This fascinating study shows that charity boards with fewer members lost an overwhelmingly larger amount of money to Bernie Madoff, and the accompanying article provides advice on what makes a better board.

• A study carried out by the National Committee for Responsive Philanthropy demonstrated that the majority of charities that lost at least 30% of their assets to Bernie Madoff’s Ponzi scheme had four or fewer board members.
• The reason behind the study’s results seems to be that among small, homogeneous boards, if one member decides an investment is a good idea, the rest of the board is not large or varied enough to argue.
• In order to avoid becoming victims of the next Bernie Madoff, charities ought to enlarge and diversify their boards.

Facts & Figures

• The study used a list of 150 charities linked to Bernie Madoff.
• Of the 105 organizations that lost at least 30% of their assets, 38 had one or two trustees listed on their tax forms, and 46 had three or four.
• Only 16 of the 105 organizations had five or more members on their boards.

Best Quote

“We think part of what’s going on here is small, homogeneous boards where someone knew someone who trusted Bernie Madoff and that was enough. But it’s not enough to allow Uncle George or Grandpa to say Bernie’s a good guy and make an investment.” – Aaron Dorfman, Executive Director of the National Committee for Responsive Philanthropy