NEW YORK – Young Israeli artists and art students who are having trouble financing their studies have unwittingly joined the long list of victims of Bernard Madoff, the New York Jew who defrauded thousands of investors in the world’s largest Ponzi scheme.
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One of Madoff’s victims was the America-Israel Cultural Foundation, which operates in both countries. The foundation’s $14 million endowment was invested with Madoff and disappeared without a trace.
In recent years the fraudulent investor’s trustees have managed to locate some of the stolen money and distribute it to the victims. But the foundation isn’t among those who got compensated, in part because it did receive some payouts from the investment it made with Madoff.
The foundation’s losses severely dented its activities, and especially affected the scholarships it offers Israeli studying at home and abroad. In the first years after the Ponzi scheme collapsed, Israeli students, including some in the United States, were left stranded without the promised scholarship aid. Others who had hoped to get scholarships had to find funding elsewhere or give up on pursuing their dreams.
The America-Israel Cultural Foundation was founded in 1939 by philanthropist Edward Norman. In the 1960s, Ukrainian-born American violinist and conductor Isaac Stern (the Isaac Stern Auditorium at Carnegie Hall was named after him in 1997) and his wife Vera joined the foundation and effectively took it over. Thanks to their reputation and connections, they were able to raise money for their activities in Israel. Some 18,000 artists received scholarships from the organization over the years, including Itzhak Perlman, Ohad Naharin, Daniel Libeskind, Michal Rovner, Itay Tiran, David Broza and Rita Yahan-Farouz.
Even today, almost a decade after Madoff’s scheme collapsed, the foundation still hasn’t recovered, even though it has managed to raise money from new sources and resume operations on a smaller scale. Its main savior was the Ted Arison Family Foundation, which gave it $2.5 million over five years. The Israeli pharmaceutical firm Teva also gave it $133,000, and the family of former Teva CEO Eli Hurvitz has given it 190,000 shekels ($53,000) every year.
Nevertheless, the foundation is only awarding about half as many scholarships as it did before. Prior to losing its endowment, it had an annual budget of $3 million and used to give around 1,000 scholarships annually. Today, its budget is only $2 million, and in 2016, it awarded only about 400 scholarships to needy artists in the fields of music, dance, theater and design. The average scholarship was between 5,500 and 7,000 shekels.
So who’s responsible for what happened to the America-Israel Cultural Foundation?
David Homan, who became the foundation’s executive director in 2006 – two years before Madoff was arrested – insisted that he was not personally responsible for the fiasco. He noted that the foundation began investing with Madoff back in the 1990s, “when I was still 13 years old,” and said that by the time he began working there, the money was effectively already gone.
Homan said the people responsible for the decision of investing with Madoff are no longer with the foundation, and that senior officials had taken responsibility for something they didn’t personally do.
Search for an influential donor
In the years after Madoff’s scheme collapsed, the foundation was riven by internal disagreements, both among senior executives and between Homan and the board of directors. The foundation’s connection with Israeli institutions was also tense at times. But any mutual accusations of poor job performance were kept strictly behind closed doors.
Most of those involved refuse to talk. They’re afraid that exposing these rifts will hurt the organization, which they say does important work to help Israeli artists who are just starting out. At the same time, even Homan’s critics don’t hold him responsible for investing the foundation’s money with Madoff.
Even though it has remained in operation thanks to two Israeli families, the Arisons and the Hurvitzes, the foundation has been criticized over the fact that other wealthy Israelis aren’t rushing to open their wallets for it.
Homan pointed out that the board of directors has gained new Israeli members, such as Sharon Azrieli. He also said the foundation’s circle of donors has expended in recent years, but the amount of money it raises is still well below what it used to receive.
The foundation’s biggest problem is the lack of a major influential donor who can attract others to the cause. Today, it has no leaders of Isaac and Vera Stern’s stature. The way fundraising works in both America and Israel is that a billionaire (or sometimes two or three) decides to give to a certain organization, and attracts other donors. The Sterns’ three children are affiliated with the foundation, but it still lacks a principal donor of the billionaire variety. A billionaire can give hundreds of millions of dollars, and his close friends – usually millionaires or billionaires themselves – will join the party.
Often the reasons for doing so are more social and less philanthropic: If you give to my cause, I’ll give to yours. And if friends give, they’ll be invited to parties and other important social events that connect them to the principal donor. Yes, charitable fundraisers are part of the social life of the wealthy.
“In the U.S., you can find billionaires, including Jews, who will give very large donations, sometimes billions, to cultural institutions,” said Homan. But Jewish American donors don’t usually give to Israeli cultural institutions, he said, adding that this is probably because Israel is now considered a wealthy country in its own right. They’ll give to hospitals, Birthright Israel and construction in the Negev, but not to culture.
He acknowledged that the America-Israel Cultural Foundation needs a generous billionaire to carry on Stern’s work, but he has yet to find one.