The New York Times reports that foundations that lost billions in Madoff’s alleged Ponzi scheme could also face hefty fines under an obscure tax rule intended to discourage private philanthropies from risky investing.
The rarely invoked excise tax penalizes foundations that fail to vet investments properly, heed red flags, or otherwise exercise diligence with their money. Marcus S. Owens, a Washington tax lawyer specializing in exempt organizations, estimated the potential hit for Madoff’s philanthropic investors to be around $1-billion.
The Wall Street Journal reports that the scandal could have a deep and lasting impact on U.S. health care. Madoff investors such as the Picower Foundation, Carl J. and Ruth Shapiro, and Morton Zuckerman were major donors to hospitals and to scientific and medical research.