Bernie Madoff’s Ponzi Scheme – The Impact on Main Street, America

By now, most people, if not everyone knows about Bernie Madoff and his 50 billion dollar Ponzi scheme. The news has reported a great deal on how this has impacted many people. In Palm Beach, FL many individuals, estates and organizations lost money in the scheme. There is another affected group which is not covered as often because they did directly invest; and that is the needy families, and they lost twice. Local charitable organizations in every state rely on the generosity of gracious donors. There are also several foundations which provide funding to help local organizations implement their programs.

As a result of some recent economic events, including the poor performance of the stock market, the reduction in wages for some people and the increase in the national unemployment rate, we can only begin to imagine that the need in local communities will be greater. With a decrease in families’ finances, more people will be seeking assistance form local organizations to help them wade through to other side of the current economic stumble. The number of individuals who are applying for unemployment compensation continues to grow. The media has already reported an increase need evidenced by the number of people who are applying for everyday survival assistance through government programs such as Medicaid and Food Stamp. As parents with limited funds continue to make efforts to be gainfully employed, programs such as childcare and camps are going to be in great demand this summer. Unfortunately many school districts are looking for ways to reduce expenses, and are less likely to be able to add summer extensions to help meet these needs.

How does Madoff’s scheme affect your community?

  • The victims of the Ponzi scheme included foundations which fund programs in local organizations. It is very likely that there was an organization in your community or the neighboring community which receives money from on of those who fell victim.
  • Individual donors with lower amounts of discretionary funds are less likely to make their donations, or are more likely to donate less then their normal contributions.
  • Agencies which receive less funding will be able to serve fewer families, even when there are more families seeking assistance.
  • Communities with increased needs and reduced assistance become more vulnerable.

When a child is able to spend time away from the home, attending school or a camp for instance they are exposed to:

  • Opportunity for continued learning. They acquire knowledge through out the school year and in camp they continue the learning process to reinforce the work from the previous year.
  • A chance to interact with same-aged peers and continued social growth and development
  • Supervised and guided activities, which limits the opportunities they have to get involved in less constructive or more dangerous activities.
  • Reduces the risk of becoming victims of child abuse for children who are at risk of being abused because parents are not overwhelmed by overactive children who need constructive engagement and children spend time with other concerned adults who may be able to notice and address warnings or signs of abuse in the children.

All these sound good for the kids, but where is the benefit for the rest of the community? Well, it is in prevention. By increasing and promoting wellbeing and limiting risk, the community saves on the cost of treatment. If a child is at camp in supervised environment, that child is less likely to be out in the community getting hurt or damaging property while trying to find entertainment. When a child is at camp, the unemployed parent can continue to work toward gainful employment instead of being home at risk of releasing their frustration of a child who they feel is bothering them when all he/she wants is to find an engaging activity. A child at camp continues to learn practice positive social interaction skills and engaging in a structured environment, which reduces the re-teaching that they will need when they return to school in the fall. There are many ways people can help even when they are not able to make the major contributions of the past. It is simply a matter of finding the right initiative.

Many people did not personally lose money, and are not seeking assistance, but the impact still extends to them. Whether they use them or not, members of the community pay the cost of services. In a time where the common theme in state budgets is covering the short fall, many services are being reduced or eliminated. Investing in prevention means reducing the amount spent in treatment, and this is important because treatment in general is more costly than prevention.

Adversity really is a part of life. Resilience; however, must be pursued and maintained. These difficult days are providing an opportunity for people to take a stand. To quote Nike, “just do it!”

© 2009 Judi Cinéas

Source by Judi Cineas, PhD