Newspaper article St Louis Post-Dispatch (MO)

Give and Take: Agency Vowing to Double Charity Money Suspected of Fraud

Newspaper article St Louis Post-Dispatch (MO)

Give and Take: Agency Vowing to Double Charity Money Suspected of Fraud

Article excerpt

Prosecutors pressed a fraud investigation Tuesday of a foundation that promised to double the money of nonprofit groups - until it collapsed Monday, threatening hundreds of charities, universities and museums.

The Foundation for New Era Philanthropy filed for Chapter 11 bankruptcy protection Monday, listing $551 million in liabilities and $80 million in assets.

The foundation had solicited money from nonprofit groups by promising to double their money - a 100 percent return - within six months. It claimed philanthropists who wanted to remain anonymous would help boost the income. The rich donors' identities were supposedly known only to New Era's president, John G. Bennett Jr.

The foundation also solicited donations from named philanthropists, promising to double their money in the same way and give it to a charity of their choice.

Lawyers for the foundation, based in Radnor, Pa., said Bennett had admitted that the anonymous donors never really existed. That leaves as many as 300 unsecured creditors in danger of losing millions of dollars.

"The whole philanthropic community - individuals and institutions - has been dealt a painful blow," said Keith S. Thompson, president of the Academy of Natural Sciences of Philadelphia. The academy has $2.7 million at stake.

Others with money with the foundation include the University of Pennsylvania, the Pennsylvania Academy of the Fine Arts and the Franklin Institute, a science museum in Philadelphia.

Penn spokeswoman Barbara Beck said the university thought it knew what it was getting into.

"Penn was invited to participate by people who were close to the university. These were people with integrity that we knew very well," Beck said. "So although we've been suspicious all along, you tend to take people at their word when you've dealt with them before."

She would not say how much the university invested.

Bob Smucker of Independent Sector, an umbrella group for nonprofit organizations, said, "This just shows that even savvy, sophisticated people can at times be suckered. There's no easy way to get big bucks, no quick fix. There is nothing new under the sun. …

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