Charities Wiped Out By Madoff Mess
Because of Bernie Madoff, Deborah Coltin is out of a job and a 401k retirement account, reports CBS News correspondent Jeff Glor. But for her, even more devastating is the impact on others.
"It is extremely tough for me to believe it and for the community to believe it," Coltin said. "We've been in a state of disbelief."
The $8 million charity she was running was wiped out.
The worst part about the mess Madoff left behind was that groups that were helping the most, got hurt the most. Philanthropic organizations have lost a staggering $2.5 billion dollars so far.
There's a reason why they became such easy prey. One, the charities gave Madoff credibility. After all, who would cheat a charity?
Two, it's the way they're set up.
"If you're running a Ponzi scheme, you would want to have charities and foundations as your investors because you can count on them to have slow, steady withdrawals," says Mitchell Zukoff, author of "Ponzi's Scheme: The True Story of a Financial Legend."
Madoff was promising slow, steady, consistent growth -- roughly 10 percent --exactly the kind of returns that foundations, especially, are looking for.
Why? By federal law, foundations are required to spend 5 percent of their funds each year on good works and administrative costs. They can spend more, but most don't.
With no unforeseen expenses, no expectation of huge profits and no unpredictable withdrawals, they were a perfect target for Bernie Madoff.
"You would want both large investors coming in and stable investors who are not going to have large outflows of cash," Zukoff says.
That doesn't mean charities were the only victims, but they have become the most notable ones. Many left with no supply, and ever increasing demands.
"The ultimate victim are those Americans who rely on the services of our not-for-profit sector to feed their kids, educate their family, and to create more vibrant communities," said Jewish Funders Network President Mark Charendoff.
"And that money's not coming back?" Glor asks.
"That money's never coming back," Charendoff says.
Debra Coltin is hoping to salvage one program with private donations. What she doesn't know is whether anyone getting these letters might also have been a client of Bernie Madoff.
Deborah Coltin's charity, the Youth To Israel 2009 program, is accepting tax deductible donations of any amount. Checks should be made payable to: The Jewish Federation of the North Shore, which is serving as the repository for checks.
Checks should be mailed to:
Deborah Coltin
Robert I. Lappin Charitable Foundation
29 Congress St.
Salem, MA 01970
In the note section of the check, please write Y2I 2009 Donation
