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A blow to charities: Many investors used their funds to support Jewish causes.

NEW YORK - The Hebrew word for charity is tzedakah. But it means something more, too: doing the righteous thing.

Bernard L. Madoff is saidto have stolen billions.
Bernard L. Madoff is saidto have stolen billions.Read morePhiloctetes Center

NEW YORK - The Hebrew word for charity is


. But it means something more, too: doing the righteous thing.

Many of the investors allegedly swindled by Wall Street money manager Bernard L. Madoff are, like him, Jewish, and for many of them, contributing to Jewish causes is a crucial part of their culture.

"It's the biggest scandal in philanthropic life in, well, as long as anyone can remember," said Gary Tobin, president of the Institute for Jewish and Community Research and a leading expert on Jewish philanthropy. "We don't know yet how big it is. There are foundations that have lost major assets, donors that have lost their ability to give, and organizations whose investments have disappeared."

Shock has rippled through the philanthropic community since news broke last week that the respected Madoff, once chairman of Nasdaq, was at the center of a $50 billion scheme to defraud investors.

The names of Jewish organizations and individuals allegedly affected read like a Who's Who: A charity of director Steven Spielberg. A trust tied to real estate magnate and New York Daily News owner Mortimer Zuckerman. Spielberg's DreamWorks partner, Jeffrey Katzenberg, and the foundation of Nobel laureate Elie Wiesel also reportedly were hit.

Countless family foundations up and down the East Coast, the lifeblood of so many Jewish causes, have been devastated - among them the Shapiro Family Foundation in Boston, said to have lost $145 million.

Many don't know yet if they were affected. "I don't think we'll know the scope of this for a year," said Mark Charendoff, president of the Jewish Funders Network, a group of family foundations.

"There were people who woke up and said, 'Thank God, I wasn't involved,' " Charendoff noted. "And then they find out that somehow they were, through a secondary fund."

The loss to Jewish philanthropy has been estimated at $600 million to $1 billion.

"It is catastrophic," said Jonathan Sarna of Brandeis University, a leading authority on American Jewish history. "The Jewish community will look different when this is all over."

The scandal points out a key aspect of how Jewish philanthropy works - through close social ties, and very much based on word of mouth, said Tobin, of the Institute for Jewish and Community Research.

To Charendoff, of the Jewish Funders Network, it's natural that investors would go to family, friends, or fellow club members for advice on where to put their money.

"There's a lot of 'Hey, I know this guy. I trust him, and you should, too,' " he said.

One foundation that contributes to many causes in Israel, the Chais Family Foundation, has had to shut down because of its losses with Madoff.

"We are now informing all those wonderful projects that there will be no more funds available," said its president, Avraham Infeld, in Israel. "We are also closing our offices, and I have the very difficult task of informing our staff that we can no longer employ them."

What's in the immediate future for Jewish philanthropy? Not all Jewish philanthropic causes have been affected. Many were free of Madoff's involvement. And even those who were, like the Shapiro Foundation, say they are moving forward.