Barbara Picower, who along with her husband, Jeffry, established the Picower Foundation to fund pioneering medical research, said in an email to beneficiaries that its grant-making would cease "effective immediately".
It also said the American organisation would "close its doors in the coming months" because its money was managed by Mr Madoff.
Set up in 1989, the foundation – which is America\’s seventh largest – is the biggest in a raft of charities and endowments that have been devastated by the revelations that Mr Madoff, one of the world\’s best known financiers, had apparently been running a Ponzi scheme or pyramid selling racket for decades.
Well, did they really?
Sure, they lost funds they thought they had, that\’s obviously true. But imagine you\’d been in Madoff since 1989 (I doubt that this is the case, in full, here, but just imagine). You\’ve been getting 10-12% per year for nigh on 20 years. You\’ve had your principal back and a great deal more over that time.
And you\’ve been paid it from the money coming in from the newer investors. This is how pyramids work of course.
So the true status is that there\’s been a transfer from (minus whatever Bernie took himself) new investors to old.
Yes, we can complicate matters by thinking about opportunity cost, what would have been the returns in a fund that wasn\’t fraudulent but even so, for those who had been in for decades, have they actually lost at all*?
* Yes, this assumes that they took out annual returns from the fund but I think charities have to do that, don\’t they have to spend 5% of assets every year under US law?