How I avoided becoming a Madoff victim
Like many of his peers, philanthropist Charles Bronfman, an heir to the Seagram’s whisky fortune, was offered a chance to invest with Bernard Madoff.
“I’m no maven on financial stuff,” says Mr Bronfman, explaining that he referred the opportunity to his financial advisor.
“He came back and said, ‘Look, we asked [Madoff] certain questions. This guy could be the best guy in the world but we didn’t cotton on to his answers. So we have to advise against. Maybe you’re missing a big bet.”
Rather than being wiped out, Mr Bronfman helped set up an emergency fund last year that offered up to $500,000 to foundations that were hardest hit by the Madoff scheme.
“I know of 51 foundations that died and 130 or 140 that were seriously injured,” says Canadian-born Mr Bronfman. “It’s a tragedy. And it’s not a Jewish tragedy, it’s an American tragedy.”
While Mr Bronfman ran the Canadian side of Seagram’s for many years (his older brother Edgar, longtime president of the World Jewish Congress, headed its US operation), he is probably best known for his philanthropic work, which focuses largely on programmes that promote Canadian and Jewish identity.
Now he is sharing his philanthropic expertise in a new book, The Art of Giving: Where the Soul Meets a Business Plan. The work is part memoir, part how-to.
According to Forbes, Mr Bronfman’s net worth is $1.8 billion. The Andrea and Charles Bronfman Philanthropies (ACBP), which he chairs, currently manages more than $200 million of his and others’ capital. It is a spend-down foundation, so by 2016 all the money should be gone. There is currently about $70 million of his own money left.
As Mr Bronfman and his co-author ACBP president Jeffrey Solomon see it, the field of philanthropy has changed greatly since the foundation launched in 1986. No longer is a donor’s duty done once a cheque is signed. Today, because of corruption and mismanagement, people want to be more involved.
“Use your mind as well as your heart. Follow your money,” he advises, no matter how small the sum. “Don’t just sit there and be passive and write a cheque and say, ‘Well, that obligation is done’.”
Instead of allowing community leaders to decide where funds would be best spent, he says, people need to be able to track their investments.
Another effect of the Madoff scandal, combined with the credit crunch, has been a significant downturn in contributions to Jewish causes, particularly from younger donors. While a million individuals used to give to the Jewish Federations of North America annual campaign, that is down to 400,000 or less, says Mr Bronfman.
“But that doesn’t mean people have stopped giving. They have just stopped giving to JFNA because it’s too
The acceptance of Jews in American high society has also had a knock-on effect.
“The Metropolitan Museum and the Museum of Modern Art used to refuse Jewish money. Now, if you walk into the Met, every second gallery or pavilion has a Jewish name on it. Henry Kravis’s wife is now chairman of MoMA and Leonard Lauder is chairman of the Whitney.”
Though Mr Bronfman has avoided many of the financial pitfalls of recent years, the recession has strained ACBP’s finances and the
foundation has had to cut its grant making by 35 per cent.
But regardless of what happens when his foundation winds down in 2016, he judges his philanthropic work a success. Birthright Israel, which he co-founded 10 years ago with Michael Steinhardt, has already become a rite of passage for young Jews.
Every year, it sends tens of thousands of 18 to 26-year-olds, mainly from North America, on a free, 10-day trip to Israel. A recent study by Brandeis University found that Birthright Israel had a real impact on whether those Jews marry Jewish partners.
“As a philanthropic entrepreneur you go into a lot of things but only some of them make out nicely,” Mr Bronfman says, his eyes sparkling. “Then, all of a sudden, you find the richest gold vein in the world.”