Downfall of Major N.Y. Aid Charity Leaves Many Questions

The sudden dissolution of one of New York’s biggest social-service providers shocked both city officials and the 80-year-old nonprofit’s clients and left many wondering how the charity fell into a gaping budget hole, The New York Times and WPIX television report. The Federation for Employment and Guidance Services announced late last month that it would wind down operations under the pressure of a $19.4-million deficit.

FEGS, as the organization is known, has $202-million in multiyear city contracts to provide job, health, and other services to more than 100,000 needy, elderly, and disabled New Yorkers. City officials said the group’s annual audits did not indicate significant fiscal problems. FEGS did report operating losses on its 2011 and ’12 tax forms, which showed that former CEO Gail Magalif was earning more than $600,000 a year, and the charity said it was paying leases on more office space than it needed.

A FEGS spokeswoman said in a statement that the deficit “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.”