Madoff Scam Claims JEHT, Picower Foundations

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Youth work lost two major benefactors to the apparent Ponzi scheme created by now infamous financial manager Bernard Madoff.

New York-based grant maker JEHT and the Palm Beach, Fla.-based Picower Foundation  abruptly closed their doors before Christmas because their primary donors' money was lost by Madoff, who has been charged with allegedly operating a scheme that bilked at least $20 billion from investors.

(Click here for a list of recent JEHT and Picower grantees in the field of youth work.)

Picower, which posted assets of nearly $1 billion on its most recent tax return, was established in 1989 and run by Executive Director Barbara Picower, who founded the foundation with husband Jeffry Picower. It has invested heavily in health research and after-school programs. Picower's largest youth-related grants in fiscal 2007 went to Boys & Girls Clubs of America ($1 million for executive leadership development) and the Harlem Children's Zone ($1 million for its middle school initiative).

Last year, Picower entered into a network of co-investors, spearheaded by the Edna McConnell Clark Foundation, that committed to fund expansion and capacity-building for three youth work organizations: Denver-based Nurse-Family Partnership ($50 million), Boston-based Citizen Schools ($40 million) and Memphis-based Youth Villages ($30 million).

Picower had committed to be a co-investor for the Nurse-Family Partnership expansion. The program arranges home visitations by area nurses to young, low-income mothers.

"They were very generous to us," Nurse-Family Partnership spokeswoman Lauren Baker said of Picower. She said her understanding is that other investors on the project are stable, and that "we'll be okay."

The foundation gave New York nonprofit Children's Aid Society $3 million over the past ten years, most recently to help replicate its pregnancy prevention and early childhood obesity prevention programs.

"There is no doubt it leaves a hole," says Chief Operating Officer Bill Weisberg. "We have to scale them back and find new funders."

Like scores of other New York charities, plagued by the state budget cuts and drop in philanthropic dollars that followed Wall Street's collapse, Picower's closure could not have come at a worse time for Children's Aid Society.

"We are projecting that next year will be very difficult; we could face major cutbacks," Weisberg says. "We are pretty bitter that someone's apparent fraud would damage funding for low income kids."

JEHT's two main donors, real estate heiress Jeanne Levy-Church and her husband Kenneth Levy-Church, were among those whose money was managed by Madoff.

JEHT is an international funder with a staff of 24. It makes grants in four main areas: criminal justice, juvenile justice, international justice, and fair and participatory elections. JEHT made $26.4 million in grants during fiscal 2006. Since it was founded in 2000, it has given away more than $62 million.

The foundation's closure jeopardizes a number of juvenile justice-related projects carried out by youth-serving grantees of the foundation.

"We're being told that JEHT funds were with Madoff and that they are ending all funding commitments immediately," Abby Anderson, executive director of the Bridgeport, Conn.-based Connecticut Juvenile Justice Alliance, a JEHT grantee, said last week.

"They filled a big niche," says David Steinhart, director of the juvenile justice program at Bolinas, Calif.-based Commonweal, also a JEHT grantee.

He credits JEHT for wading into policy and advocacy work that was often controversial and required careful consideration of the lobbying rules for foundations and nonprofits. "There are not many foundations that do it that way," Steinhart says.

The complete loss of JEHT's assets means that any payments owed to grantees, even for current-year grants, will not be made.

"Given the circumstances, the foundation is unable to issue any payments on unpaid grants, the unpaid portions of multi-year grants previously made, or give further consideration to any proposals that were in the pipeline," JEHT President Robert Krane wrote in a statement sent to grantees last week .

Major projects supported by JEHT include:

*Annie E. Casey Foundation's Juvenile Detention Alternatives Initiative: JEHT has helped support replication of JDAI, a widely renowned effort to reduce the reliance on detention by local juvenile justice systems around the country.

*Missouri model: JEHT provided funding for Santa Clara County, Calif., to hire the Missouri Youth Services Institute, a nonprofit run by Mark Steward, former director of the Missouri Department of Youth Services. MYSI is helping Santa Clara replicate Missouri's use of small, regional facilities and youth development programming to work with incarcerated juvenile offenders.

*Models for Change: JEHT provided grants to a number of organizations that are heavily involved in the MacArthur Foundation's juvenile justice venture, which aims to foster major system reform in four core states. Grantees supported by both foundations include the D.C.-based Center for Children's Law and Policy, Springfield, Ill.-based Juvenile Justice Initiative and Philadelphia-based Juvenile Law Center.

A smaller grant maker that is closely related to JEHT is also closing due to losses suffered under Madoff. The New York-based Rockit Fund funded programs, polling and lobbying on a number of civil liberties issues including juvenile justice. It was run by JEHT CEO Robert Crane, and Ken Levy-Church served on its board of directors.

  • Chris Buchanan

    I am working on a documentary film about the impact of Madoff’s fraud, and would invite anyone with specific stories about how losing grants from Picower or JEHT is directly impacting them to contact me. Thank you.