, it said its investments with Mr Madoff amounted to $45m. Even when these investments would have to be written off in their entirety, the impact on the financial position and the funding status of the Pension Fund would be very limited, it said.
EDITORS CHOICE
In depth: Madoff scandal – Dec-15
Lex: No fun of funds – Dec-17
Santander blocks fund website– Dec-17
Court imposes curfew on Madoff – Dec-17
Copyright The Financial Times Limited 2008
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