In the wake of a fiscal meltdown, FEGS (Federation Employment and Guidance Service), one of the largest and most respected social service organizations in America, is shutting its doors very soon. Several other agencies under the UJA/Federation auspices will be taking over some of its $250 million network of employment and guidance programs.
Founded in 1934 by the UJA, FEGS employed 2,000 but provided health and disability services, home care and job training to so many more. With an annual operating budget of over $250 million, it helped over 135,000 clients with an estimated 20,000 of them being Jews. In January, with a deficit of $19.4 million, it announced that it was closing down
An eight-member UJA-Federation task force led by two of its former presidents was assembled to monitor the dissolution of FEGS to ensure that its programs would be transferred by the city and state to UJA-Federation’s network of 97 other agencies.
“We want to make sure that where FEGS programs align with our mission that we are able to transfer them to … the most appropriate relevant agencies in our network,” said Elana Broitman, UJA-Federation’s senior vice president for agency relations. “I don’t want to leave the impression that all [FEGS’ clients] will be serviced by UJA-Federation, but we are worried about all of them, of course.”
Eric Goldstein, UJA-Federation’s CEO, announced creation of the task force in an email to donors last Friday. In it, he said that in light of the financial collapse of FEGS, his organization has “brought in healthcare industry experts to closely examine specific issues that could affect other human-service agencies, such as the financial and operational impact of changes in how health care is funded.”
“We are exploring more intensive ways to train trustees regarding governance and accountability, and agency executives on business management and governance,” he added.
The two former presidents leading the task force established last Dec. 18 are John Shapiro and Jerry Levin. The other six members are described as “veteran lay leaders.”
When asked about the reason for their financial collapse Julie Farber, the senior vice president for planning, strategy and innovation at FEGS, told JTA the agency’s $19.4 million loss “was a result of multiple factors, including poor financial performance on certain contracts, contracts that did not cover their full costs, investments in unsuccessful mission-related ventures, write-offs of accrued program revenue, and costs resulting from excess real estate.” She added that a “forensic assessment has not uncovered any fraud or malfeasance to date.”
The offices of both the state attorney general and the Manhattan district attorney are reportedly conducting their own investigations. This comes six months after another Jewish philanthropy, the Metropolitan Council on Jewish Poverty, revealed that its major officers were guilty of stealing from the funds they were charged with overseeing. William Rapfogel admitted to stealing more than $1 million from the New York charity he ran for two decades. Rapfogel’s predecessor, David Cohen, pleaded guilty to stealing $650,000. Herb Friedman, Met Council’s chief financial officer for 18 years, was also charged. They have recently announced that they are looking to merge or partner with other organizations to improve efficiency.
FEGS has 172 assigned by city and state authorities. To date, about 7% have been assigned to other Jewish social service agencies, almost 200 others have been otherwise assigned, leaving over 100 other programs pending and searching for a sponsor.
April 1 is the projected transfer date for the programs that have been found a home.
Deputy New York City Mayor Lilliam Barrios-Paoli was quoted last week as saying that most of the city’s contracts with FEGS have already been transferred to other nonprofits.
“Life will go on and services will continue,” she said. “The state has to figure out what happens with the … mental health practice and clinics that they have. That’s well on its way as well. It is tragic that it happened to FEGS, but services will not be affected.”
Among the other nonprofits picking up FEGS’ state and city contracts are: Henry Street Settlement, Good Shepherd Services, United Cerebral Palsy, Association for the Help of Retarded Children, Catholic Charities Community Service, Goodwill and Presbyterian Social Services.
FEGS has about 2,200 employees 1,400 of whom are members of District Council 1707 of the American Federation of State, County and Municipal Employees District Council, according to Larry Cary, an attorney for the union.
“Representatives of the city and the state have said they have no authority to require the receiving programs to hire FEGS employees,” he said, adding that the union plans to contact each nonprofit to which a program is transferred. (JPupdates)