This is the Madoff effect: After announcing that it took a massive loss in the Bernard Madoff Ponzi scheme, Hadassah confirmed Wednesday it was laying off a quarter of its staff.
(Check out my story here.)
The layoffs were not the result of the loss of the $40 million Hadassah had in Madoff’s firm, nor another $50 million in imaginary profits it thought it had earned through Madoff, which it thought it could add to its endowment, which now stands at $412 million..
Rather, Hadassah had been planning on streamlining for about two years. Last September, the organization hired McKinsey and Co. to help implement the plan and in December — just before the Madoff scandal broke — Hadassah notified its board that it was about to begin implementing the plan.
But the Madoff losses, as well as the tanking stock market, significantly pushed up the timeframe on the restructuring, according to a source inside the organization, turning the implementation of the restructuring from a long-term plan to a 30-day plan.
This is the Madoff effect.
Even before Madoff’s scheme fell apart, the Jewish nonprofit world was going shrink because of tightening charity dollars due to the economic recession. Organizations were going to downsize, close down and merge, people would lose jobs and the Jewish world would lose services.
Bernie Madoff just made it happen a little faster — and more intensively — than we first thought.
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