[NYAPRS Enews] Some NYS MH Nonprofits Restructure or Close in the Midst of

[Harvey Rosenthal]

NYAPRS Note: NYS mental health nonprofits are reacting in a variety of ways to the growing challenges and opportunities and the sweeping changes our field currently faces. New strategic plans, partnerships and networks are forming every day while the number of mergers and consolidations continue to rise. Some advocacy groups including NYAPRS are investigating the benefits of forming or contracting with Managed Services Organizations that allow nonprofits to affordably and effectively share back office functions, a strategy that received widespread attention in last week's NYAPRS/MCTAC conference that featured presenters from OPEN MINDS.
In the meantime, many agencies are facing serious financial pressures. As one small Western New York agency prepares to close its doors, the largest one in New York City announced last Friday that it was restructuring and downsizing its operations in the face of shortfalls connected to its 'unsustainable' scope and scale. FEGS is expected to maintain its longtime high quality standards and cutting edge impact as former OMH Acting Commissioner Kristin Woodlock moves up to take over the reins of the 80 year old agency.

Federation Employment & Guidance Service has $19.4 million shortfall
by Reuven Blau    New York Daily News Friday, December 12, 2014

One of the city's largest nonprofits has suddenly discovered it is $19.4 million in the red and plans to make major cutbacks to its social service programs.

The Federation Employment & Guidance Service announced the shortfall Friday, blaming it partly on a loss of grant money.

But it was unclear how a deficit of several hundred thousand dollars that auditors discovered last year could have spiked to almost $20 million.

"It's a challenging time in the nonprofit sector," said FEGS spokeswoman Julie Farber.

FEGS, which helps 12,000 disabled people a day, has an annual budget of about $250 million funded largely by city and state grants.

Leadership of the organization has changed three times since last month.

In November, longtime CEO Gail Magalif announced that she planned to retire in February. Her handpicked successor, Ira Machowsky, suddenly resigned several days ago.

On Friday, the nonprofit announced that Kristin Woodlock would take over, effective immediately. Woodlock, the former acting commissioner of the New York State Office of Mental Health, disclosed the nonprofit's multimillion-dollar deficit in an email to staff.

"The news is particularly sobering and demonstrates the immediate imperative for change," she said. "The current scope and scale of FEGS' programs and administrative operations are clearly unsustainable."

The state Attorney General's Office is not investigating the financial matter, a spokeswoman said. The Manhattan District Attorney's Office did not immediately return a call seeking comment.

The organization was founded in 1934 during the Great Depression to help Jewish men and women land jobs and fight discrimination in the workplace.

After World War II, FEGS assisted returning veterans, refugees and people with disabilities. It has since grown into one of the largest nonprofits in the city with 4,000 staffers offering an array of service for New Yorkers with disabilities.

http://www.nydailynews.com/new-york/fegs-nyc-non-profit-disabled-19-4m-shortfall-article-1.2043351
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FEGS Slashes Programs After Revealing Stunning $20M Loss
N.Y. Social Service Group Dumps Incoming CEO
By Josh NathanKazis  Jewish Forward  December 12, 2014

The massive New York Jewish social service agency FEGS will cut programs after discovering it lost a startling $19
million in the 2014 fiscal year, the Forward has learned.

The organization abruptly dropped its new CEO on the day it disclosed the loss to staff.

FEGS revealed the $19 million loss in an allstaff email on December 12. Ira Machowsky, FEGS' executive vice
president, was slated to replace the organization's CEO on January 1. But he and the outgoing CEO, Gail Magaliff,
were replaced on December 12 by Kristin Woodlock, the group's former Chief Operating Officer.

A spokesperson for FEGS said that Machowsky has submitted his resignation to the board. "FEGS' Executive Vice
President Ira Machowsky believed that the FEGS restructuring would best be handled under new leadership and
submitted his resignation, which the Board accepted," the spokesperson wrote in an email.

The spokesperson did not directly respond to a question about how FEGS learned of the scale of the loss. "While
FEGS has made certain cuts and changes, these did not go far enough," the spokesperson wrote.

In an email to staff, Woodlock said that FEGS would cut services in response to its fiscal crisis. The $19 million loss,
Woodlock wrote, "is particularly sobering, and demonstrates the immediate imperative for change... Our intention is to
create a smaller and more focused portfolio of services."

The group lost just $1 million in its 2013 fiscal year, according to tax filings.

Machowsky has worked in various positions at FEGS for over three decades, most recently as its executive vice
president. He was tapped in November to replace Magaliff, who had been the CEO of FEGS since 2007. Machowsky
was set to take Magaliff's role in January 2015. Instead, Machowsky is now gone from the organization, and the CEO
role has been handed to Woodlock, a former Acting Commissioner of the New York State Office of Mental Health, who
had been the COO of FEGS since 2013.

FEGS is one of the largest Jewish charities in the country, with annual expenditures of $229 million. The organization
provides a range of social services, from home care to workforce development, and received $94 million in government
grants in the 2013 fiscal year.

The organization also receives major funding from UJAFederation of New York, which gave FEGS $4 million in the12/15/2014
fiscal year. In a statement, UJA said it was aware of FEGS's financial situation. "Our priority remains that
individuals currently served by FEGS continue to receive critical services and assistance," the statement reads "We
are in regular communications with FEGS, an independently governed and operated beneficiary agency, and support
FEGS's intention to undertake a comprehensive restructuring effort."

The organization is audited by Loeb & Tropper, an accounting firm that services many Jewish charities, including the
Forward Association, this newspaper's publisher. A spokesperson for the firm, Paul Mendelsohn, said that the firm
could not comment on client matters.

http://forward.com/articles/210845/fegs-slashes-programs-after-revealing-stunning-/
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