Friday, January 30, 2009

The JEHT Set

Yesterday New York Times columnist Nick Kristof posted to his blog a list of family foundations decimated or at least severely wounded in the Madoff mess. The links were brought to my attention by Oram colleague and principal Marilyn Bancel.

The JEHT Foundation is one of the total casualties. I attended this event in my capacity as president of the board of Women's Prison Association a JEHT grantee:

A memorial service for the JEHT Foundation was held in New York on January 22nd. The death was announced December 12th immediately following the highly publicized arrest of Bernard (Ponzi) Madoff. The cause of death was traumatic exsanguination – i.e., the foundation’s money bled out suddenly and acutely. JEHT was six years old, wiped out like so many others by imprudent investment with Mr. Madoff. JEHT is survived by its board (the donors and a few outside directors) and by its staff which has been let go effective January 31st.

As expected wonderful things were said about the corpse – but nothing about the corpus: pretty much everyone present knew JEHT’s funding came through Norman Levy the father of the founder Jeanne-Levy Church. He had long invested with Mr. Madoff. A board of presumably financially sophisticated people was snookered like so many others. At the time of its death notice CEO Robert Crane said “the returns had been steady and strong for all these years. It was shocking.” Like observations, and even stronger remarks, have been made by many others similarly affected.

Painful, moving and emotional remarks were made by Ms. Levy-Church the foundation’s driving force whose devotion to progressive causes was described by one onlooker as “rare and remarkable.” Eulogists included the head of Atlantic Philanthropies, a representative of Pew Charitable Trusts and several grantees cut off more or less in the prime of their JEHT support. Mourners were drawn to the foundation’s edgy SoHo offices for the service and they came from the grantee community, public service and other family foundations. Words like “cautionary,” “sad” and “nice wine” were uttered by some. Encomia were reproduced on large posters and a memorial book was available for mourners to record their names and whatever comments they might have cared to make.

It is believed that Mr. Madoff was especially attracted to foundations because the 5% payout they were required to draw down annually was a manageable amount for him to pay back each year, leaving the “principal” at rest- principal that turns out not to have existed, having gone out to pay the other investors who came along later, the essence of the Ponzi investment model as taught in most business schools.

JEHT Foundation, despite its youth, became one of the most effective small foundations in the country partnering with other much larger foundations like Pew and George Soros’s Open Society Institute to fulfill a mission and supporting good work virtually ignored by traditional philanthropy.

The Foundation was established in 2000. “JEHT” is an acronym for Justice, Equality, Human dignity and Tolerance. Its mission was to support programs that promoted reform of the criminal and juvenile justice systems; to ensure that the United States adhered to the international rule of law; and it worked to improve the voting process by enhancing fair representation, competitive elections and government transparency.

A recent posting to its web page said that “the JEHT Foundation Board deeply regrets that the important work that the Foundation has undertaken over the years is ending so abruptly. The issues the Foundation addressed received very limited philanthropic support and the loss of the foundation’s funding and leadership will cause significant pain and disruption of the work for many dedicated people and organizations. The Foundation’s programs have met with significant success in recent years – promoting change in these critical areas in partnership with government and the non-profit sector. Hopefully others will look closely at this work and consider supporting it going forward.”

In its brief life JEHT gave away more than $75 million in aid of what one of the eulogists described as “orphan causes.” In the world of philanthropy – on whichever side of the table one sits - experienced non-profiteers long ago learned that questioning the provenance of money is seldom a good idea. As one observer commented “you wouldn’t want to know.”

It is possible, perhaps even likely, that some of JEHT’s good works came from bad money and that grants to deserving progressive nonprofits were based on ill-gotten gains. Who would ask? No grants are likely to be returned.

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