How Charities Can Regain Lost Trust (Part I)

Intrinsic to the precepts of Judaism is the act of giving.
A verse in the Torah states, when a “…man (is) reduced
to poverty and cannot support himself in the community,
you shall uphold him…” (Leviticus 25:35) The real
tragedy of the Wall Street meltdown / Madoff scandal in
the Jewish community is not a loss of money, but a loss
of trust. Our ability to help our brother Israelite has been
harmed. Though we still seek to support our brother Israelite,
we are now afflicted with fear and uncertainty on how to
give effectively.

First, let us examine the facts:
1) The troubles in the housing and financial markets have a
far greater impact on charities than the troubles caused by Madoff.
2) Jewish non-profits, like all non-profits, have been harmed.
However, very few have been devastated.
3) According to Gary Tobin, the President of the Institute for
Jewish & Community Research, “thousands of (Jewish)
organizations generally have sound fiduciary control in place,
and in the constellation of Jewish communal life, very few of them
have been affected in a serious way by Mr. Madoff’s cheating.”
(Chronicle of Philanthropy: page 46; Januray 15, 2009)

The breakdown in trust caused by Fannie Mae, Freddie Mac,
Lehman Brothers, Merrill Lynch, AIG has instilled fear and
uncertainty in the people trusting them with their money.
The breakdown in trust caused by Madoff has instilled fear and
uncertainty in donors to Jewish non-profits. As a result, donors
may cut back on the amount they donate to charities, or at least
put off their donations for a while.

It is understandable that people withdraw when confronted with
uncertainty. This lack of trust has a bright side. It will lead to a
discussion about transparency in American philanthropy. Charities
that are transparent, efficient, and follow good practices of
accounting should be rewarded. Charities that do not follow these
practices should mend their ways. Finally, donors need to be more
personally responsible for their giving. They should do rigorous
due diligence when giving their money to charity. Donors should
look beyond the mission statement of the charity they give money
to. They need to examine the charity’s investment practices, its
efficiency, and its ability to survive an economic downturn.

The tragedy of Wall Street / Madoff may actually be a watershed
moment in time. In the future, donors will look back upon this
moment as a time when we learned how to better support our
brother Israelite.