Long Tentacles of Madoff's Scheme Impacting Life-Giving Programs

Hospitals, food banks, schools and community outreach programs throughout the world are being forced to cut life-giving services as they watch millions of dollars in grants from large Jewish charities dry up in the wake of Bernard Madoff's alleged $50 billion Ponzi scheme.

The Fair Food Foundation, an urban food program in Ann Arbor, Mich., announced it was cutting its grant funding after losing the money it received from the New York City-based JEHT Foundation.

The 6-year-old foundation, whose acronym stands for Justice, Equality, Human dignity and Tolerance, had substantial sums invested with Madoff. It announced that it will cease all grants and shut down next month.

For Steven Schwartz, executive director of the Center for Public Representation a nonprofit legal center, in Northampton, Mass., was funded by JEHT, it means his work has stopped dead in its tracks.

"We just trusted that we would get the money, and so rather than suspend the work until the check was in hand ... we do the work and expected the check will follow," Schwartz said.

Due to the shuttering of JEHT, all its other programs have stopped too, including New Orleans' Advocates for Environmental Human Rights, the Rhode Island Family Life Center, and a group that provides fresh food in poor neighborhoods in Detroit and Oakland, Calif.

Such is the far and varied reach of Bernard Madoff's $50 billion Ponzi scheme.

The Jewish Federation of Greater Los Angeles said its funding of family activity programs and community center services is being cut, although it will try to maintain feeding programs and medical care for the very poor.

John Fishel, president of group, said the organization lost $6.4 million from its endowment fund in the Madoff scheme, and that the loss will result in cuts to services and programs.

"We are committed to maintaining the critical services we offer," Fishel said. "We will just have to work a little harder and prioritize. There are levels of need – there are things we do that are essential and things that we do that are desirable."

Fishel said the money lost in the Madoff scandal worsened an already dismal situation brought on by the economic recession.

"The economy impacted giving this year like for every not for profit in the United States.
We do have people that are giving less," Fishel said. "That's a double whammy in a tough year – to have the Madoff situation on top of what had been a rather weak economy since last June."

Mark Charendoff, President of the Jewish Funders Network, which has a matching grant program to fund pro-Israel organizations, said the collapse of Jewish charities has had impacted the organization as several of its members have disappeared in the past few weeks.

The scandal's ripple like effect is also being felt in Israel where several large Jewish charites funneled millions of dollars to everything from hospitals to education programs. Some of these included the California-based Chais Family Foundation and the Robert I. Lappin Charitable Foundation in Salem, Mass.

Israel's Technion Technology University announced on Tuesday that it lost $72 million because of Madoff.

The Jerusalem-based Yad Sarah Organization, formed in 1967, which provides medical services and equipment to the infirm and needy, is also wondering how it now will meet its $20.5 million annual operating and research costs.

The group had its money invested in GMAC Financial Services chairman J. Ezra Merkin's hedge fund, Ascot Partners, which was obliterated by Madoff's scam.

Yad Sarah's spokeman David Rothner said his group doesn't fully know the impact of the losses on the "Friends of Yad Sarah" fund.

"Before this scandal we were planning to cut the 2009 budget due to the world economic situation. So this is like someone walking in the rain and a car passes and splashes puddle water on him. He doesn't know if he's wet because of the rain or the puddle. All he knows is he's wet," Rothner said.

The Elie Wiesel Foundation for Humanity, founded by Nobel Peace Prize winner and Holocaust survivor Elie Wiesel, lost $15.2 million it had invested with Madoff Investment Securities, essentially all of the foundation's assets, but it hopes to remain afloat.

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There's little doubt that the fallout spreads beyond the Jewish community.

Also on the list of Jewish philanthropies that have gone belly-up is the massive $1 billion Picower Foundation, which had given money to the New York Public Library and diabetes research, and MIT's Picower Institute for Learning and Memory.

Now Palm Beach County public school students, which rely on the Picower Foundation for $2 million to $3 million annually, may have to cut after-school programs, science lessons, field trips to concerts and plays, sneak peeks into the business world and even sex education.

"When you look at it, sure you're seeing Jewish names and Jewish foundations close, but the ultimate recipients of that aren't the foundations," Fishel said. "The bulk of that money went to the general community. It’s the average American, that's who the victim is here."

FOX News' Jennifer Lawinski and Stephanie Fried and the Associated Press contributed to this story.