Under Internal Revenue Code Section 4944, which states that foundation officers, directors and trustees can be held liable for investments that jeopardize the carrying out of the exempt purpose of their organizations unless the participation is not willful and is due to reasonable cause, potential liability exists for board members of private foundations and, specifically, for members who lacked proper oversight in investing all their foundations’ money with Bernard Madoff. The tax imposed under Section 4944 is equal to 10 percent of the amount invested for each year in the taxable period. The determination of whether investments were made which jeopardized the carrying out of the exempt purpose is a facts-and-circumstances test. With respect to the argument that charities were unable to uncover the fraud committed by Bernard Madoff, Senator Charles Grassley’s (R-Iowa) counsel noted that “other charities chose not to invest with [Madoff] after doing some due diligence.” Grassley stated in December that foundation and charitable boards should review why they “put all their eggs in one basket.” He further noted that it may be time to re-examine the reform and imposition of a prudent investor rule.